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Hello, everybody, and welcome to this presentation of CDON's quarterly results for the second quarter. Presenting this today is myself, Fredrik Norberg and our CFO and Deputy CEO, Thomas Pehrsson. Today, we will go through our long-term goals, short-term focus, the Q2 results and the integration status. Then will Thomas guide us through the financial performance. And as usual, we will end with a Q&A.Our long-term goals is to become the leading marketplace for the Nordics to also increase the penetration of marketplaces and reach a double-digit market share in the Nordic e-commerce industry. And lastly, to leverage the scale benefits of the model to deliver reliable growth with expanding profitability. To achieve this, we have 3 focus areas for the short and midterm. We will increase our supply and provide with more of the products that people want and utilize the low margin cost of bringing in more supply. We will improve our customer happiness and get it on to the high levels of -- [ that Fyndiq ] managed to reach the last couple of years and continue from there. And we will create distinct customer experiences and leverage 2 brands with different value propositions to serve different types of customers and needs.If we dig into the numbers, here, we see our 3 main KPIs. We start with GMV, representing our turnover and pretty much shows our attractiveness of our proposition to the consumers. We ended this quarter on almost SEK0.5 billion versus last year, that's plus 1%. And when we're talking about these numbers now, we are comparing this quarter is the group, including Fyndiq from the 12th of April, comparing with last year's quarter for CDON. So it's a little bit of a complex quarter this quarter, so -- but I will try to be clear around this.If we move to the next KPI, which is our main KPI, and this is gross profit after marketing, which is the money we keep from our sales with the marketing cost deducted. And this kind of shows our operational efficiency of the business. Here, we have an impressive increase from last year of plus 80%, ending on SEK48 million. I will, on the slides after this, show you some comments and dig deeper into these numbers. This sums up to our profit and loss measure represented by the EBITDA, which shows the operational efficiency of the company. Here, we have a huge turnaround from the loss of minus SEK20 million last year to plus SEK2 million this year.If we dig into the GMV, we can see to the left that for the group, we reached plus 1% versus last year. If we look into separately on the marketplaces, we can see that CDON had minus 19% for this full year quarter, full quarter compared to last year's quarter. If we look into Fyndiq, we had minus 1% compared to last year. This is due to the fact that we have a really challenging market development in Sweden at the moment with minus 2% in April and minus 12% in May. We haven't yet received the numbers for June. Also, CDON experienced really strong sales last year from mobile phones and PlayStation 5. As you know, it was really a feeding frenzy last year of PlayStation 5. On top of this, we can see that we have really an increased focus on profitability for both marketplaces. And this is at the expense of low margin sales.If we dig into the gross profit after marketing, our main KPI, we can see for the group, it was plus 80% versus last year. This is mainly driven to the additional value that Fyndiq brings to the table. But also if we look into the both of the marketplaces, we can see a good organic growth. If we look on CDON, it's plus 22% versus last year. And this is especially impressive given that the GMV was minus 19%. Fyndiq had plus 10% versus last year. This is due mainly due to that we have increased take rates, mainly for CDON, but also for Fyndiq and also a strict focus on increased marketing efficiency for both companies and especially for CDON. This trickles down to our EBITDA, which is a turnaround of the loss of minus SEK20 million last year to plus SEK2 million this year.Looking into CDON, it was minus SEK20 million last year and now it's plus SEK0.3 million and Fyndiq moved from minus SEK2 million to breakeven this year. I also should note here that on CDON, we have adjusted for extraordinary costs of minus SEK3.7 million on the EBITDA and for Fyndiq plus SEK3.5 million. The reason for this turnaround of the loss from last year is partly due to the strong gross profit after marketing from the last slide, but also the reduced OpEx in CDON following the cost reduction initiatives launched in December. Worth noting is that the impact from communicated SEK40 million in cost synergies is not yet visible, but will mainly come during next year.I know that this slide is a little bit scattered, but I will guide you through this. This is the quarterly EBITDA for CDON, since 2019. The blue bars is the second quarter results for these 4 -- 5 years. Here, we can see that we have a strong seasonality. And as every retailer and e-tailer, CDON is really back-loaded seasonality wise with the peak in Q4. And looking at the fact that we have a breakeven both the first quarter and the second quarter this year, which is the first time during this period of time and the first time in many years, we are very confident that we will reach our target of at least EBITDA breakeven for this year.If we move over to the integration status, to repeat, we will create one team, one merchant interface, while maintaining 2 offices and go to market with 2 distinct brands. Our integration process is running according to plan with focus on synergy realization and performance improvements. On the supply expansion focus, we have accelerated our focus on new supply. We have signed a major Nordic home electronics merchants, and we have ramped up our focus on our fulfillment services represented by the FPC.On the customer experience side, we are continuing to move to a customer-centric approach at the core of our business. This will lead to updated merchant agreements, which may lead to us losing some unprofitable merchants and supply. But this will lay the foundation for us reaching our midterm goals and long-term goals. We have also centralized our internal customer services to the Malmo office. On the marketing efficiency, we are each and every day now validating and optimizing the profitability of our marketing channels. We are also sharing best practices between the sites and really cherry picking the best of the best from the best practices that the 2 sites have.Before I hand over to Thomas for more detailed numbers, I would like to just summarize and say that we are going according to plan. We have good progress in our integration, and we have a laser focus on our gross profit after marketing. This will lay a great foundation for us to be able to reach our midterm and long-term goals.With that said, I hand over to Thomas.
Thank you, Fredrik. Now on to the financial performance. First, some introduction. This quarter is a very special quarter in many ways. First of all, the acquisition of Fyndiq was finalized in 12th of April. Therefore, CDON Group's second quarter financials consist of results from Fyndiq from the 12th of April until the end of June, while results for CDON consists of the entire period. Fyndiq was not part of CDON in 2022. Hence, there are no comparable numbers from comparative periods included in the official numbers. However, to get a better understanding of the performance of the group, I will present these numbers in this presentation later on. It was also presented in the Q2 report as referenced at the end of the report.CDON and Fyndiq are both marketplaces. However, they operate in a slightly different way. CDON's 3P business is an agent-based business between the suppliers and the consumers, where CDON does not buy nor sell products. Therefore, only commissioned and value-added services are accounted for as net sales with limited cost of goods. Fyndiq marketplace, on the other hand, operates on drop-shipment business model, where there is a transaction between Fyndiq and their supplier. This makes Fyndiq the legal owner of the goods even if merchants ship the goods directly to the consumer. These results in a higher net sales and cost of goods than CDON.Group income statement. First off, I represent the official reported number for the CDON Group. The total GMV for the group amounted to SEK497.3 million compared to the same period last year of SEK493.3 million, which is a slight increase of 1%, as Fredrik mentioned. This is mainly due to the combination of Fyndiq and the absence of comparative period for Fyndiq. Net sales for CDON Group increased to 60%, which is due to the addition of Fyndiq operating model. Gross profit after marketing increased to 80% to SEK77.3 million compared to SEK54.6 million from last year due to the combination with Fyndiq, but also stronger take rate, which enhanced -- with enhanced focus on profitable marketing spend.We are very happy to announce that CDON Group in its second consecutive quarter is EBITDA profitable. EBITDA amounted to SEK1.8 million in comparison to last quarter, which amounted to minus SEK20.2 million. During the quarter, there has been one-off costs of minus SEK3.5 million related to the acquisition of Fyndiq, minus SEK2 million related to the last settlement on the restructuring program started last year and the reversed accrual of SEK5.7 million positive related to the IMY Google Analytics case.Group balance statement. Total noncurrent assets increased to SEK765.3 million due to goodwill of Fyndiq after the acquisition. The increase in equity is due to the newly issued shares related to the acquisition of Fyndiq. We ended the quarter with a cash balance of SEK109.7 million, which includes the cash balances for both CDON and Fyndiq.Group cash flow statement. Cash flow for the period amounted to positive SEK11 million, which is a result of a positive cash flow from operating activities as well as a positive effect from changing in operating liabilities. Total cash flow for the period amounted to SEK53.7 million, which is mainly related to the contribution of Fyndiq's cash balance as well as a positive cash flow from operations. As I said, we ended the quarter with a cash balance of SEK109.7 million.Group income statement for reference. And just to be clear, this means entire comparable periods for both marketplaces. With the results of the entire period for Fyndiq and the comparable period 2022 for Fyndiq, total GMV for the group declined by 16%. The decline in GMV is a result of the challenging macroeconomic climate that has a negatively impact on the e-commerce market as well as the shift of -- to focus on profitable sales. Net sales decreased by 14%, which is mainly due to weaker sales from the 1P segment at CDON.Gross profit after marketing, however, increased by 17%, even with a weaker top line due to a stronger take rate and more efficient marketing spend in the paid channels. The solid performance of gross profit after marketing in relation to a stable [ cost level ] resulted in a positive EBITDA of SEK0.5 million in comparison to last year of minus SEK22.6 million. And we are still confident in our ability to reach our short-term target of being at least EBITDA breakeven for the full year 2023.Thank you, and over to you, Fredrik.
Thank you, Thomas. And now we end with opening up for the Q&A.
[Operator Instructions] The next question comes from Nicklas Fharm from SEB Equities.
I obviously think it's quite an achievement to turn around on the EBITDA line and sustain that trend into Q2, which has been very difficult. But I want to start by asking you to give us some more details on the GMV developments for the core CDON business, the 3P business that is in the period. As you point out, it looks like the market is perhaps down 6%, 7% or so in the quarter to end of May, whereas you report a 14% decline. I understand and appreciate that you're going for profitability rather than top line growth perhaps. But please, if you could expand a little bit on what's actually going on at the CDON's 3P business, please?
So for the period, we have numbers for April and May and April is down 2% and May is down 12%. However, we haven't yet received the numbers for June, but it's not that far away from rest of the market. But then in addition to that, CDON had really strong sales last year, especially driven by the PlayStation 5 frenzy that everybody had all parents. Maybe you included also must have to buy a PlayStation 5 and a lot of people are buying from CDON. And we don't have that super trend this year. And this is something we can see both on Fyndiq and CDON -- from time to time, you have these super trends and then the next year, it's really hard to keep up with those last year numbers. But then also in addition to that, we see also that we have really increased the marketing efficiency when it comes to CDON from the end of last year and to the beginning of this year. And that makes also that we have more profitable sales, but then a bit declining top line sales. So from my point of view, I feel that this is quite natural explanations to it.
Excellent. Excellent. Very good. Can I follow up on the same topic. If I look at the -- as I understand, proforma Fyndiq GMV breakdown at the very end of the quarterly results report. They are rather flat year-on-year. That's SEK108 million. Now would you care to give us some insight on what's happening at Fyndiq, which is clearly outperforming no matter how we slice it at this point.
I would say, it's [Technical Difficulty] Fyndiq didn't really [Technical Difficulty] from this time of year last year, but the constant improvement of each and every week, improving things makes a progress. And today, we see that we are -- Fyndiq are performing better than the rest of the market. And this is how it looks for the marketplaces from time to time. Sometimes you have some super trends, sometimes you're not. And for this time of year, we can see just a solid sales increase for Fyndiq.
You don't think it's because people are kind of trading down and that you may be benefiting from the very weak consumer at this point in the cycle? And if so, should we be somewhat more cautious towards the future, whenever the cycle turns?
That's a good question, Nicklas. In theory, Fyndiq should benefit from harder economical times. It's hard to say because we are so much right into it, and we will be able to see this maybe in 1 or 2 years. But on theory, you're right. I, however, believe that we still have potential also for CDON to grow even with a more high cost type of items that CDON are selling in the future.
Excellent. And a final question, a bit detailed, perhaps, could you just outline what's actually in the net financial items. Is that the write-down of your previous associated assets?
Exactly, I think so. It is.
The entire amount?
Yes. No. Almost, don't have the entire amount [indiscernible] have written that down in this quarter, obviously the combination of Fyndiq. So, right, you're right.
I see. Perfect, Thomas. That's all for me.
The next question comes from Adam Wyden from ADW Capital.
I have a couple of quantitative questions and I'll sort of finish it with qualitative question. So first, I know you guys are waiting to -- or I guess you're in the process of sort of finding those [ SEK40 million ] of G&A or I guess, hard costs across the 2 businesses, and that sort of will be prospective. Can you talk a little bit about, I guess, the take rate development and sort of merchant initiatives? I know Fyndiq is -- I guess their take rate is about 26% and 12.5% is commissions. So you're basically making half of your take rate on value-added services. I don't know if that's advertising, logistics, what have you. But can you talk a little bit about sort of take rate development, value-added services and sort of merchant onboarding and development? I know you pursed a lot of unprofitable merchants and a lot of unprofitable traffic, but can you sort of talk about those 2 things? And sort of your development on there and what the prospects are for that.
Sure. If we start with the synergies on the cost side, as we said before, we see that we will reach the full potential by the end of next year, and we are getting improvements on that post each and every month that we are going now. If we look into the take rate development, this is something that we have several really interesting and high potential areas that we are focusing on. As I mentioned before, we have the fulfillment services where we see that we really can both improve the quality of the fulfillment services, but also have a financial upside on it as well. This is something that I've also been involved very much in the last couple of weeks, and we are making a lot of progress in this area. I'm looking forward to do something really big in this area for CDON.Another area, as you said, is the commission and the take rate alignment and so on. This is in progress. And probably, we can be able to roll something out during this fall, but it's really in progress. When it comes to the merchants, we have set some really ambitious plans when it comes to acquiring both merchants and new supply. This is really, I would say, a long game for us, but we see or in now some quick short wins. We have already now signed a major Nordic home electronics merchants that really will move the needle for us. And we continue to strive to increase the mass of supply that we have on both CDON and Fyndiq. So some smaller short winds, but great progress in this long-term strategies that we have set up.
Yes. No, I think there's been -- I guess, what you said is in your comments that we were sort of buying unprofitable customers and using unprofitable marketing to sort of buy customers. So I think some of the GMV development, at least maybe I'm not taking words out of your mouth, but some of that GMV development, at least the way I read the press release is that you guys are unwinding some sort of unprofitable GMV, where we're spending money on bad sales and marketing and perhaps merchants where we're sort of not making the math work. And so the sort of the headline GMV yes, is augmented by the sort of the end market, but to some degree, also just unwinding unprofitable business. That sounds right?
That's totally correct. And I wouldn't say it's easy, but it's easier to sell a product with no margin and to put a lot of marketing cost on it. The hard part is to really make gross profit after marketing and this is what we now see an 80% increase combined versus last year and that we really have a laser focus on. So you are totally right on it.
So again, just going back to the original point that I started with, like if I look at sort of CDON's 13% -- 12% or 13% take rate and then I look at Fyndiq's at 26%. I sort of put my little inspector gadget sort of a magnifying glass and I sort of went and did some research about becoming a Fyndiq merchants. And Fyndiq merchants are about 12% to 13% commission rate, which is good. But again, you're selling a product, but you're really taking 26%. I mean, what do you think the opportunity to get CDON take rate up from 11%, 12%, 13% to 25%? Because when I think about that 12% delta between the 2 take rates, I mean, that's like [ 250 ] of EBITDA. Now I don't know if I can expect you to get all of it, but I mean, the quantum of that increase in EBITDA from sort of take rate value-added services commissions, advertising, we're not even talking about SEO and SEM at that point. But like I mean is the opportunity that big because if it is, I mean, I think that's sort of going to be the driving force over the next couple of years and less about whether GMV grew 50% or not, because we've seen in the past that growing GMV at 20% on profit doesn't really do anything for us.
Yes. So, if we believe that we can increase the take rate and commissions, yes. Do we believe that we can increase CDON's commissions to the levels of Fyndiq, no. That is impossible, I would say. And that is due to the totally different type of supply and products that CDON and Fyndiq are focused on today and will be focused on also in the future to sell AirPods Pro's or PlayStation 5, it's impossible to even have double-digit margins on those products to have dancing cactus on Fyndiq, yes, you can have 25% of our margin. But that doesn't mean once again that we cannot increase the commissions on the CDON. That is possible.
And we can also, of course, add on additional services that we have to take rate to increase.
Well, that's what I was getting at. Like in terms of the mix, maybe I said it wrong, what I'm saying, if you look at the mix of -- again, I don't know how each one of your things are, but when I look to start to become a Fyndiq merchant, I saw commission rates about 12% or 13%. And then I guess sort of backed into the fact that there's probably another 10% or 13% of additional take rate from value-added services. So I was really asking more about like that additional sort of 10% to 13%. I don't know if that's logistics, advertising, whatever other things you're doing. But I think is that applicable to CDON?
Sorry, we lost you at the end here. Can you repeat the question again? Sorry.
Like, when I look to become a Fyndiq merchant, I looked and it said, well, on average, it will cost some 13% sort of vendor commission rate. But then when I sort of looked at it and I said, if you guys are making a 25% or 26% take rate in aggregate, then the difference on average is value-added services. So what I was saying is, is the quantum of value -- like is there an opportunity with other value-added services that you're doing at Fyndiq to raise CDON's take rate, not necessarily commission rate, of course, on an iPod, you're never going to get a 25% take rate. But could you get a 5% take rate or 7% take rate of commission rates, but then add on those value-added services that Fyndiq is making almost 1,000 basis points on.
Yes, Adam, there is a potential for that. That's consisted for different -- for instance, from freights and product fees in connection with the commissions. And of course, we can harmonize that between the 2 entities or marketplaces, CDON and Fyndiq. So that can also be increased at the CDON part, so to say. The very commission itself, as Fredrik said, that's a little bit different story depending on the product and the suppliers. But all other services around that, we can harmonize an increase.
Yes. That's -- I mean that's sort of the take rate in aggregate. I mean, if you look at Amazon, we did some analysis on Amazon, they might be making as much as 50% to 60% on every dollar of 3P marketplace. There was an article [ on E-Handel ]. So I think there's a lot of room on value-added services, freight, logistics, whatever advertising SaaS fees. And so if we can sort of get that stuff going, then that's an opportunity to monetize our existing customer base. And I think it's much more important, at least, we've seen recently that having profitable merchants as opposed to this buying traffic is not the right thing. And so we're seeing sort of the benefits of that, and I hope that's in early development. So that's all good.On the accounting front, Thomas, you guys booked 1P -- sorry, you booked Fyndiq as 1P. I know that many auditors and accountants don't let you change your numbers in the middle of the year. That's very commonplace even in the U.S. But Fredrik made a comment on the last call that you had x million products and no inventory. So Fyndiq is very much a marketplace in -- so CDON, and Fyndiq is very much margin accretive in that it's high gross margin relative to the old CDON because we still have 1P there. What can you say a little bit about sort of transitioning the accounting next year to get Fyndiq and CDON sort of on a similar sort of GMV take rate sort of apples-to-apples comparison. So everyone can sort of see what the margin capabilities are and the incremental margins and all that. I mean is that something you can get sorted for next year?
We can always work on getting some like-for-like comparisons and some reference statements and so on. But from an accounting perspective and a legal standpoint, we can't change that because the drop shipment marketplace model for Fyndiq, which is then also as the 1P business for CDON. It has to be accounted in that way as it is. So you will always see the numbers in the quarterly report on the first page, which is the one according to the legislation. There you will see the difference in the business models, if we continue with those business models. But we can always, of course, try to do comparisons and show if it was working the same way what that should look like. But we can't officially report on that. The one we are reporting right now, as you know, in the end of the report, are the reference statements where we compare like-for-like periods. So we have the full quarter for Fyndiq, the full quarter for the total company. And that's the only one that we have in the reference statements right now.
Right. But I mean, at the very least, everyone can look at our balance sheet, you see that we have SEK14 million of inventory. And so for us to be doing this much as GMV on a [ SEK14 million ] inventory, there's really no argument to be made that it's -- that they're both 3P marketplace things. It's just an accounting sort of issue instruction, because that...
Yes. No, you're totally right. Drop shipment is not 1P per se. 1P is when you have your own inventory and you overhead the risk of having an inventory and so on, drop shipment, which Fyndiq has that is actually going. Fyndiq is the buyer and the seller of the goods, but it doesn't end up in any inventory owned by Fyndiq. The accounting of it shows the similarities as with IP. But it is the marketplace. So I wouldn't confuse by saying that 1P is the same as drop shipment, because it's not.
Yes. Okay. And I'll sort of terminate with this. Look, obviously, you guys have gotten this merger done. The stock has sort of been in sort of one way sort of downward spiral. We sort of learned that there was a sort of a single noneconomic seller that was sort of selling stock indiscriminately. And we sort of have a view that they've stopped. But I think the market is sort of having a hard time making heads or tails of what's going on. Obviously, there's been demonstrable progress sort of in the first quarter and second quarter, it sort of abundantly apparent to us.And I guess sort of my question back to you is, now that you're sort of sitting here and you sort of -- Fredrik has been there now, I guess, now for a few months. Thomas, you've been in the driver seat now for a while at CDON and sort of cut a lot of fat and purge a lot of unprofitable sales. I guess my question is, I mean what -- I mean EBITDA breakeven is a sort of a part, but like again, you sort of have been EBITDA breakeven for the first 2 quarters. We know that third quarter and fourth quarter is going to be obviously better because you have the take rates on a larger GMV number, you'll sort of be solidly EBITDA sort of breakeven this year. But I mean what can we expect in terms of sort of guiding people to like a normalized profitability? Because I think a lot of people are sort of looking at this and being like, okay, like the profitable rate, like I don't know if that number means [ SEK20 million or 250 ].I mean, where do you think you are in the journey in terms of sort of getting people to like a normalized profitability number based on this GMV? I know there are a lot of levers. There's the G&A, which is [ SEK40 million ]. That's not in the numbers yet. If you guys -- I don't know what you guys make on a combined basis, whether it's [ 20, 30, 40, 50 this year, 20 ], I don't care. But like I guess my point is, I think there's sort of a wide range of outcomes, and I think people are sort of overly focused on sort of this GMV development as the driver of the EBITDA. But I guess my question is, what is your comfort level to sort of say, "Hey, if our GMV sort of flat lines here and sort of grows at 5% or whatever, so what is that sort of normalized EBITDA of the business? And I know you guys are still early, you're sort of fiddling with take rate value-added services. But I mean, are you guys getting closer to sort of getting people to a point where they can sort of understand what they're buying on a normalized basis and then sort of work off of that in terms of sort of their opinion of GMV growth? I mean do you think you're sort of getting closer to getting people to that point?
I think we could say like this. As we said, Adam, we are EBITDA profitable or breakeven after 2 quarters. We are getting into the 2 better quarters of the year with higher turnover, higher GMV that should cater of course, for more profit. Our goal is at least to reach EBITDA this year. And then you have the synergy effects, the SEK40 million that will be fully realized in the end of 2024. That will also cater for a higher profitability. But we can't give any guidance on exact numbers, what should be a normalized EBITDA this year or next year because, yes, we can't do that. As you know, we don't give any guidance.
Do you guys -- do you guys have...
That you can calculate, Adam.
What's that?
I said you are good at calculating, Adam.
Yes. I'm okay to calculate, but I think most of the people that are on Sweden are on the conference call. And look, I don't begrudge them. I mean, look, I think it's been a very, very challenging journey for a lot of folks, myself included, with the spending on unprofitable marketing. And I think people sort of, sort of assume the worst and assume the worst. And I can do math. If you guys make SEK20 million, SEK30 million, SEK40 million, SEK50 million this year and you add another SEK40 million next year, and you got some take rate in this and that. This thing could be [ SEK100 million ] of EBITDA like that. And then when you really start flexing the commission rate and take rate, I see arguments for [ SEK250 million ] of EBITDA, assuming no GMV growth, but I think everyone seems overly focused on GMV growth. So I sort of can do math.And then separately, do you -- like we're getting into the point where we're anniversarying a lot of this bad sort of I think [ Jonathan's son ], question yourself so we got into the driver seat in Q3 and Q4 and CDON. So a lot of that bad spending on marketing sort of got cut out. I mean do you think that we're sort of going to be anniversarying sort of this bad marketing spend? And do you think we're going to sort of get easier comps on the GMV front? I mean, when do you sort of expect the sort of the market comps to get easier? Maybe this is a Fredrik question.
The marketing costs.
No, the market comps, like basically, the market has been negative. The market was very negative last year. It's continued to be market -- the market has continued to be negative this year, right? Now some of that, that -- so the market -- I'm sort of getting your -- trying to get your perspective in terms of when do you think the comps against the market, like the Swedish e-commerce market will get better? And that's one question.And the second question is, we are comping aggressive marketing spend. So Peter spent a ton of money when we talked about this, that the company was spending a lot of money on marketing and basically putting the whole catalog on the website, and that was inefficient, like we're spending a ton of money on marketing, and we were getting -- and we were also having unprofitable sales. So in the first 2 quarters this year, you're seeing the effect on GMV of pulling back on that marketing. So Jonathan and Tom has sort of got into the driver seat in third and fourth quarter. So do you expect to have easier comps on that sort of unprofitable marketing spend? That's one question.And b, do you expect to have easier comps on Nordic e-commerce? Fredrik, I hope that's clear.
It's very difficult commenting or commenting on future predictions on the general market. However, our ambition is to always gain market shares, no matter how the market is performing to adapting our product [ catalog ] in efficient marketing. And it's really hard to say now how will the market go up and down. We can see that it's been a tough market for about a year now, much connected to the inflation and interest rates, especially in Sweden and so on. When will that turn around can it be worse next year. Hard to say. Hard to say, if we are at the bottom now or halfway to the bottom or so.The thing I -- one thing I can say though is that we are really selling everything up to be prepared to catch the market when it turns around and make sure that we are focused on profitable marketing and that we can grow profitable when the tides turn around. And we have some spring cleaning to do both on the marketing channels, merchants, supply, ways of working and so on. And this is the spring cleaning that we're doing now, and we're not done with it. There are a couple of more months of spring cleaning, I would say. But then after that, we have a really solid foundation to turn around from that.
Yes. Well, look, the progress is definitely apparent to us. I think our only -- our only ask is that we try and find ways to stabilize our cost of capital because I suspect that your job in terms of winning new merchants and doing these things will be easier because I think the stock is very much disconnected with the progress that you're making. So we appreciate the hard work. And hopefully, you guys can find ways to sort of stabilize your cost of capital and sort of convert the progress that you're making with the company's cost of capital.
The next question comes from [ Drew from KWM ].
[Technical Difficulty] just a few questions for us. I'm going to ask about just the EBITDA [Technical Difficulty]
Sorry, Drew, Drew, sorry for interrupting you. We have a really bad line to you. We cannot hear your question.
[Technical Difficulty]
An alternative could be that you write your question in the chat if it doesn't work with the better line.
The next question comes from Drew from KWM.
Is this better connection?
Yes, super. Much better.
Sorry about that. So we have a few questions. You guys are guiding a breakeven EBITDA here on the short-term directive. Just kind of wanted to get a sense how you guys are thinking about second half of the year and why you're just focusing on the breakeven side of that? Is that a conservative should we be thinking about that on a conservative basis or...
Yes. We gave you some backdrop on that on the slide in the presentation showing the seasonality of the EBITDA. And -- what we're kind of saying is that as any other retailer, we are really back-loaded when it comes to the seasonality towards the Q4. And looking backwards, we have our happy months ahead of us and the bad months in the back of us. So, if the seasonality is the same as it used to be, it looks good.
Okay. So it looks good. So we could maybe think about that in terms of just being conservative, but saying that it looks good, looking at year-over-year trends, we can maybe assume that it starts [Technical Difficulty] to be just on ad revenue. Wondering if you can give any cadence? Any thoughts on when that may start to be a more meaningful contributor to the top line for you guys?
Yes. That's a good question, and it's a little bit connected to Adam's question before concerning take rates. This is also a value-added services that both CDON and Fyndiq [ haven't ] really nailed it. We have done some tests, especially on the CDON side. This is though a potential we see ahead of us, and we will focus more on this. So this is a hidden potential in the future for us that we believe in, but it's nothing you do overnight. You have to really find the right supplier and do this in the right way. But we cannot see that in contrast to all other marketplaces that are making a lot of money on this area that we couldn't be able to do the same. So we see a big potential in that as well.
Yes. I mean I think, I think I would ask, is there -- have you guys thought about maybe testing out more in that area, some type of strategy to see what it looks like near term? Or is it just something that you're telling us is of interest over time but just not a priority right now?
It's somewhere in between. We are doing some testing to be honest, as we speak, but we're not sure if we are on the right track and so on. So it's in progress. So it's more than something in the long future, but it's not something that will change overnight either.
Okay. Well, let me ask you another way. Do you think you're doing some testing won't change overnight. Let's assume that the tests are good, and you say, "Hey, this could be more meaningful. Is it something that you would come back to us on a call and say, "Hey, we're having success here. We're going to make this more of a priority because there's obvious success with it on other platforms. Just trying to think about you guys are viewing the potential there?
Yes, definitely. This is something I'm looking forward to get back to all of you on some quarterly call to address the -- how we're doing on that area. And as I said before, we have a lot of -- with the integration and so on to do the spring cleaning and so on, and this is more on nice basis, yes.
Okay. Then last question, just the -- you mentioned the new major electronics customer. Could you maybe just elaborate on the magnitude, maybe their impact to top line, maybe the size of that customer? Is it -- obviously, is it a regional customer -- just sort of just any details on how impactful the contribution to them to the platform could be? I think what I'm trying to get at here is not to give like an exact percent of sales that, that customer may be generating, but just how to think about how meaningful they will be to you guys going forward?
Yes. So this is a top-tier merchant in our top-tier category. So definitely, this is a huge potential to increase this. We will not guide on any numbers or so, but definitely, both top-tier merchants and top-tier category.
Would you say like they're now, for sure, one of your -- going to be one of your top 3, top 5 generating customers. Is that how we should think about it? Are they at that size or...
We'll definitely believe.
Definitely. We believe it's going to be -- if the potential is as good as we believe it's going to be definitely a subsea.
Okay. And I apologize for the bad connection. I was on my headset I bought from here in the States. I probably should have bought a headset [indiscernible] platform for the call. So maybe I'll do that next time. So thanks for the call.
No worries at all.
The next question comes from Adam Wyden from ADW Capital.
Yes. Actually, 2 small updates. No, I think that was very helpful from Drew, and it's actually my mind went to exactly where his went, which is a lot of the weakness that we experienced in the last, I would say, 1.5 years or so has been sort of no electronics merchandise or maybe overselling unprofitable electronic merchandise between VIP shop and mobile shop, the one fraudulent merchant and the bankrupt merchant. So obviously, we've had a shortage of electronics. That's sort of been an ongoing thing as it relates to the 4Q on both. I know Fredrik in our conversations, you've said that you guys have been very focused on making sure you have the right supply going into 4Q.Do you think that you can have this merchant sort of ramped up fast enough for the peak selling season in 3Q and 4Q, so you can get -- so you can sort of get that electronics merchandise. I know that those 2 guys, I think -- and again, this is going back in my memory now, almost 1.5 years. But like I think mobile shop was like over 10% of GMV or something or maybe -- I can't remember if we the bankrupt one or the fraudulent one, but they were both. Those 2 big merchants were like huge as a percentage of GMV. I mean do you think that if this goes well, that these guys can sort of replicate that GMV? And I'm asking the same question, [ Drew sort of ] laying the groundwork for it.
Yes. We think we're in that ballpark with this merchant. As we speak, we are testing some sales with them. And we believe if everything looks good, and they are happy, we will have the time to ramp up for the Christmas sales.
Okay. And these guys are large enough and have the bandwidth. And I mean I know that those -- I don't -- again, maybe Thomas knows, but when I sort of do my back of the envelope, those 2 merchants, VIP and mobile, the fraudulent and the bankrupt one, those guys could have been as much as 15% or 20% of CDON's GMV. I mean if -- again, you don't want to -- you don't know because you don't know the merchants inventory. But I mean, this is a big enough merchant that you guys could, in theory, replicate all the lost GMV electronics, if obviously, you get people with the site and it's not, they have the balance sheet and the inventory to sort of replicate those sales in theory.
The mobile shop and the fraudulent you're referring to, Adam, they were not as big as 20%, but between 5% and 10%.
One -- each, one was almost 10%, I believe, but you're saying that -- I'm just not saying 20% each, I'm saying like maybe 15% to 20% total across both of them.
Yes. And I would say more like 10%.
Okay. All right.
And this particular new one, yes, it had us possibility. It has at least equally broad assortment, if not better. And it has a very good reach over the Nordics.
Good. And as it relates to the Capital Markets Day, I mean, can you share a little bit -- I mean, I know you're obviously not going to give targets or anything like that, but I mean I'm just curious, you're obviously early in the journey or maybe not that early. Fredrik's been running a marketplace for a while, and I'm sure you've been studying CDON for a while and sort of know where the bodies are buried, and clearly you're seeing in the progress. But like can you talk a little bit about sort of what you sort of high level, like the types of things you might be willing to share with folks in November, because obviously, I'm just sort of trying to sort of set the table, like what -- do you think that you might introduce targets? Do you think it's more qualitative. I mean can you share a little bit about sort of what you plan to share, I mean at all about the Capital Markets Day, or why you decided to do it?
I can answer on the second one, but not the first one or the first one, it's too early to give some more details about the Capital Markets Day. But why we're doing it is to come closer to the market and to you investors and to get more reach on who we are and what we are planning and why CDON is such a great company and will become a great turnaround stock in the market also. So that's why we have this Capital Markets Day.
Good. Yes. I mean, look, the valuation is getting to the point now where our biggest fear at this point is that some sort of strategic scoops in and buys it or a private equity firm because when we sort of do our analysis on gross profit after marketing on an enterprise value basis, I mean, we're trading about 1/3. Now obviously, we're smaller scale and whatnot. But I mean, we're trading at 1/3 or 1/4 of where everybody else is. So I got to imagine you guys will be sitting here and being like, wow, we're making all this progress, we're purging unprofitable business. And I think in our -- I mean, things, I think, down almost 90% off the highs. I mean, I would think that you guys might be a little bit nervous that someone else sort of gets the benefit of all our hard work.So I think the sooner you get the cost of capital line and get investors comfortable with the progress that you're making the sort of the longer we can run with them all. So I -- in addition to this Capital Markets Day, anything you can do to sort of highlight it. I know you guys are Swedish, under promise [indiscernible], but there's a sort of a leveling effect here where you don't want people to take your sort of conservatism as fear or whatnot. So that's the sort of final point.
I agree. And then we also have a third quarter with us also to show the progress that we have been talking about and so on, and hopefully, with a good progress also on that quarter. So agree with it.
[Operator Instructions]
Okay. If there are no more questions, we will go into the chat, and then we have got one question from our friend, [ Adi ]. And it says congrats on the progress made. The stock is trading as though the company is going out of business. Can you please discuss at what level does it make sense to begin an opportunistic share buyback program?That is actually something that we cannot comment on. And if so, it will not be our decision here, but that will be a decision of our board. So we cannot comment on that, unfortunately.Then I don't think there were any other questions in the chat.
It looks like Drew is in the line again.
But we can take questions, yes.
Yes. Drew, have an additional question.
The next question comes from Drew from KWM.
Just wanted to ask -- just a little bit more about that large merchant. I think some of the questions that I have there, typically large clients, large customers to get other large clients, other large customers in a marketplace like this. I mean it certainly validates it when you get a big player on there, if they are indeed as big as you guys are making it sound. I think that a couple of extra questions are. Was this -- how did it come about that they came onto the platform? Was it you guys maybe approaching them to come on? And I wouldn't assume that there's any like negotiated take rate with them being a larger customer? Or do they fully on their initiative approach you guys that want to come on to the platform? If you could speak to that. And then the second part of that question is, would we -- should we start to think about there being other large customers in the pipeline? And can you just kind of talk about what you're seeing out there or what you're hearing out there about other big players coming on?
Yes. So if we're talking about the process to acquiring this merchant or get it to start selling on CDON, it's kind of a inverted correlation between size and time to get them on board. The big ones take quite some time and the small ones goes pretty fast. This one took some time, and we have -- I mean, we have discussions with a lot of the biggest merchants and resellers, both in Nordics and now we're also going very much looking into Europe as well. We have a strategy both focusing on these major players, but also to have a mass recruitment as well on different merchants and so on. It's not entirely just positive to have these giants and becoming too dominant in the marketplace. Sometimes you rather would prefer many smaller merchants, but adding up to an increased sales and so on. But this one took some time, and we also had some interesting more ones in the pipeline.
Of similar -- in the pipeline of similar size, or similar magnitude, in terms of brand or company size? Is that what you're saying?
So this specific merchant is in one of the strategic buckets that we have. And in that bucket, we also have discussions with a couple more of this site. Then it's really hard to say, will they start selling in 3 months or in 12 months or 18 months, but we are accelerating these type of discussions as well.
Okay. That's helpful. All right. Well, yes, I mean, again, one large client oftentimes will evoke other large clients to get on there when they start to see bigger players on there. But of course, it comes down to ASP of the items they have on there and then how many they actually have on there. Hopefully, this large client is going to put a ton of their products on there, and it will bode well for you guys. Okay. I think that's all. I appreciate the color there, and we'll touch base with you guys next time.
There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.
All right. That was the last question, and we have no more questions in the chat. Thank you, everybody, for your attention and really great input and questions and looking forward to speak with you again in 3 months. Have a great vacation for you who are having that ahead of you and a great summer for the rest of you. Thank you, and bye-bye.
Thank you.