Hello everyone, and welcome to the Baltic Classifieds Group 2025 half-year results announcement. My name is Nadia, and I'll be coordinating the call today. If you would like to ask a question, please press star followed by one on your telephone keypad. I will now hand over to your host, Justinas Šimkus, CEO, to begin. Justinas, please go ahead.
Good morning. The start of the financial year has been very successful. The leadership in the core platforms remained as strong as ever. The number of customers and inventories saw healthy growth in each of our core verticals, and both B2C ARPU and C2C yields have increased double digits. This has resulted in a strong financial performance, with revenue growth over 17% and EBITDA up 18%.
In fact, I'm very proud that our EBITDA for this half of the year is almost equal to our full-year EBITDA three-year IPO, which is a remarkable achievement in just three and a half years period. In addition, we have expanded our industry-leading EBITDA margin to 79% and maintained cash conversion close to 100%. We continue to implement our capital policy. In July, we participated in the last Apax placement and bought shares for over EUR 13 million.
We paid down EUR 5 million debt in May and EUR 7 million in November, and the board has proposed an interim dividend of EUR 1.20 per share to be paid in January. Our platforms are one of the most dominant platforms in the world. The total portfolio is visited 9× per month by each citizen in the region. All three vertical business lines have excelled, achieving a record number of advertisers and increased ARPU in B2C and yields in C2C.
What is very important is that our core revenue streams, B2C and C2C, have achieved remarkable growth, with both segments reporting a 17% increase. In spring, we successfully implemented pricing and packaging changes for our C2C segments, which have resulted in double-digit yields growth across all business units. At the same time, the inventory levels remained at record high.
The changes to our B2C prices and packages in autumn, last, and this year at the same time, led to increased ARPU in all business lines: automotive 17%, real estate 19% up, and 12% growth in jobs, while the number of business customers were robust across all business lines. Our strategic pricing and packaging events launched in the first half of the year, setting us up with a great momentum for the second half of the year. Now I'll hand over to Lina to talk about financials.
Hello everyone. During the first half of the year, we observed sustained momentum in our core business, which remains well-positioned for growth throughout the remainder of the year. Overall, group revenue grew by 17%. Listing fees, B2C and C2C, which represent our core revenue stream, account for 90% of total revenue.
B2C contracted clients' revenue, contributing 50% of group revenue, grew 17%, and C2C individual listings revenue, representing 40% of group revenue, also grew by 17%. The non-core revenue streams performed well also. Ancillary revenue, primarily driven by financial intermediation and accounting for nearly 6% of total group revenue, grew by 22%.
Display advertising revenue, contributing approximately 5% of group revenue, increased by 10%. Across the business lines, all four demonstrated good growth. The core verticals, auto and real estate, leading the way.
Together, these two verticals account for 65% of the group's revenue and grew by 17% and 26%, respectively. The jobs and services business line grew by 17%. Within this line, jobs represents the B2C segment and grew 14%, and services, which is the majority of the business line C2C and accounts for 18% of the business line revenue, grew 28%.
The smallest business line, generalists, grew 4%. In overall, revenue growth has been driven by a growing base of advertisers and ads, as well as yield improvements across both B2C and C2C segments. Regarding yield improvements, as Justinas already touched, we have continued with a regular schedule of pricing events. At the start of the half year, we implemented C2C pricing changes across most of our platforms, which gave impact to the entire half year.
In September and October 2024, we introduced B2C pricing and packaging changes for auto, real estate, and jobs platforms, reflecting enhancements to our value proposition. These changes will contribute more to the second half of the year. In the jobs business line, due to the 12-month duration of most contracts, the impact of these changes will flow gradually over the course of the year.
We continue to observe strengthening network effects across all business units. Here's the performance of our business lines over the recent financial half- years. As shown, each business line remains on a consistent growth trajectory. Notably, group revenue for the H1 has doubled since our IPO compared to H1 2021. Our cost discipline continues to drive operating leverage, representing the largest portion of costs. People costs account for 15% of revenue.
Programming, development, and system administration all handled internally, with these expenses reflected in salaries. People costs increased by 16%, mainly driven by the team expansion. That's a 7% impact, and annual salary reviews, which had an average of a 9% increase. Marketing costs increased by 2%. The majority of the group's traffic is organic, with direct and unpaid search channels accounting for more than 80% of total traffic.
Paid search traffic remains minimal, keeping the total marketing cost at slightly more than 1% of group revenue. As a portfolio of brands, we optimize marketing expenses by leveraging our own websites for advertising, minimizing reliance on external service providers a nd this approach is particularly effective due to our ownership of Skelbiu.lt, ranked as the sixth most visited site in Lithuania and featuring strong vertical categories. Skelbiu.lt drives high-quality traffic cost-free to our market-leading vertical platforms through cross-listing.
That is a very unique portfolio setup and one of the reasons why we enjoy a higher EBITDA margin. Our IT costs, being third-party services, account for 1% from revenue, and other costs, being everything else we need in the business, including costs associated with running a public-listed company, account for 5% from revenue and grew 5% this year. In total, operating costs, excluding depreciation and amortization, grew 11% this half year.
In terms of profitability, with a 17% increase in top-line revenue and continued disciplined cost management, our EBITDA grew by 18%, and the margin expanded by one percentage point to 79%. In terms of the cash generation, we continue to be highly cash-generative, with cash conversion maintained at 99%. Cash generated from operations grew by 17% to EUR 34.2 million, and net cash inflow from operation increased by 18% to EUR 28.5 million.
Looking at other performance measures, adjustments to IFRS numbers remain limited. Adjustments were made for the amortization of assets from historic acquisitions and deferred tax. Adjusted operating profit continues to closely align with our EBITDA and also grew by 18%.
Adjusted net income increased by 21%, reaching EUR 27.6 million. During the half year, the company purchased and canceled 4.6 million ordinary shares, representing 0.9% of the issued share capital at the start of the year.
Adjusted basic EPS grew by 24% to EUR 5.7 per share. As previously mentioned, during the first half of the year, we generated EUR 28.5 million net cash from operations. At the start of the period, outstanding loan balance was EUR 50 million. Leverage ratio 0.5 ×, and the net debt EUR 27.5 million. During the half year, we paid final 2024 dividend of EUR 2.1 per share, totaling EUR 10.1 million.
Allocated EUR 13.8 million to repurchase company shares for cancellation and EUR 2.4 million for buying shares for future employee awards, and voluntarily repaid EUR 5 million to reduce gross debt. We ended the half- year with gross debt of EUR 45 million, a leverage ratio of 0.4 ×, and a net debt of EUR 25.6 million. Following the half- year end, additional EUR 7 million was voluntarily repaid, leaving us with EUR 38 million of gross debt. Our capital allocation priorities remain unchanged.
We intend to deploy the cash generated within that same year or shortly thereafter. We intend to return 1/3 of adjusted net income each year via interim and final dividends, split approximately 1/3 and 2/3, respectively. The interim dividend for the year 2025 was declared to be EUR 1.2 per share and will be paid in January. We will continue considering value-creating M&A opportunities.
All options for financing remain open, including using our cash, increasing debt, and even seeking additional equity capital. However, using own cash is the most likely and would most likely not affect dividends but might reduce capacity for share buybacks, and we intend using a combination of debt repayments and share buybacks from the balance of cash. Thank you. Simonas will now cover the strategic progress.
Hello everyone. In the next four slides, I will update you on the KPIs for each business unit. The structure of the slides remains as usual, but to enhance the clarity for the C2C segment in the automotive and real estate markets, we have added additional KPIs. Alongside active ads, we also disclose listed ads. The automotive market is performing well. The number of transactions has increased by 7%.
In Lithuania, the average car price has risen slightly, while in Estonia, it has decreased slightly. Overall, the average car price across both countries remains at the same level as the last year. In the middle right chart, you can see that private sellers have listed 1% more ads compared to the last year. The active ads shown in the top right chart represent the inventory level on the platforms, which has risen by 9%.
Additionally, average revenue per listed ad has increased by 18%, reflecting our pricing adjustments. In B2C segment, yield grew by 17%. Two main reasons behind the growth. Firstly, dealers had more inventory and had to purchase more slots. Secondly, our pricing and packaging event drove higher adoption of premium packages. In the bottom left, you can see that our lead versus closed-out competitors is very strong, 7× in Lithuania and 40 × in Estonia.
After a slowdown in 2023-2024, the real estate market has entered a growth phase. Market activity has increased, with the number of transactions rising by 4%. Average prices remain stable, and market sentiment among the brokers is positive. Both C2C and B2C dynamics are similar to autos. Private sellers listed 2% more ads. However, longer selling times had led to a 20% increase in the C2C inventory.
Pricing adjustments introduced in the late spring and C2C customer base segmentation have resulted in a 29% growth in yield per listed ad. I will give more color on customer segmentation later. The number of B2C customers increased by 4%, while average revenue per broker grew by 19%. This growth was primarily driven by an annual pricing and packaging event.
We maintained very strong lead both in Lithuania and Estonia. Our platforms are expected to be 24× and 15 × bigger than competitors. Let's take a look at jobs and services. Jobs market stays active. The unemployment rate remained at a very low level of 7.6%, and average wage has grown significantly, increasing by 10% over the past year. The market continues to provide a favorable environment for our business. Companies are investing in the recruitment and retention of employees.
As shown in the bottom right chart, our customer base grew by 2%, and average revenue per customer increased by 12%. As you know, the services segment represents the C2C part of our jobs and services unit. You can see the chart in the top right. This segment is the smallest one but grows rapidly, both in volume and yield. The number of active ads increased by 9%, and yield grew by 19%.
Our job board maintained a strong leadership position, with a lead of five times over the closest competitor, a nd this time, we also reported the lead of our biggest vertical services, Vertical Paslaugos.lt. The main competitor is the services category of our own generalists, Skelbiu.lt. As you can see, Paslaugos.It is 2× bigger. Our main generalist, Skelbiu.lt, in Lithuania accounts for 70% of the generalist business line revenue.
It is important to stress that it is not a typical generalist. Approximately 75% of its revenue is derived from vertical categories: automotive, real estate, jobs, and services. Therefore, Skelbiu.lt competes with our own market-leading verticals. As Lina said, Skelbiu.lt ranks as the sixth most visited website in Lithuania. We strategically leverage Skelbiu.lt to strengthen our vertical platforms. We have the cross-listing, which generates high-quality traffic for our vertical platforms, strengthening them even more.
Generalist platforms experienced modest growth. We had 6% less ads than a year ago. However, we increased yield by 12%, and our lead over the closest competitor in Lithuania remains as strong as ever, of 19 ×, and in Estonia, 3× . As always, we are rolling out a lot of improvements to our platforms. I would like to mention a few of them in the next two slides, starting with autos.
In Autoplius.lt, we have introduced a market demand assessment tool for dealers. This tool leverages the platform's data to generate the score that reflects supply and demand conditions. Additionally, we have enhanced our support for dealers by offering a car- buying tool. This tool facilitates the sourcing of the vehicles from within our platform. Furthermore, a car history check service has been incorporated into the premium B2C packages.
At Auto24, we have introduced value-based pricing for our basic B2C package. It features a similar logic as C2C value-based pricing. Price per slot is higher for more expensive cars. Additionally, we have broadened cooperation with our partner bank to enhance car financing products by offering a bullet loan option for car buyers. At Aruodas.lt, we have implemented a segmentation system for C2C self-service customers, which I have mentioned before.
It allows us to apply different monetization strategies for different segments, like private sellers, developers, and agents. Additionally, we have introduced a new B2C package specifically designed for co-living projects. At KV, we have significantly upgraded our map search functionality. We improved accuracy and focused on user experience. We have also elevated the quality of our listings by integrating data from the state registry. This streamlines the listing process and also minimizes inaccuracies.
Let's move to jobs. At CVbankas, we have developed a proprietary AI matching tool. It leverages large language models and custom embedding technology to match job offers and CVs. We already utilize the model to recommend the best applicants for employers. It saves our customers time needed for hiring. The model has a wide range of potential applications, including advanced search and CV database, recommending job offers to both active and passive job seekers and more.
At GetaPro.lv, we have introduced a value-added service. It allows service providers to boost their visibility or to boost the visibility of their listings. At Skelbiu.lt, we have improved our fraud prevention program by incorporating additional security measures into the buyer-to-seller chat application.
Users are now required to verify their identity in case they are sharing some sensitive or potentially fraudulent information. Otherwise, users cannot continue the conversation. Now, I would like to hand back to you, Justinas , to finalize our presentation.
All right. Thank you, Simonas. The underlying markets we operate in are in recovery, with an improving macroeconomic environment driving demand in the autos, real estate, and labor markets. The inflation has slowed down, and the region returned to real wage growth, with an increase in customers' and consumers' purchasing power.
In addition, it's important to remember that the Baltics has been the fastest-growing region in the European Union over the last few decades. This is largely attributed to high export growth, vibrant employment market, and strong credit profiles, both public and private. This environment has created great opportunities for our customers, as well as our company, to take advantage of the growth and generate profits.
Looking forward, the board remains confident in the outlook for the second half of the year, driven by the successful implementation of pricing and packaging changes and continued momentum across our businesses.
For the second half of the year, the board is expecting the revenue growth of at least 15%, with autos, real estate, and jobs and services segment projected to grow above this target, while the generalist category is expected to grow below the overall group average. Growth will primarily be fueled by B2C ARPU and C2C yield expansion, with inventory levels anticipated to remain in line with those observed in H1.
This implies an upgrade to full-year revenue outlook after the overperformance in H1. The board expects an EBITDA margin for the financial year 2025 to expand by one percentage point compared to last year.
In terms of capital allocation, the board remains committed to its current policy, prioritizing the use of excess cash to both reduce the gross debt and continue the share buyback program, particularly in the absence of compelling M&A opportunities. Thank you for your attention. Now it's time for Q&A.
Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad. If you would like to remove your question, please press star followed by two. When preparing to ask your question, please ensure your phone is unmuted locally. T he first question goes to William Packer of BNP Paribas. William, please go ahead.
Hi, Justinas. Hi, Lina. Thanks for the presentation. Three questions from me, please. Firstly, it's great to see the outlook upgraded. Could you help us think through the inventory assumptions underpinning your H2 guidance? Should we think, for example, you're assuming flat inventory?
If so, isn't there upside risk, particularly in real estate? R emind us, your model is simple as a 10% growth in inventory leads to a 10% additional growth in revenue. Secondly, inventory has been a tailwind for some time, which is very welcome, b ut for some of your classified peers, they've had more challenging inventory trends recently.
How do you think about de-risking the business from a reversal or weakness in inventory, which may come down the road? Is that a strategic priority, or should we think of inventory volatility as a fact of life and the job of ARPU growth to outweigh that when that comes?
T hen, the final question on M&A, the tone seems to have changed again. Is it fair to observe that you're stepping away from doing deals as the competition for assets and therefore prices is simply too high a nd therefore, back to focusing on returns. Any color there would be helpful. Thank you.
Thank you for the questions. As always, quite a long list. Hard to remember all of those, but just made a note.
Always. All right.
But just remind me if you want to elaborate on any of those.
Yeah, sure.
So on the outlook, I think that you are very correct. In the second half of the year, we expect that real estate will outperform, given the current performance and successful C2C and B2C pricing events. The inventory levels on the second half of the year, we expect to be the same as in the first half of the year.
So inventory levels, kind of we assume that it will be flat or growing low single digits. Also, talking about the inventory, inventory had already minimum impact in the first half of the year. If you see the number of ads grew low single digits, because we need to look at the number of listed ads and number of business customers to make the right assumptions. So basically, already this year, we are back to the normal level of inventory.
The growth in terms of inventory is expected to grow in line with macroeconomic, let's say, GDP growth. I think that the marketplace business has a great position. Basically, when you have a headwind of inventory, so it means usually the macro is performing very, very well. When the macro is performing very, very well, so usually the marketplace presses more a pricing lever.
In opposite, when you have a tailwind of inventory, it's likely that the macro or underlying is performing less well. Then you have a tailwind of inventory growth, which also helps you to grow the business. Basically, in both scenarios, in both macro scenarios, the strong leading marketplace has the tools to grow the business.
Basically, until there are not really huge variances, for example, I don't know, unless the economy is not skyrocketing or not crashing completely, so the sweet range for the marketplace, it's kind of quite large. Basically, you can perform quite well with -2 macro or +2 GDP growth macroeconomic environment. The third question on M&A, I wouldn't say that our tone is lowering.
We are interested in M&A, and we are looking at different M&A deals. I guess maybe after the first half of the year, our tone was a bit higher because we knew that there will be an attractive asset coming on the market, which it's likely we will participate in the competition. We did participate, but we kept all our criteria, being disciplined in pricing, we're being measuring and benchmarking the quality of assets compared to our own assets.
In the end, we did not win that asset. Thinking about looking at the past, we looked not at a single target. We looked at quite a few of them in the last three years. I think that we will continue the same practice, but also keeping the discipline in line.
I think that I have said many, many times that we are very fine not to acquire anything, but continue with our share buybacks because we think that our company and our shares are highly valuable, and our assets are really premium assets. At the same time, if there will be an asset to acquire, we will look at it opportunistically. If we like your market position, if we think that it's reasonably priced, then we will look at it.
I think you've answered everything. Thank you very much.
Thank you.
Thank you. A s a reminder, if you would like to ask a question, please press star followed by one on your telephone keypad. Th e next question goes to Ciarán Donnelly of Berenberg. Ciarán, please go ahead.
Hi, yes. Thanks so much for the presentation. A couple of questions for myself. I guess, firstly, could you just run through the outlook in terms of the key underlying drivers for each of your markets, auto, real estate, and job services in calendar year 2025, so I guess FY26 and onwards, and how they align in terms of the KPIs and whether they'll be supportive?
T wo, maybe just on your comments on the M&A process you participated in that you referred to in the previous question, could you give us any sense of which end market or country? That was it. Thanks.
All right. Thank you, Ciarán , for the questions. So on the second half of the year, we assume that the inventory has stabilized and returned to the normal levels. So we anticipate that the inventory levels will be similar to H1, applying low single-digit growth or being kind of closer, I don't know, stable, I would say, with low single-digit growth.
T he assumptions for the growth will be mainly pricing events, which we had already in May and in October. So basically, those both pricing events will have full impact on the second half of the year. On M&A, I think that maybe just a bit I'll give a broader answer. We really are true believers in a marketplace business.
The key criteria for us when we are looking at the marketplace business is how dominant is the business, how high the leadership, how much bigger is compared to the closest competitor, b ecause if it has a high leadership position, so it means that this business can have pricing power.
Overall, most of the marketplace businesses are low in monetization because the take rates of 3% or 4% or 5% or even 6% are much lower take rates compared to any other online marketplace business, including eBay, Airbnb, Booking, Spotify, Uber, and etc. We think that if you have pricing power and the combination that you have also low monetization, you can continue growing the business. This is for the key criteria is what we are looking at.
In terms of the territory and in terms of the countries, we are interested in well-developed countries, including we consider the Baltics to be well-developed countries, including Scandinavia, Central Europe, Western Europe, b ecause it's important for a well-functioning marketplace, it's important that underlying markets are well-developed, like the property market is well-developed, the automotive market is well-developed, the jobs market is, there is a healthy economy and well-functioning economy for that.
So this is how we look, and then if those criteria are met, we look at valuations, and we have a very good benchmark. The benchmark is our own valuation, and overall, we think about our own assets very highly. We think that these are the premium assets in terms of the leadership, in terms of being still low in monetization, and we compare the other assets to our own assets.
W e always have this choice, either to acquire another asset or to buy our own stock. T hen we make a decision. So it has to meet many criteria, including leadership, price of the asset, and then for us, it's again always a benchmarking to our own. So to summarize, we are very happy to do M&A, and we have done M&As in the past. At the same time, if we don't do, we are also very happy purchasing our own stock. So we are not kind of, we don't feel the pressure to do M&A.
Maybe just one follow-up. In terms of the specific process you referred to, was it within your current markets, or was it outside M&A market in terms of geography?
It was not in our markets. It was in Western Europe.
Perfect. Thanks.
Thank you. A s a final reminder, if you would like to ask a question, please press star followed by one on your telephone keypad. We'll pause for just a moment. W e have a question from Fiona Orford- Williams of Edison Group. Fiona, please go ahead.
Thank you. Just a couple for me left. First of all, on pricing, I mean, you've talked about getting pricing events through in May and October. Where does your pricing sit next to the competitors? D o they use your pricing events to move theirs up, or do they see it as an opportunity to try and take back some market share?
I'd be quite interested in your thoughts on that. T he second is just a technical one. When you're using some of this cash for repaying the debt, are there any penalties for doing that? Thank you.
Thank you, Fiona. So I'll answer the first question, and then Lina will help me with the second one. So on the first question, it depends how we look. Our prices are much higher in absolute terms compared to our competitors. But if you look in related terms, let's say price per lead, so we are in many cases cheaper.
So to give you an example, we are 5× more expensive than the closest competitor, but if we deliver 10 × more leads, so in fact, we are twice cheaper. The pricing events, usually the marketplace business is the type of business where the winner takes it all. So the more you push your own prices, the less you leave on the table. B asically, the less money is being spent on your competitor's sides.
So usually, our pricing events are a negative thing for our competitors a nd they can't use it in their own advantage. Lina, would you like to take the second question?
Yes. In terms of the second question, our voluntary repayments of the debt is a part of our agreement with the lenders. So no, we don't pay any penalties in relation to that. We do have to cover expenses that lenders experience as a result of our repayments, but those are in a few hundreds rather than anything significant.
Okay. Thank you very much.
Thank you. It appears we have no further questions. This now concludes today's call. Thank you all for joining. You may now disconnect your lines.