Good day and welcome to the Schibsted Group third quarter 2017 Q&A conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Jo Christian Steigedal. Please go ahead, sir.
Good afternoon. My name is Jo Christian Steigedal. I'm the Head of IR in Schibsted. A warm welcome to this Q&A session in connection with the presentation of Schibsted's third quarter report for 2017. Thanks a lot for joining us today. Together with me here in Oslo are our CEO, Rolv Erik Ryssdal, our CFO, Mr. Trond Berger, and also my colleague on the IR team, Espen Risholm. I'd now like to hand the word over to Rolv Erik Ryssdal for a short introduction.
Thank you, Jo Christian, and welcome to all of you to this nice autumn day here in Oslo. Together with the team, I'm looking forward to answer your questions regarding our Q3 report, but please allow me first to make a short introduction. We are very happy to present a strong Q3 result for Schibsted with an EBITDA increase of 37%. As early this year, the growth is a result of achievements in both online classifieds, publishing, and Schibsted Growth. Let me say a few words on classifieds first. The third quarter was in many ways evidence of the strength of the online classified business model. With strong brands and market positions, the earnings power is significant, though the margins may fluctuate somewhat with marketing spend on campaigns.
Going forward, we aim to continue the good development by taking further advantage of our competitive strengths, strong local presence leveraged by joint scalable products and tech platforms. The verticals cars, real estate, and jobs had a solid growth in Q3. They are the main drivers for our growth. The background was product innovations, price optimization, and good market conditions in most of our major markets. We have also continued to decrease investment-based losses. This is a result of strong growth in monetization in emerging markets, including Brazil and very favorable operational metrics for Spain, which has reduced the need for marketing investments. Moving on to the media houses, I would like to point out that the publishing activities continue to deliver impressive results. Both digital advertising and digital subscriptions contributes to revenue growth in the quarter. The EBITDA margin is up from last year.
We're successful in signing up digital subscribers and are approaching a total of 600,000 pure digital subscribers across our newspapers. Let me also mention the great product development within publishing, where we're rolling out innovative news services regularly. VG is a star performer among our publishing operations with a revenue growth of 7% and an EBITDA margin of 20%. Before opening up for questions, I want to highlight the great development of Schibsted Growth, and in particular, the continued good growth for our personal finance business Lendo in Sweden. Revenue growth for Lendo accelerated 50% in Q3, and EBITDA margins exceeded 50%. I would also like to make a final note that we recently announced an adjusted organizational structure where media and marketplaces will be organized in two separate divisions.
At the same time, responsibility for most of our common product and tech initiatives will be moved much closer to the operations. This will help us gain even more speed of development and increasingly leverage our local competence and strong brands. Before opening up for questions, I'll remind you that the full presentation recorded on video this morning is available on our website. Now, I'd like to hand the word over to our operator, who will organize the Q&A session. Operator, please go ahead.
Thank you, sir. Ladies and gentlemen, if you'd like to ask a question over the phone at this time, please press the star or asterisk key followed by the digit 1 on your telephone. Please ensure that the mute function on your telephone is switched off to allow your signal to reach our operators. Again, please press star 1 to ask a question over the phone. We will pause just for a moment to allow everyone the opportunity to signal. We'll have our first person in the queue. Silvia Cuneo from Deutsche Bank, please go ahead. Your line is now open.
Hi, everyone. First, well done today. Great set of results. I have a couple of questions. First, on leboncoin, can you please talk about the recent small acquisition you made in the real estate vertical from SeLoger? How incremental is it for revenue and EBITDA? Then about display advertising in France. Although it was still a bit soft in Q3, the single-digit growth sounds a bit better than the low single digit you reported in Q2. Just wondering what's driving the improvement, and should we expect it to continue? Second question is about Lendo. Great performance there. My question is how much of the acceleration in the Norway revenue growth was driven by personal finance and marketplace services? Thanks.
Okay. leboncoin has recently announced the acquisition of Aval. That's the fourth player. It's A Vendre A Louer. it's the fourth player in the French market. I think this is strategically interesting, noting that SeLoger, the number one player, has acquired the number three player. I think that Aval will give leboncoin further strength in some urban regions where they were not as strong before. I think this is a good development and gives a new segment to leboncoin. I don't think, Trond, that we have commented on the EBITDA or any of the.
No, but I think some of these may be Public at least from 16 financial statement. It's a turnover and the EBITDA not in the size that we make any non-business stock exchanges as a result of that. I would say that the earnings is just a very few million EUR in as such. The important here is the product part.
Yeah. Compared to the leboncoin numbers, it's not that significant, but it's interesting product and it's interesting position. When it comes to advertisement market in France, we have seen an improvement. First, I'd like to add that I'm very happy that the leboncoin is doing so well in the verticals. That's really, you know, the strategically important part. As you noticed, this brand has also been picking up. I don't think we guided on that before, but we expect to have a continued positive development there. The final question was on Lendo and the impact from figures.
Yeah. Well, I mean, we, it has just a minor effect on the top line growth. If we haven't disclosed the detail of that.
I think we can say that the impact is fairly equal to the previous quarters.
Yeah.
It's not really the driving force of the acceleration.
Yeah. It is the underlying, the group performance. That's correct. It's really driven by the main verticals in FINN doing great. Okay. Thanks.
Thank you. Now we take our next person from the queue, Rasmus Engberg from Handelsbanken. Please go ahead. Your line is now open.
Yes. Hi. again, a great set of numbers. I wanted to ask you about Blocket in Sweden. you have received a competitor there that, as far as I can tell, has seen a significant growth in number of ads at your expense. You know, is this material enough that we might see Blocket's revenues decline going forward? Or is it a small thing?
Well, I can start off to Christian here. I think, they've gained some traction when it comes to ads, and that's natural, I think. However, it is not really coming at Blocket's expense. That is probably not really the case. On the contrary, I think that feedback from many in the market is that Blocket is actually producing leads in a good way, and it's an important part of their sort of mix of marketing and driving traffic to their content, so.
That's why we have not lost significant or lost ads. But of course, we take every competitor very seriously and, you know, we're looking at their products and see what they're doing. This, you know, just makes us work even harder on our products so that we can provide the most effective leads because we take this very seriously, but we believe we have a good plan for our own products.
Surely the number of ads, at least, I mean, I calculated them, they're down about 18%, since the beginning of September, and that's roughly equal to the number of ads that are on Wayke. Isn't that a significant decline?
I think what we've seen is that some dealers have obviously tried Wayke, but we have also seen some testing of the efficiency of Wayke compared to Blocket. I think that the feedback that we get is that Blocket is really important. Exactly the numbers, I can't comment on those specific numbers on October. That is. I don't have that ahead of me unfortunately.
Your numbers are not the same that we're looking at, but I'm sure that Jo-Chris can get back to you more on detail on that later.
Okay. Thank you.
Thank you. As a reminder, ladies and gentlemen, star one to ask a question over the phone. We will take our next person. Hubert Jeannin from UBS. Please go ahead. Your line is now open.
Thank you for taking my questions. I have a couple of questions on Shpock. You had mentioned in the past that you are looking at monetization, particularly towards the lower end of the used car market and in the UK and conducting pilots. I was wondering if it's still how is that trending? The second point, you had mentioned competition from letgo in Norway and Sweden. I was wondering if there's any update on that situation, if it's getting more competitive or getting better. Thank you.
To start with the last question, I think we're very positive when we see the development for our loan services in Norway and Sweden. We feel that the team has strengthened their position even further this year. We're very happy with that situation. When it comes to Shpock and monetization, it's right that we're going to experiment with different types of monetization, such as, you know, more display ads. We're also looking at some paid product. We're also looking at what we can do in the verticals, and there cars have been mentioned.
I think it's fair to say that we're working on that, we'll know much more about that, in, I would say, three to six months.
Thank you.
Thank you very much. Just another reminder, ladies and gentlemen, dial one to ask questions over the phone. There are no further questions over the phone at this time, gentlemen. I would like to hand the call back to you for any additional or closing remarks.
Should we just encourage the audience to to think again whether there are a few more questions since they're on the line.
We're all lined up here to answer your questions. Please don't hesitate if you have any. Thanks. If not, then.
Sorry. We have a follow-up question from Silvia Cuneo from Deutsche Bank. Please go ahead. Your line is now open.
Hi again. Just a follow-up on Facebook Marketplace. They recently announced they are moving into the cars vertical in the US. I don't know if you have any thoughts about what implications they can have if they roll out in other markets.
I think it's we of course, we noticed that. I think U.S. seems to be their prime place for experimentation, and we are watching closely what they're doing. We have not seen negative effects of any of our sites due to the Facebook groups or the Facebook Marketplace app so far. This is obviously something we're watching closely and following. Our experience so far is that the Facebook Marketplace has more expanded the total market. I believe that what we're doing is work closely with the professional customers in our market, and that seems to be a successful strategy for us.
Great.
Thank you. Now we take our next person from the queue with a follow-up question. Hubert Jeannet from UBS, please go ahead. Your line is now open.
Thank you. Just a follow-up question on Brazil, which seems to be doing very well. I was wondering if you could give a maybe a bit more color on how is it doing in the verticals, cars and particularly real estate? Thank you.
Well, it's doing great in cars, and continue to take market share from the two more specific vertical players like WebMotors and iCarros. We are constantly developing the product there. Coming to real estate, we also have invested and built up a new product that also now being launched more skewed towards the new construction. We see that the real estate market is a interesting opportunity in Brazil. It is large, but first of all, new construction is large and there are a couple of players, but we are, and we and Subito is I would say about the same size. I think there is a good opportunity in the real estate.
Thank you.
Thank you. Now we take our next person. Aditya Buddavarapu from Goldman Sachs. Please go ahead. Your line is now open.
Hi. Thanks for taking my question. I mean, just following up on Brazil, can you just talk about your longer term plans for that asset? Because it looks like you've executed some of your assets in Asia and concentrating more on LatAm. Do you think at some point you might try to gain maybe a higher stake in that? What are your thoughts on how your portfolio should look like in terms of the geographies over the next few years? Do you think there are some markets that probably are less important to you at this point?
Well, you know, we have concentrated our market or portfolios around the Europe and Latin America and we have a few sites also in North Africa, but mainly Europe. We have a significant presence also in Latin America. We're very happy with that portfolio as we believe that there's still a lot of growth to come in Europe. We believe also that our position in Latin America is adding an extra leverage opportunity for further growth. We're happy with that portfolio and don't have any plans to change it. As for Brazil specifically, as you know, we have just recently increased our stake from 25% to 50%, so we're very happy owners of that asset going forward.
Okay, great. Thank you.
Thank you. Ladies and gentlemen, as another reminder, star one to ask questions over the phone. There seem to be no questions over the phone at this time, gentlemen.
If that's the case, we'll be happy to be at your service for direct call, so please call or IR people or Trond and I could also be available. Jo Christian.
Yes. Thanks a lot for participating. Also finally, another reminder of our investor seminar in Barcelona, on the fourteenth of November. You're all welcome to join, or follow us on the webcast from that event. We'll go more into that on the classified as well as the presentation of the media division. A very good day to all of you. Goodbye.
Thank you. Ladies and gentlemen, that will conclude today's conference call. Thank you for your participation. You may now disconnect.