All right, I think we're exactly on the second here, [Christian]. G ood morning. Welcome to this quarterly presentation for the Q3 for Schibsted. I'm happy to see so many in the room, and I know that many are following us on webcast as well. As normal, it's Trond and me who will go through the presentation, but we have also the presence of our chairman and of Sondre and Didrik, so hopefully they're able to answer your questions. We will run the presentation relatively quickly, and then be sure that we have enough time for Q&A. It's been a very good quarter for Schibsted, to dive straight into it, these are the headlines. In the classifieds side, we see very positive development within all our big sites in France, Norway, and Spain.
It's really they're delivering well on the verticals, a very good quarter for them. A bit softer in Sweden, let's get back to that. We're also seeing that the investment phase has reduced their losses in this quarter. Let me get back to that also. Publishing is delivering very well, you can see that publishing has, albeit small, it's a positive development on the top line and a very positive development in the product development and also in the EBITDA. I'm very impressed by what they have been, what they're doing. For Schibsted Growth, we continue our expansion, and especially Lendo is showing a consistent and good growth, there are also many other good companies in that portfolio.
We have recently launched a new organizational structure, and let me start by telling you a little bit about that. The important thing for Schibsted has been to invest more in product and technology, and we've done a major step up there the last three to four years, which I think is absolutely instrumental for our success going forward. We'll continue to rely heavily and on our investments in product and tech. We have decided, though, to organize our activities in a different manner by making two focus division, one for media and one for marketplaces, and the product and tech will continue to be the driving force in these divisions.
By reorganizing it this way, we believe that there'll be opportunity for us to really take care to use our global scale within publishing and within classifieds, but still then bring the product and tech closer to the where the action is. The reorganization is being implemented as we speak, and it will be complete before the year end. The strategic goals that Schibsted have been working towards for many years remains the same. We said that we are here to create world-class digital media houses, and we are a global leader in marketplaces. Want to continue that development. Online classifieds, let us go into that. Let me start by taking one step back and just show you some...
Another way of presenting classifieds, where you see that our strong brands, and that are, have leading market position in their local marketplaces are really the fundamental what we're, our progress. You can see that most of the revenue comes from the verticals. Professional dealers, that we're working with in the verticals. This is where we have seen the most growth and also the where I expect to most of the growth to come in the coming years. In order to be the best partner, we need to continuously work with our product development. This is what I refer to when I'm talking about our investments in product and tech. This is where it's going to materialize in products that we're rolling out.
This is both for the media division and for the classifieds divisions. We are constantly working on developing new products. As late as this week, we rolled out a new dashboard service in Blocket in Sweden for car dealers. I believe, our, those services have been well re, received in other markets. We'll be able to tell you more about that also when we deep dive more in our Capital Markets Day. That will happen a few weeks from now. Leboncoin is delivering another excellent quarter. I think it's fair to say that they're firing all their, on all their cylinders. We're seeing that the cars is doing well. Real estate is their biggest vertical now. Has a very positive development. The smallest vertical, but the one that's growing quickest is of course jobs.
All three of them are significant contributors to the total development for Leboncoin. Display ads are a bit slower in this quarter, but we see increased margins, and we see also that they have traffic growth. I'd like to just remind you of, that, the margin in Leboncoin, as in other companies, can vary from quarter to quarter. Last year, we had a lot of marketing investments in the Q3 . This year we didn't have it, but we will have it in Q4 . I've seen some of the trial TV commercials. They're real good, so I can recommend them to you. Hence that will affect, of course the margin in the Q4 .
The important part for me is that there is a healthy underlying development in all of Leboncoin. Going over to FINN. I mean, I think they've delivered another very impressive performance here. Again, also here, all the verticals are really doing well. Of course, FINN is partly reflecting the development in the Norwegian economy, and we're seeing that the jobs is going well now. We can see that also geographically that things are more positive now on, in the West Coast than they used to be, of course, last year. So in the Bergen and Stavanger area, we can see that the jobs are picking up also in the traditional strong sectors, oil and gas.
Of course not back to the levels they used to be, we see a more positive development, a lso in the housing markets for those two regions. I think FINN has also a very good development in traffic and have spent on marketing, but they have, as you know, FINN has really reinforced their position even more in the Norwegian market throughout this year. An excellent, another excellent quarter from FINN. In Spain, it's a bit of a mixed development. We're seeing a very good performance in jobs and also in cars. Real estate market is hampered or is stronger competition.
We're seeing that the acquisition that we did in Habitaclia has been very successful, strengthen our position in an important region for us in Catalonia. Then of course, since we are meeting tough competition, we're investing in marketing like we're doing in other markets. I believe that is exactly the right thing to do. Of course, the question mark when it comes to the further development in Spain is the political situation in Catalonia. We just have to wait and see. Obviously, if there's an unstable situation or unrest, that's not good for business. Typically, we've seen some signs in InfoJobs, but it's too early to say exactly how that is developed.
In Sweden, it's a bit of a softer quarter from Blocket, especially display ads. They're not having the best development. It's also affected partly by the combination of Servicefinder. I think the good thing is that the cars, professional cars especially, continues to grow well. Also the jobs part in Sweden is becoming important now. We're working continuously on the product development there. In the other markets, other developed markets, I say it's a bit of a mixed development. The Italy, Subito, Willhaben, and also Hungary continue to grow well. They are have a growth rates around 20%. What's dragging down the total there somewhat is Ireland, where the real estate market has been very difficult for us.
Our traditional players in Italy and in Austria and Hungary are developing well. Right. Talked about the investment phase. We have said throughout the year and also last year that we'll reduce the spending. You see that also from quarter to quarter. Let me again remind you that there might be some seasonal effects. We expect that to a somewhat higher level again back in Q4. The trend is that it's reduced because the businesses are developing well, there's lesser need for investments. Brazil, I don't think there's any big news to report from Brazil in this quarter. As you know, we increased our stake from 25% to 50% in the summer.
It continues to develop well and has a good development both in traffic and also in the important verticals, especially then cars, and also doing well in real estate. To round off the classifieds part, this shows you the development of how Shpock is doing. For the most promising development we're seeing in Shpock now is in the U.K., where we're really seeing that Shpock is getting traction. We have not there been hampered by competition from Facebook. What we're measuring as the big general is Gumtree. What we're seeing is that especially in app usage, we're actually sort of past them with quite some margin. We're now testing out different forms of monetization as we look ahead. Right.
I think I'd like to turn to the media houses. You know, I'm impressed by the job that's being done in the media houses. An excellent quarter. I don't think, albeit a slow growth, at least a stable and a positive development of the top line and also a better economic result. I don't think many media companies, traditional media companies, can show the same development. I think it's really good when you see what they're doing on products, throughout the different media houses. Let me show you a little bit here. Last time we highlighted VG. This time we combined VG and Aftenbladet, which are similar in structure in many way, and also Aftenbladet has a good quarter. I think here you can see especially VG is showing very impressive results.
The product development, let me get back to that. Here you can see that they have a good growth in digital subscribers, and also are taking market share in the digital ads sphere in Norway. Excellent performance by VG and also then very good performance by Aftenbladet here. I think another encouraging signs for the media houses are what we're seeing when it comes to digital subscriptions. I mentioned VG's digital subscriptions and that of course for Aftenposten and Bergens Tidende, Fædrelandsvennen, Stavanger Aftenblad, and Svenska Dagbladet, we're seeing a very positive development in digital subscription. Now, this is an industry phenomenon, but I think our execution on this is actually among the best that I can see globally.
Here you can see that here are some offers from Aftenposten as development. What we see is that people are willing to pay for quality content, and also that there is a much higher pick-up rate among younger persons in this than for the paper edition. I think this is very encouraging. We've seen it in other markets when there is uncertainty or unrest in the society, then people turn to quality sources, I think. I think even in stable countries like Norway and Sweden, we're seeing that there is a positive demand for good quality content, and that's why we're selling more digital subscriptions. I think Aftenposten alone is close to, is it 100,000, Didrik?
Yes, I think it's past 100,000.
Past 100,000, yes. That is digital subscriptions. I talked about product development. Many things happening here. Personalized front page of Aftenposten being rolled out. For Aftenbladet, they've really been investing a lot in live coverage, live video coverage of big news events. Just yesterday I saw there was an incident in the airport, bomb, suspected bomb, and Aftenbladet immediately goes out and say, "We're transmitting live from that." Same thing for VG is really developing a lot of good new products. This is a new service. I believe it's in test, in [Delta, VG pine], which is next generation news app. You can see it's very different from the traditional news services.
I think it's going to be very attractive, especially for young public. I believe that with the reorganization that we're going through, we'll be able to put even more emphasis on the product development. All right. Let me finish up by Schibsted Growth. There are no big news there except to see that this develops well. Here you can see a positive development in the revenues. This is done excluding Hitta.se. You see that personal finance is getting even more important in the total, but there are also substantial business in price comparison and a number of other businesses.
Well, the star performer has been, as we've shown you before, has been Lendo, and especially in Sweden, they're doing well, but we have actually launched it in two other markets, in Norway and in Finland, and we see a promising development there. Scalable business model. Right. I think that was what I was going to say about the operation. Trond, I'll hand it over to you.
Thank you, Rolv Erik. If you look at the figures, it's certainly a good quarter. If you look at the breakdown, I think it's also important to notice that if you go into a classifieds operation, that it is really the main verticals that is most important for value driver for us, of course. Then real estate, motor, and jobs. Also we have a very small percentage of generalist. We're being asked if Facebook has an impact in any markets. We monitor, of course, closely that. We don't see that on our traffic position and on the revenues, and only 3%, 4% of the revenues also coming from the generalist private.
The advertising revenues is still, I would say, somewhat a challenging market, but we do see some positive development, and we're really working on getting better targeted product in the display ads. If you look at the P&L for Q3 , we have a 10% growth in operating revenues. That leads to NOK 903 million compared with NOK 756. We have a part of the other income and expenses. We have sold out Hitta.se in Sweden, and there we have a gain of approximately NOK 200 million as a result of selling out of Hitta.se. That leads to an operating profit of NOK 802 compared with NOK 354.
Again, a really good quarter, and going well in, most operations. If we break down, then, between, the two, quarters, 2017 and 2016, you see that it is then, the verticals, in France and Norway really doing well. Sweden, is, also, good on, the, car market but, again, hampered by especially the display market in Sweden. Spain, job and cars, and the other is a little bit, slow due to especially difficult situation a little bit in Ireland. The media houses, again, really good figures. Sweden, more normal, development that we have seen over the last quarters.
Again, about the same level on the other that we have guided leads to the NOK 903 figure. Looking at the different markets, you see that we have 22% top line growth, and margins are stable and healthy on our classified operations. You see that in the different markets that we have revenue growth of 23% in France, 21% in Norway. In Sweden, again, I said it's a little bit slow but underlying around 4% in the car, in Blocket. Spain, 27%. Other developed market also there, some underlying development of 14%.
We reiterate our guidance, meaning that we have a 15%-20% top line growth over the next or actually what we say immediate to long term. That is certainly then now reiterated. We also have guided that we do see in 2018 further reduction in the online classified investments as we do see good development in our underlying assets. So that will go down. Then in the product and tech, we also certainly will be in through the reorg, and we will also there see that we can probably take out some effects of the being closer to the operations, and the especially the vertical initiatives that we believe can be a positive contributor in those operations.
The CapEx is expected to be around NOK 100 million. If you look at the key financial figures, we have net cash flow from operating activities which is strong in this quarter. Net interest-bearing debt is ratio 2.1 net interest with debt or EBITDA and then t he CapEx about the same level as before. We're having something good financial position, and we're having also a maturity profile that we are happy with when it comes to our financing. The underlying tax rate is around 30% if you then look at our operations. We have a prudent tax policy, meaning that we don't take up then the benefit if we do investment in early stage in markets.
So, that leads us to the highlight for Q3. Just to say it again, solid growth in our core verticals. We're having positive development certainly in in the largest market and also reduced our losses in the investment phase and publishing. Really happy with the digital product development and also the development we're seeing as a result of the digital growth. Schibsted Growth continue expansion and then again, we have been through the reorg that Rolv Erik talked about. So, I think that leaves the Q3, Rolv Erik?
Yeah. I think it just remain up there. Let's get up the next slide to remind everyone here that we will have an investor seminar in Barcelona on the 14th of November. Hope that most of you can attend there. Right. I think that's actually we'll finish off the presentation there and then just open up for Q&A. As I said, you know, I see we have the chairman, we have Sondre and Didrik here. I see Gard in the back here also. I think we should be able to answer most questions hopefully. Please, let's start.
Henriette Trondsen, Arctic. First, congrats with very strong results. On investment spending, you expect that to come somewhat up in Q4. Can you give any further color on that? Also, how much of the spending in Q3 that was for Shpock in U.K.? Also a second question on Spain. Do you see an effect from Wallapop in cars?
Yes. Yeah, I can say. Well, first of all, we, I mean, we are somewhat reluctant to give too precise guiding since we have to model, do campaigns, varying from quarter to quarter. Put it a little bit differently, I think for the year 2017, I think that the consensus we have in the market for investment spend, that's okay for us. So, I think that's the only guidance I can give on that, meaning that we go a little bit up in Q4.
Well, Wallapop, so far, I mean, we're following what they're doing. We're watching them closely. So far, we haven't seen any effect on our business.
Yeah. Thank you.
Fredrik Steinslien from Pareto Securities. First of all, congrats on the good results. A couple of questions from me, if I may. First of all, can you comment a bit on a political, potential impact in Spain, elaborate a bit on what the potential outcomes and how this can affect your growth, just to get a sense of what the potential impact can be?
No, I don't think it's up to me to reflect on potential outcome. What I can talk about is how it may affect our business. If there's political unrest, then tends, that tends to over time, that tends to affect businesses. You know, what we then can see, and we see that in other markets, if the. It's a little bit like if there's uncertainty on the macro picture. It's the same science, really. You know, typically people will wait with their recruitments, and that may affect InfoJobs. In general, the advertisement spend might go down. That is what can happen, but I don't. It's not up to me to speculate in different outcomes.
Okay, thank you. On marketing spend across your developed phase, how would you comment on what the total marketing spend was in Q3 compared to, say, an average level over a year, for example, and how will this develop into Q4 contra Q3?
Well, I think we have to be a bit more granular than that. I think, you know, there are different businesses. They decide when and how to spend their marketing money and t hey're reacting to things in the market and following their strategic plans. It's not like that is decided here by headquarters. I think that will vary from country to country. I mentioned the example of France, right? There we know that there will be more marketing spend in Q4 . I think it's, it will vary a little bit from country to country.
Okay, last one from me. You commented a bit on monetization for Sphock. Can you elaborate a bit on that, on timeline and rollout, that you foresee?
I can say that we're experimenting with how to different models for payment. That will vary between, you know, display ads, you place that, and that you have special promoted things in the feeds and that you go into the verticals and try to develop tools for car dealers, for instance. If they work, it's all about providing leads. If you provide leads, then you can charge for it.
That's one general.
Mike Spechi from SEB. It seems like a quarter where signs are quite well aligned. A lot of good, good performance across all the assets. Are there any bumps in the road that you actually had this quarter, so the quarter could potentially been even better? You didn't mention anything that was on the soft side more or less.
Well, I think, we're happy with this quarter, and I think I'll leave it at that. I did.
Okay. Thank you.
Okay. Something from the webcast?
Okay. We have a few questions from viewers on the webcast. We had some technical issues here, but well, one question is regarding Sweden. Can you comment on the car market there? Give some sense of the importance of cars in Blocket and how early signs are in the market there from a new competitor?
Well, cars is a very important vertical for Blocket, no doubt about that. That's high priority for us to continue to develop that. That's why we're rolling out new products. We see that there's a new competitor being launched and we're watching them closely. I think this will only further encourage us to work even harder on our own product and to work to forge even closer ties with the important car dealers and deliver good products for them that can deliver leads. That's, I think that's what I can say at this stage.
Okay. Can you give some more color on the Norwegian housing market, which is slowing down? How might that affect the real estate vertical on FINN?
I think that's too early to say. You can have, you know. You can actually have a delayed effect if people put, spend much money because they want to market it. Of course, in the long term, if it goes down, you'll typically see fewer transactions. That's why I said that FINN is also reflecting the Norwegian economy.
Yeah. Regarding product and tech related cost, what can you say about the direction of that into 2018?
No, I think, we have said that, we aim for, same or, somewhat lower levels in 2018. That's the guidance for time being. We may come back in Q4 to give some more precise guidance on, the product that they're going into 2018. Continue to invest in product and tech for our services will be important for us.
All right, the final one for now, at least. Can you give some more color on Mexico? Can you give some comments on the development there?
Well, Mexico is really doing great on top line growth. Again, just to remind you that Mexico is a large market, but less developed on the vertical side. We have having a really leading position in the car and generalist market, and also real estate is very fragmented. Again, fragmentation is typically the situation, so it will take some time for really being able to see a significant contribution from Mexico but t hat's a promising, interesting market.
York Manske from Protector Insurance. In terms of your Shpock slide, it mentions that you're going after the car vertical. What do you believe you can take on incumbents there in terms of the car vertical?
I mean, since we have Sondre here in the room, perhaps you wanna answer that, Sondre? You can stand up here because there might be more questions coming to you, and he's here.
Sure. Yeah, I think, you know, just to reiterate what Rolv Erik said, we're focusing on the product development of Shpock, and we're continuing to investing in both the product organization and the markets we are in. It's following the natural journey of moving when you have a strong position in generalist, you start to move into the verticals and also start to move into the professional parts of verticals. Then in some of our markets, and we commented specifically on the development in U.K., you have strong players. It's a very interesting both classified market and a very interesting digital advertising market. The total advertising market in U.K. is by far the biggest in Europe. It's interesting market to attack, even though we have, of course, strong incumbent players.
I'm just curious in case of Spain and Wallapop has exactly the same position there in terms of what you're trying to do in the U.K., more or less. If you're believing you can attack U.K. successfully, then you should have this, you know, Wallapop should have the same chance to attack your Spain's position as well. I'm just curious what you believe regarding that case, and if there are any differences between the U.K. position of Shpock and Spain and Wallapop?
[I guess] the easy answer is that, you know, I guess nobody have the real truth on how it will develop. We just have to execute better than our competitors. We have done that in the past, and we will do it going forward.
I think it's fair to say that U.K. is by far the largest digital market per capita or in total in Europe. It's a much bigger pie in U.K.
Thanks.
Sondre will of course, be very central at the Investor Day, but now he's here now as well. If you want to take the opportunity to ask other questions about classifieds, please do so. If not, I think. Oh, you have one more from the web?
Yeah, we got one more on the end here. When you're rolling out Shpock into your existing markets, potentially others, if that is the case, what will be the risk of cannibalizing your existing marketplaces?
You take that, Sondre?
Yes, we are using Shpock as an important product in some of our existing market. Then we take a portfolio approach as we have done, for example, in the Norwegian market, where we see a good coexistence of FINN and Shpock together, and FINN is strengthening their position in this competition. Shpock is targeted towards younger users. Of course, we take a portfolio approach and balancing. We're giving our users in the market the best product portfolio.
All right. Seems that we've been able to answer the questions, so far. Thank you so much for coming, and we'll be available for your questions. There's also a conference call in the afternoon. Remember, see you in Barcelona on November 14th.