All right, I think it's 9:00 A.M. Let's start. Welcome to this Q3 presentation for Schibsted. We have a program for you that looks the following. First, I'll be going through the highlights and then some of the main businesses. Our CTO and CPO, Rian and Terje, will go through some the most important developments in product and tech. Trond will take the financials, and then we'll open for a Q&A. There are representatives from senior management present, and also the chairman of the board is present. Warm welcome to all of you. The highlights for the Q3 looks like the following. I would say there are no big surprises from our side. We're continuing and executing on the strategy that we have outlined.
If you look at the online classifieds, it's continuing to go well in France. They are delivering, and we'll go more into that. It's a good quarter for the big classified sites in Scandinavia, Blocket and FINN. As expected, and as we've told you previously, there's a slowdown in the Spanish market, mainly due to a macroeconomic situation. I'll get back to that. We're seeing also that the other parts of the portfolio, both the developed markets but also more in the emerging markets, are having an interesting and good development. For the media houses, there's a lot of development going on, new products being launched, great journalism, and we're doing well when it comes to selling digital subscriptions.
You can see that, although the ad markets are still tough, then the increased digital subscription sale, in combination with the cost reduction, provides good results for that division. Also helps, of course, by the positive development in Schibsted Growth. We continue to roll out pro-products in product and tech. Terje and Rian will get back to that. That is very important for us, and they will continue. We're having an exciting pipeline of products coming out now. This is very important. This is about providing the best products. We'll continue to build that also into the next years. Right.
Let me start with the classifieds, there you can see that of the four big markets, we're doing well, as I said, in France, in Norway and in Sweden. Spain is somewhat slower, and it has to do with the macroeconomic situation. You can see also that the other developed markets are really starting to fire on their cylinders. Let me show you this overview because many people are interested in of the composition of the classified revenues, and that's why we provided this one. There you can see that the majority of our classified revenues comes from the big verticals. Real estate, motors, and jobs are really the core of the classifieds, has been that.
What we've done the last years is to develop more into those verticals. We've done that either from our generalist positions, like in France and Sweden, or by developing our vertical positions, like Spain further or by doing targeted acquisitions within that field. That has been our strategy and continues to be our strategy going forward. Let me start by leboncoin. I think leboncoin is developing very well. It's a very solid company that is has a great organization, is doing very well. They have continued to develop in real estate, so they're very popular among the brokers in France. They are also continue the growth in cars.
What's the exciting part with leboncoin now is really the launch that they've just done in jobs. I think it's early days, so it's too early to say exactly how that will go. But to me, the start looks promising. They just launched this fall a paid offering to the recruitment companies in France. That's why they are continuing to market the site. You can see that also in the numbers. They're increasing their staff, naturally, to get more salespeople, but also more in product and tech. In Spain, we're seeing that it's a good development for cars and real estate.
What has been hampering in the growth is that recruitment, due to the macroeconomic situation, has been so much slower than previously. Also the display ad market has been slower. You can see that we've had also a high marketing spend in this quarter. We'll continue to spend on marketing. It's very important. As you know, it's a competitive situation in especially the generalist market, but also in real estate in Spain. I'm confident that we are rolling out the right products in that competition, but we'll continue to spend on market really to be ahead in those market segments. Norway, I would say it's going better than some would expect with the Norwegian economy. That's also helping FINN.
Whereas real estate is relatively flattish, the volume is actually down. It's being helped by the FINN staff developing new products that, for instance, targeted the ad products. It's really helping to boost their also the performance for their customers, but also then the revenues for FINN. Cars and jobs are growth drivers. What I'm saying is getting better with the Norwegian economy. It's really that we're seeing growth in jobs volume. What we're seeing on the West Coast is more than compensated by a positive activity in other parts of the country. Central part of the Oslo area with a good growth there, especially in constructions and new buildings.
There's also a positive sign is that Torget, the general site, is now growing for the third consecutive years, healthily in volume. In Sweden, it's been a good year so far for Blocket. They've been helped by a good car market in Sweden, and also good potential. They've also had a positive development in jobs. Please remember that a year ago, in the Q4 , we did some price increases in Sweden, which was successfully implemented. That has, of course, helped the three first quarters this year. You'll not see the same effect in the Q4 . We've highlighted some of the other, what we call the other developed markets, because they are showing a good development, both individual but also on aggregate.
I would say that willhaben is not the biggest player, but they are the Austrian company where we have a 50% stake. They're getting an interesting position with both good growth and also healthy margins. Subito is growing top line and is looking to take a bigger part, especially the car markets. When it comes to the spending, this is a new overview we made. It shows you that the joint ventures that we have been participating in for a number of years, you can see that they're on the right track because the blue staples there shows you that the aggregate results is going down. That is because some of them are turning into a break-even position, of course. The spending there is going down.
The reason why the spending then is still held at the higher level there is that is the investments in Shpock and also some of our, I would say, promising development that we have complete control of, such as Mexico and Morocco. Shpock, well, first Brazil. I think Brazil is doing very well. What is exciting is that they continued their good traffic growth for a long time, and they're also now looking to monetize and start monetizing. In July, they started to monetize the positions they're having in real estate and motors, meaning that car dealers, real estate agents who post more than two items, they need to start to pay.
What normally happens at that stage is that then the volume drops, but the revenue goes up. That is exactly what has happened in Brazil. That has gone as expected. Right. When it comes to Shpock is doing, having good development in the markets that we're in. It's especially Germany and U.K., where we're spending money on Shpock. They're also present in Norway, Sweden, and Italy. It's especially Germany and the U.K., where they have a leading position as a native app. The recent rise in traffic there and the number of new listing has to do with some successful TV campaigns that was done in Q3 in both U.K. but also Germany. That's the classifieds.
Let me turn the attention to the media houses. There's a lot of activities going in the media houses in Norway and Sweden. I'm proud of what I'm seeing because there's a lot of innovative journalism taking place. I could have mentioned many examples. I'd like to mention this one, where Aftenposten is really setting the agenda and challenging the role that Facebook is playing as an editor. Thought that was an interesting debate. As you know, that received worldwide attention. An example of our journalists and editors setting the agenda, what's happening. What we're seeing for the media houses is that the number of subscriptions that people are willing to pay has gone up.
That's a general trend, not only for us, but we're also seeing, you know, among other players in Norway and in other countries, that people are willing to pay for quality content. Of course, VG and Aftenbladet has lower price thresholds for their plus services, whereas for the subscription papers, this is a more important and bigger part of their total revenue. There we have a goal for the four subscription newspapers in Norway to reach 100,000 subscribers by the end of the year, but they achieved that in October. That's good. Of course, what is more challenging is the ad market, I think we're all seeing that. In Norway.
Although had see some positive job signs with FINN, of course, the total ad market in Norway has not been the best this year. Also, you can see that, of course, Facebook and Google have increased their market shares. What we're doing now is developing our own products, and I think Rian and Terje will get back to that are very good, and hopefully will give a positive effect next year. It is a relatively tough market. Also rolling out new products in Sweden. There you can see that the ad market in total is better and more healthy than in Norway.
Looking at the results for the media houses, the results are positive this quarter, and this is a combination of course, that we're seeing some positive effects from digital subscriptions, but also then cost restructuring which has been taking place, and some restructuring within the newspapers and of course, not least within the print and distribution business, there's been substantial cost savings that's helping those results for this quarter. Schibsted Growth is continuing and is becoming quite a sizable business. What we're seeing there is a good growth, especially in Sweden for the marketplaces Lendo and Compricer, which are both growing rapidly. Also Prisjakt, the price comparison site is doing well.
That's the main headlines for the businesses. I'll like to invite Terje and Rian up to give an update on what's happening within product and tech.
Thank you. Thank you, Rolv Erik. We'll do a very quick update. We had Investor Day presentations in London and New York in September, we're basically outlining this message, and I'd just like to re-emphasize and repeat here. We are making very significant investments in product and tech. This is an important initiative for our business, and it's really to unlock and enable long-term growth. Key to this is ensuring that we can speed up our ability to develop and deploy products in all of the markets across all the product lines that we operate in, because we live in a very dynamic and rapidly changing market and environment where user behavior needs, new competitive threats, et cetera, are emerging on an ever-increasing basis.
Our ability to respond to this is going to be paramount not only to our survival, but also to our future growth. At the same time, we're very narrowly focused on ensuring that we broaden some revenue streams, not just applying technology for survival, but actually looking at unlocking new opportunities. A key part of that, of course, is ensuring that we understand our user data and how we can best apply very tailored and targeted products to our audiences and ensure overall ARPC. We had this event in Barcelona in September we call Reboot, which is really sort of the culmination of a reorganization that we have been doing over the past 12 months.
The single focus and purpose here is really to bring our entire technology and product organization on a global basis together as one organization with a single focus on increasing our ability to unlock new potential, to increase efficiency, and of course, also to accelerate our ability to get products to market. It was a hugely successful event. We've got, you know, incredibly positive feedback. We're already just over four weeks have passed since we held this event. We're already starting to see great initiatives come out from new partnerships formed across the globe. Of course, they remain solely focused on this mission, which is to build scalable platforms and reusable components.
What's happening behind the scenes of all the brands that we have is a relentless focus on building highly scalable platforms that we can use across all of our product lines in all of our markets across the globe. We've got great traction and very, very positive results in publishing, where most of our media houses are now running on a single publishing platform, and our newsrooms are able to build products and get content to their audiences in ways that they previously couldn't even imagine. Very, very positive traction and results there.
Advertising platforms, of course, Rolf Erik mentioned that, you know, there are challenging, macroeconomic situations, especially here in Scandinavia, but we are responding and adapting by ensuring that we've got the right product offerings for our sales forces to be able to go to market and ensure that we can drive the effect of CPM of our advertising products, and ensure that we've got both a good guaranteed business and response to the changing ad market, and have good offerings in programmatic and of course, also in mobile. The enabling technologies are a key part for ensuring that we are able to get these products to market as quickly as possible, and that we have reusability and extensibility regardless of the business line and regardless of the market that we're operating in.
Today, we'll go a little bit more into marketplaces, and I'm going to hand over to Terje Seljeseth, our CPO.
Thank you, Rian. I will give you some update from the Rocket project. Before I go there, we are working with the verticals as well. Have a number of initiatives on the verticals for improving the monetization, ARPU, and so on. That is a busy area for the time being, for sure. As Rian said, I will focus a little bit on the last news from our Rocket. It is actually taking off a bit. We are using this as a testing site for all the new technology that we are developing, so this is really very exciting for us to follow.
The first results, these are the number of downloads and repeated usage of the app in the first market that we have launched in. This is a MVP, so we haven't launched all the technology that we are really planning to launch there yet. We see some very positive results in the numbers already. This is perhaps the most exciting thing to follow for us for the time being. Later, of course, this technology that we'll test in these markets will be reused in a lot of other sites and applications. We are developing a lot of other services that are also used in the Rocket platform, by the way, messaging and notifications. There again, we are starting to see some interesting results.
One thing is that we have improved the engagement in the sites only by launching the new messaging service. When we are in addition launching the new notification service, we see that the numbers are getting really interesting. Reduced time for replies, increased engagement, and efficiency on the site. These are some first results from the technology building that we are doing. Yes, to summarize again, we are increasing speed. I think that is the most important message to leave you with in development, both because of the reorg, one organization, and the technology that we are building. Thank you.
Thanks.
Thank you, Terje and Rian. We'll go through the finance in Q3, happy to report that Q3 was a record quarter. Looking at our performance historically, we had gross operating EBITDA of NOK 756 compared with NOK 672 last year. That's a good underlying results in most of our companies. Also, if you look at that we have been able to take down costs more than we have increased the revenue, there is an operating leverage also an improvement in this Q3. We have continued to invest, of course, in both, in new markets like with Shpock, Mexico and Asia. That's about the same level as we had last year.
The JVs, as Rolv said, has come significantly down. We have a fairly stable situation when it comes to depreciation and other income and expenses. This leads to profit before tax of NOK 392 compared with NOK 965 last year. Bear in mind that in 2015, there was a significant IFRS write-up of the investment in Shpock. That was a technical thing that actually is not really comparable with 2016. If you split the EBITDA between the years, you see that we have improved the operations, of course, than in France. Exciting to see now the new job launch. Also, the more mature assets that we have in Norway and Sweden continue to grow nicely. That's good to see.
Spain has been a little bit of a struggle due to both a little bit macro display and some slowdown that we hope will improve somewhat going forward. Also we see significant improvement in other online classified operations. Continue to take out efficiency in media houses, both in Norway and Sweden. We have stepped up, as we have said, the product and tech in order really to get this one product organization. Looking then at the different segments, you see that we have a good growth in EBITDA if we then strip out the investment phase, first of all, then in the emerging markets. Steady growth over the last three years.
The media houses, both in Norway and Sweden, we've been able to keep the profitability and also increase it in Sweden. Sweden includes then Schibsted Growth, and we have then a strong growth like in Lendo, and also Prisjakt is doing very well. The results in the media houses, we are currently happy with. Fair to say that we have a challenging advertising market, more in Norway than in Sweden. We are working with new product to offset that. We have a good growth in then investment phase operations. You see that we have an increase of 69% in revenues, comparable figure last year. We have taken down substantially the investments, first of all in JVs.
It is really contribution from countries like Brazil as an example. If you look at the investments that we have in Q3 2016, the blue there is, first of all in Shpock and Mexico and in some other countries. We have now seen return of the investments that we have had, first of all in emerging markets. We will continue to do investments, and of course it will come down significantly in 2017. We have an estimate for 2016, a total of EUR 90 million-EUR 95 million. That will go significantly down compared with 2016, if you now look into 2017.
Also we will continue then, as I just remind you, that we will continue to invest in product and tech, both for classifieds and advertising products, which is key to deliver future revenue streams. If you look at our key financial figures, fairly stable situation. We have net interest-bearing debt, which gives us a possibility to continue to grow and expand. Also, the CapEx is fairly stable as a result of this, it gives also then a good cash flow. Fair to say that it's seasonally a little bit weaker in working capital. That also in some effect into the cash flow in this quarter, it was then particularly strong in Q2. That's you have to see it combined.
If you look at the tax rate, we have an effective tax rate, a little bit above 31%. It's good to see that tax rates are expected to go down in some of our countries we're operating in. In France, it is said to go down from 33% to 29%. We expect also that to happen in some other countries. Our tax rate is if you look two, three years ahead, should go down, maybe 3%, 4%. That's positive. I give the word to you, Rolv Erik, to go through the highlights.
Thank you.
Yeah, sure.
Okay, I think I will finish up like I started. This is a good quarter for Schibsted. No big surprises. We're continuing. Okay.
I'll do it again? All right. On the webcast. Let me start again. I think this is a good quarter for Schibsted. There are no big surprises, I believe. We're continuing to deliver on our strategy. I think our classifieds portfolio is doing well. Currently, with the exception of Spain, which is a little bit lower due to reasons I've explained. We'll work hard and invest in order to rectify that situation. I think the media houses are doing well. It's a tough advertising market, but positive signs on what they're doing, and especially on digital subscriptions. We'll continue to roll out the new products that we're developing, and we'll continue to invest in that area. I believe that is vital for us.
I think I'll end it there. Then I'll be happy to open up for questions. Anything from the webcast? You can kick it off.
Okay, we have a few questions from the webcast. First, Spain. You say that you expect an acceleration in the growth in Spain from in 2017. Is that from the levels year to date 2016, or from the Q3 levels, which were somewhat lower?
I would say from the Q3 level. It's still, I think the big factor in Spain, which is hard for us to predict, is really the macro situation. I think it's hard to predict exactly what's going to happen there. I think this quarter was particularly so. That's what I said.
All right. Then on France. How should we think about the contribution from jobs to leboncoin? Can you say anything about the magnitude of that? Following that, can leboncoin see overall revenue growth accelerate in 2017?
Well, when it comes to the job market, we are actually just over the last two, three weeks, launched the job offering in France. It's been well received, but it's very early days, so I would be very hesitant to give any guidance on that in 2017. It's a fairly big market and also some fragmentation. When it comes to the revenue growth, we don't give guidance specifically on leboncoin in 2017. Yeah.
All right, I'll do a couple more. Regarding Shpock, what are the early signs from U.K. in terms of the impact from the Facebook Marketplace on Shpock? Further, for 2017, do you expect more or less negative EBITDA in Shpock?
Well, let me take the last first. Of course, Shpock is still in investment phase, and we'll also have them negative EBITDA next year. When it comes to the Facebook launch in the U.K., this is something we're watching very closely from day to day and see the effects. So far, we haven't seen any effects on our on Shpock. Actually, they've been developing well, so it seems to me that Facebook is perhaps then enlarging the market.
Okay.
Early days.
There's a question for some clarification on investment phase, spend. You say that you expect to invest EUR 90 million-EUR 95 million in online classified investment phase, this year. Can you clarify whether. Further, you expect this to go significantly down in 2017. Can you clarify whether this, how Shpock plays into this? Is it included, and can you say anything about. Yeah, that's the question, Is Shpock included here?
Shpock is included, so that's the answer to that. Further, I think we've given enough guidance on that.
All right. a couple of more, or is there more in the audience?
Anyone in the audience who wants to challenge the guys coming from through you, Christian?
Do you expect the margin to continue to decline in FINN Norway?
I think that we are currently seeing growth in FINN. On the other hand, I've said that we have said it before, FINN, we are expanding into also other marketplaces with some somewhat lower margin. It's a good investment, but we shouldn't expect any specific margin enhancement in FINN as we are broadening the product space.
Okay, another one here in the webcast.
Okay. Regarding Brazil, is it fair to conclude that Brazil is growing faster than the average growth in your investment phase companies, which was close to 70% revenue growth? And is Brazil breakeven already? ``
I don't think, you know, we give too specific guidance. I would like to say that Brazil is doing well. What we said about the breakeven.
Well, we have said that we of course aim for a breakeven during 2017. Again, it's a strong growth currently in Brazil. We're happy with that, we wait and see.
One more on the investment phase spending guidance. You say that you expect a significant decline in the spending. Would you be able to be somewhat more specific on that? What do you mean with significant?
No, I don't think we can do that. You know, we're I'm sure that our competitors would love us to be very specific, but I think we're specific enough. You know, it has to do also with agility. You need to be able to. It's not possible exactly to predict now what will happen in Q3 and Q4 next year in terms of competitive situation, et cetera. There needs to be some flexibility in that.
All right. I think, we're getting to the end from the web now. Finally, are you still looking for growth opportunities through acquisitions and consolidation in your markets?
Yes. That's part of our strategy, that we're looking to see if we can find the opportunities to consolidate because we believe that creates better marketplace for consumers and advertisers. That's something that is in our strategy. That was a lot of questions from you Christian, thank you.
Mm-hmm.
Are there anyone else in the room who wants to ask something? If not, then I think we'll thank you very much, and then we'll be available here around. There'll also be a telco later in the day.
Yeah.
Thank you very much for coming.
Thank you.