Hello, everybody, and Welcome to CDON Group's Earnings Call for the Fourth Quarter. Next to me, as usual, I have our CFO, Carl Andersson, and you will, in a moment, get your prime time and digging into the numbers. Thank you. All right, to summarize this quarter, this was really a foundational year for CDON Group. We have rebuilt pretty much a new organization. We have migrated two platforms into one platform, but we also had quite disappointing sales for the years and also with the week ending. Looking into the numbers, sales numbers, what I'm showing here is the gross profit after marketing, meaning the gross profit is what we keep from the sales, and then we deduct the marketing cost.
As you can see here, we had a quite good start of the year, but we did not really level up throughout the year and ended a little bit weaker than we really hoped for. The weakest category was media, which is mainly our 1P business, including movies, music, and games. This is mainly due to the organizational changes that we have done, but also due to the platform migration. This is due to the fact that these categories were really deeply integrated in the old platform and ways of working. We have increased our dependency on paid traffic, and this mix of the marketing mix really has increased the marketing cost for us. Looking only at the gross profit, we actually report an increase for the full year. When we deduct a higher marketing cost, we get these lower gross profit after marketing numbers.
We also saw towards the end of the year a tough price competition starting with the Black Week and going into December as well. Looking into the countries, we saw that Sweden was the weakest country for both segments. As I mentioned, this has been a foundational year for us. Here I try to visualize how this looked from an organizational standpoint. We started the year, and here we have the green dotted line, which is my way of, in a subjective way, trying to show the output of the organization. We did not start at top on this year, and the reason for that was due to us not being able to really integrate the two organizations. As of last year, almost exactly on this day, one year ago, we announced that we were to close the Malmö office and centralize the whole organization to Stockholm.
You can see this in February. What happens, of course, with output is that it got totally drained. I have seen this many times before, and it is totally natural, but this is just a fact. This is what happened. In the coming months, it continued to lose output. This is due to the fact that we were losing people, capacity, but also competence and experience. Everything needed to be handled by the remaining staff, pretty much doubling their effort. After that, we started to recruit new people. That also drains the output. Taking interviews takes a lot of time and energy. Onboarding new people also takes time and energy. When new employees are onboarded, it takes some time to get really a positive output. It can take weeks and sometimes months.
This is what we see now towards the end of the year, an increase in the output of the organization. If we look into the trajection into 2025, I'm very confident that we will pass the output compared to previously, but almost with half of the staff. We are really getting more leaner, but also more meaner. In parallel to these big changes, we also did our platform migration. Looking to the left, I try to visualize our focus and also capacity for the different parts in our development. In the bottom, we have maintenance, which is pretty much ensuring the platform stability and security. We have fundamentals, which are the basic flows in our business model, such as financial flows, payment providers, search, and so on.
Maybe not what you see directly in the shop and affecting the shopping experience, but it's really the fundamentals of running a marketplace model. On top of that, we have the new features, improving our customer experience, improving our merchant experience, and maybe improving our marketing efficiency. This was pretty much the ratio we had, 2022, when we were two separate companies, CDON and Fyndiq. Looking into 2023, we already increased the fundamental part, being focused on preparing for the migration that was supposed to happen the year after. This was at the cost of new features. Looking into 2024, you can see that new features are at really a bare minimum. The majority, absolute majority of our focus and capacity for the full year was on the migration. This migration, as we announced last earnings call, was perfectly executed on time in September last year.
Now, looking forward into the coming year, now 2025, we see that we will be able to improve, increase the new features velocity, but we still have some fundamentals left. It is some basic flows like aligning the financial flows, but also taking the merchant integration to next levels that we need to also fix and focus this year. Looking into 2026, which I see is more of a standardized normal year, you can see what happens here is that the maintenance is being halved. The reason for that is that at that point, we have one platform, not two platforms, and one platform that is highly efficient. As you can see, it is quite visual. We really can improve our velocity when it comes to new features and getting back in innovating and becoming a front runner in the industry.
We are really looking forward for the coming years now. With that said, time to dig into some numbers. Welcome.
Thank you, Fredrik. Let's dive straight into reported figures. We report both lower GMV and EBITDA following that very transformational year that Fredrik was talking about. We report 11% lower GMV in the quarter and looking at full year. We need to remember that Fyndiq was only included from April 12th in 2023. We report 9% lower GMV. Net sales was down 13% in the quarter and 7% full year. That was impacted by the 1P business, which primarily or heavily impacts net sales rather than GMV. GPAM, gross profit after marketing, declined 16% in the quarter as the higher take rate that we experienced was more than offset by the higher marketing costs. More on that later. EBITDA amounted to SEK 10.5 million in the quarter and SEK 4.5 million full year.
Note that full year numbers include SEK 10 million of one-off costs associated with closing of the Malmö office. An adjusted EBITDA would amount closer to SEK 15 million - SEK 16 million. In the quarter, we also included a write-down of SEK 18 million relating to intangible assets on our legacy CDON platform that are no longer used once we have migrated to the shared backend environment. Looking at our two segments, trying to break down and understand performance a little bit better. Starting with CDON, it was definitely a tough and disappointing quarter. An important, but also very campaign-intensive period. All in all, this led to -17% year-over-year. Full year for CDON segment, roughly SEK 1.3 billion, but down 19% year-over-year. On the contrary, on Fyndiq, we are happy that we are growing.
In the quarter, we grew by 6%, fueled by continued momentum in markets outside of Sweden. Full year GMV of SEK 501 million equal to a 2% growth for the year. Organic GMV for the group declined by 11% in the quarter and 14% full year. Slightly different from the previous page and the reported numbers. Continued strong take rate as we continue to prove consistency. We can see an increase in the CDON segment that was positively impacted by higher shipping income. There was also a lower average order value and some mixed effect, which contributed to the higher take rate in the quarter. Full year take rate for CDON increased to 14.2%. In the case of Fyndiq, it reached 29%.
There is some seasonality at play for Fyndiq with a higher average order value during that period, which has a small negative impact on the take rate during the quarter. Over time, we continue to see consistency and we saw similar impact in Q4 in 2023 as well. Lower gross profit after marketing and pressure on our margin. Despite that higher take rate in the quarter, GPAM decreased or declined for CDON by 25%. Higher marketing costs are really driving this. We will get back to that on the next page. Full year gross profit after marketing declined by 20%. Our GPAM margin in the quarter fell to 8.3%, almost down one percentage point. On a full year basis, we are relatively flat compared to the previous year and ended at 8.1%. Fyndiq's GPAM declined by 2% in the quarter, so slightly off and higher marketing costs.
On a full year basis, we increased GPAM by 2%, similar to that of the GMV growth. Higher marketing costs stem from a more expensive traffic mix. It is true across both segments that we see an increased share of paid traffic over organic and direct traffic. It's important that we get back to a higher share of organic and direct traffic. This will be a combination of effects, including technical SEO fixes, content, and brand awareness building, but it takes time. Marketing costs increased in the quarter, reaching almost 7% for CDON, but on a full year basis, it's closer to 6%. Marketing costs for Fyndiq were relatively stable to the previous quarter. On a full year basis, we reached 11.6%. Remember that significantly higher take rate on the Fyndiq segment.
All in all, this led to a positive EBITDA in the quarter, but also full year. The second half of the year is seasonally stronger and important to us, but it did not reach our expectations and our long-term ambition. EBITDA in the quarter was SEK 10.5 million, and that is some SEK 6 million lower than previous year. Full year EBITDA of SEK 4.4 million is SEK 16 million lower than 2023. Still, adjusting for the one-off costs associated with closing of the Malmö office of SEK 10 million, then we would reach an adjusted EBITDA of around SEK 15 million for the year, comparing to SEK 21 million in 2023. We do have continued control of our cost base. Despite the sequential increase in OpEx in the quarter, we argue that we are about to realize the previously communicated run rate cost saving during the first quarter.
Q4 still includes consultants, software, and other costs associated with the platform migration. We have exited a lot of those costs and will continue during Q1 to clean up the cost base to reach that lower run rate that we have been talking about. Lastly, a few words on cash. There was a positive cash flow in the quarter. Operating cash flow before changes in working capital was positive on a quarterly and full year basis. It is a seasonally strong quarter from a cash point of view. All in all, this contributed to a build-up in cash. The end-of-year cash balance was SEK 145 million compared to SEK 154 million the year before. That said, time to summarize. Welcome back up on stage, Fredrik.
Yes, thank you. All right, yeah. Weaker than expected sales-wise, definitely. At the same time, this has been really a foundational year. We have the main parts of building a long-term business model and business here now in front of us. We will not be doing this every year. We are past this now. We have a new organization. We have one shared platform that we can build from. We really strongly believe that the year of 2025 is going to be the year of CDON. Thank you. Now we open up for Q&A.
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All right.
The next question comes from Niklas Elmhammer from Carls quare. Please go ahead.
Yes. Hello. Thank you for taking my questions. I don't know if you can perhaps comment on 2025 so far. Already in Q4, there seem to be some less headwinds in terms of traffic. When is it reasonable to expect a return to growth?
Good question. We are a little bit hesitant of commenting current rating. We haven't done it so far neither. Now, we really believe this will be the year of both for CDON and a turning point also for especially Swedish e-commerce in general. We believe that we will be very good fitted for this year to grasp that increased market potential.
Okay. Coming back to Q4, we're looking at we saw quite good traffic nevertheless, but lower conversion rate. How do you see this dynamic? Can you please elaborate on that?
Yeah. Parts of it is due to the platform migration and how we compare year-over-year traffic numbers. We have cleaned some bot traffic that was more of a problem last year. That, of course, getting rid of traffic in one end increases the conversion rate in the other end and the other way around. The biggest problem now has been mainly the traffic and also a combination of a bit weaker conversion rate, but not as weak as it maybe appears now.
No.
Okay. Looking at the initiatives you made last year for growth and efficiency, if you could elaborate at least where you stand now in terms of getting more competitive supply and also your collaborations with partners, PSP and Checkout and so on.
Sure. Besides the really focus on the migration and also the organizational parts, as I talked about, we also have talked about improving supply. This was maybe a little bit surprising for us because we actually were able to have quite good supply entering into Q4. The Black Week in December was quite stronger on the supply side than we were hitting the targets on that aspect. It was actually a combination of fierce price competition from the peers within the market that is quite hard to navigate on an hourly basis. It's almost on a minute basis on Black Friday, actually. Also, we had some challenges in really converting the traffic on this improved supply. We are digging into an understanding, even though we had a quite good supply in some aspects, we didn't really increase the sales.
Of course, it's a mix of you need to have the supply, the right product at the right price, but you also need to have the trustworthiness that people actually would like to open the wallet and give us a lot of money, and also a customer shopping experience where some parts that are foundational that we don't really have in place yet. One example of that is the delivery experience that is definitely below par. We see that that probably affects the more expensive products more than we maybe thought going into the Christmas sales.
Maybe if you have some targets for 2025 in terms of customer experience, how far will you be able to go this year?
We don't communicate any targets like that for this year. I can though say that there are a lot of low-hanging fruits, but also some bigger, juicier fruits that are a little bit higher. There are a lot of fruits for us to harvest throughout the year, both when it comes to the customer experience, but also marketing efficiency and merchant experience.
Okay. In terms of marketing, I mean, higher level of marketing, is it something that you will continue to focus on in 2025, or do you need to increase your efforts even more?
Yeah, definitely. I see we got a written question around this subject as well. One thing that is a little bit challenging for everybody in the industry, I would say, is what some refer to as the Google tax, which I think is a quite good name for it. That is the fact that more and more of the traffic from Google is being pushed more and more to the paid, to their ads. Looking just 10 years ago, the majority of the first screen both on desktop and in a phone was organic links, meaning that we as a merchant or a vendor did not pay anything for it. Today, everything in the phone, everything above hold in the screen is ads. We pay for everything. That is the shift that Google has done the last couple of years.
Of course, we as the rest of our competitors have to cope with that and address this. That is one fact that online marketing is a little bit more expensive than it has used to be. Talking about the Fyndiq segment, we definitely see a quite hard push from Temu, Shein, who has been quite aggressive also last year, very aggressive in marketing and pushing up the cost for marketing. This is really a long game. There is really no silver bullet to increase the traffic and maintain the conversion rate. We need to, number one, make sure to get happy customers. To get happy customers that come back, that's number one.
In addition to that, we can improve how we are working with the SEO and visibility, but also how we are working with the efficiency of displaying our 15 + million products on Google Ads or on price comparison sites and such. There is no, I would say, really easy answer, but it is aligned with our long-term strategy, which is really to improve our supply and improve our customer happiness. I hope that roughly answered your question.
Okay. Yeah. Excellent. Just regarding your cost reductions and the Q4, what was the sort of one-off items in Q4? Can you just specify that it was SEK 10 million for the year, but for Q4?
Exactly. SEK 10 million for the year and just over SEK 1 million in the quarter alone. That was excluded on the slide we looked at on the previous page. That actually reflects an adjusted OpEx.
Okay. Yeah. Great. Thank you. That's all for me now. I'll go back into Q. Thank you.
Okay. Thank you, Niklas. Thank you.
There are no more questions at this time. I hand the conference back to the speakers for any closing comments.
Yes. Let's see. We have some written questions here as well. There are some questions about AI. That is really interesting. I touched upon this last earnings call as well. I would say the timing for us is quite perfect. We have a totally new technology. This is a paradigm shift where we are in the midst of named AI. This is becoming more and more mature and more and more better and better for each and every week, as all of you know. The combination with us just being now finished with the platform migration and having a platform that is just newly built, purpose-built, tailor-built for our business, to combine that with AI is going to be a very interesting combination for this year. It's not just one area, maybe customer service or such.
We're looking into pretty much all areas where we can inject AI. We actually had two weeks ago, I think we had a full day here, an AI crunch day with everybody involved, cross-functional. I mean, the presentations are quite staggering on what you can do just one day, putting someone in finance together with a back-ender and one designer with someone else and such. We can inject AI everywhere. We don't have this massive legacy platform or technology. It's freshly baked. Now we can utilize that with AI. That is something we're really looking forward to now for this year and next year as well. All right. I think we have answered the rest of the questions. All right. With that said, thank you for your attention and see you in three months again. Bye-bye.