Good afternoon and welcome to the CDON Third Quarter 2025 Earnings Call. My name is Hjalmar Jernström and I work at the bank as an analyst. We are joined today by CEO Fredrik Norberg and CFO Karl Andersson. Welcome, gentlemen.
Thank you.
We have a lot to talk about, so let's dive right in.
All right. Yes, I'm very happy to report another strong quarter. First, let's dig in a little bit about the CDON Group. We consist of CDON and Fyndiq. We have about 100 million annual visits, and we are operating an asset-light, scalable business model with a very efficient working capital structure. We are operating in an attractive market with large potential, where we see that the marketplace is very underpenetrated in the Nordic market compared to the rest of the world. Looking into this quarter and summarizing it, we now are very happy to say that we have seven consecutive months of GMV growth and five consecutive months of gross profit after marketing growth. We still have the positive effect from our European merchants that we have been talking about yet ahead of us.
In the quarter, we have also secured a capital injection of SEK 45 million that I will dig a little bit deeper in. Looking into the hot numbers, we grew our top line sales GMV with 8% for the group compared to last year. Our main KPI, our gross profit after marketing, we grew even more with 12% compared to last year. Our result, our EBITDA, is now SEK 11.5 million, more than doubling than last year. Worth noting is that it's even larger than the total Q4 EBITDA last year. Looking at the left side, we can see the growth of GMV. We had a horrible start of the year, January and February, and then we have hit a more solid growth journey for the rest of the year so far. I'm happy to see also that both segments are growing.
The categories that stand out this quarter are electronics for CDON and toys for Fyndiq. Looking on the right side, we see our gross profit after marketing per quarter. We can now see that this is the strongest Q3 we have had in the last four years. It's + 12%. It's particularly strong, given that we still have a little bit of headwind when it comes to the marketing costs. With this capital injection of SEK 45 million, we are now leaving an era of this company that we have called back to basics. For two and a half years, we have really been focusing on the foundation of the business, making sure to integrate and combine the two different companies, CDON and Fyndiq, into one organization in one headquarter in Stockholm. We have also migrated two different platforms into one.
We have now one platform facing the consumers and also facing the merchants. We still have some stuff left when it comes to the financial flows and ERP that will be done during Q1 next year. All in all, we are now operating the whole business from one platform. I have been talking a lot, both externally and internally, about this back-to-basics approach. It's all about having the right products at competitive prices and generating a happy customer at the end. Now, with this money, we are entering into a new era, the growth and innovation. This will be fueled by four distinct growth initiatives. Starting from left, we have the Nordic growth opportunity. We are already live with both segments in all four Nordic countries. We are very underpenetrated in the other Nordic countries compared to Sweden.
We know which levers to change, and we just need to focus and put a little bit more capacity in that direction. That's the first growth initiative to really accelerate Nordics. The second growth initiative is tech resource boost. We are now adding engineers over tech, product, and data departments. This is really to grasp the opportunity now that AI comes into the picture and gives us. We have a new platform, and we really want to fuel everything we're doing now, from internal processes, how consumers are acting on the site, and how we are integrating with the merchants. Everything can really be emphasized now with AI. This is what we want to accelerate with these additional resources. The third part is brand marketing. For many years now, we have not done any brand marketing for neither CDON nor Fyndiq. We have, though, high brand awareness.
The aided awareness of Fyndiq is well above 70%, and for CDON, it's well above 80%. However, the associations, especially for CDON, are quite weak. This we now want to change for next year. We have been talking about this for quite some time now, and now we see that we are mature enough. We have a supply that we can be already now quite proud of. We have competitive prices, and we are becoming better and better at the customer experience. Now for next year, we're looking forward to really reintroduce both CDON and Fyndiq to the Nordic consumers. Last but not least, we have retail media. This is pretty much playbook 1A when it comes to global marketplaces. It consists of two parts. One is to enable for the merchants to promote their products on site.
The second part is to enable external brand owners to promote their products at relevant categories. For instance, it could be that Samsung wants to promote their latest TV in our TV category, where they know that customers are very close to choosing a TV. We are very guided by our mission to unleash the power of the marketplace and to enable the best shopping experience in the Nordics. The path to this is guided by these three main strategies. It was two before, and we have added one. To start with, we have the massive supply, a massive supply of products that people want at competitive prices, great customer experience, and the last addition now is an AI-first approach within the company.
By doing this, we believe also that we can close the gap to our global competitors that have much bigger resources and to really fuel everything we're doing with AI. Yes, let's dig into the numbers now.
Thank you very much, Fredrik. Let's start with an overall high-level view on our financials. We were able to maintain momentum into Q3 that we generated earlier in the year, and we saw a double-digit EBITDA in the quarter. 8% higher GMV in a strong quarter for both of our segments, which we're now very happy to see for a second consecutive quarter. 7% higher net sales as 3P business was carrying the declining 1P business. GPAM increased by 12% in the quarter, following the higher take rate, which offset the higher marketing costs. SEK 11.5 million EBITDA is a significant improvement from the SEK 5.5 million just a year ago. Looking at our two segments, we saw GMV growth across both of them, following that strategic focus that we initiated earlier in the year.
We continue to see growth momentum across both segments, and I'm very happy to see that they contribute to the overall 8% growth. Also, very happy to see that our average order value has increased by 18% versus the same quarter last year. This is largely driven by CDON. We did, however, see a decline in orders, and that correlation is natural, as we then focus, and this movement is very intentional, and where we want to be from a brand positioning perspective. CDON segment grew by 5% versus last year, as we heard. Home electronics is a large contributor to that, but we also believe that we're now seeing some signs of tailwind in Swedish e-commerce, which further supported this growth. A very robust and strong quarter for Fyndiq. We grew 17%, largely driven by continued high double-digit growth from markets outside of Sweden.
Two segments that are performing well in their respective focus areas and something to be building further upon. There were minor movements in take rate. They remain on healthy levels. Merchant performance fees for CDON offset the slightly negative mix effect that the products had on CDON. Selling more expensive products typically yields a slightly lower take rate. It's up to 14.7%, up from both Q3 last year as well as recent quarters. A small decline in Fyndiq, but as we remember from Q2, there were some one-off effects to that. The 29.7% is higher than that of last year and more or less in line with what we have seen for 2025. Higher GPAM than GMV growth is something that we're really striving for.
Very happy to see that, and now that CDON has been returning, CDON segment has been returning to growth for some time, we're very happy to see that GPAM in the segment grew by 7% compared to the 5% that we were talking about when we talked about GMV. The margin increased slightly versus last year as well to 7.9%. GPAM for Fyndiq increased by a staggering 18%, slightly higher than that as well of the 17% of GMV growth. Fyndiq GPAM now makes up just below 50% of group GPAM. The margin was up slightly to 17.3%. Our marketing costs remain high for the group, and as we can see, the costs for Fyndiq increased further in the quarter. We do remain very dependent on paid traffic, and it is a strategic focus of ours to reduce that dependency.
We have not seen the development that we want, and we continue to focus and put all our efforts behind reducing that dependency further. At the same time, our marketing spend that we are putting in is yielding the return on investment that we are expecting, so there has not been a negative effect on our GPAM margin from that perspective. Marketing costs for CDON at 6.7% in the quarter, up versus last year, but more or less in line with recent quarters. Fyndiq was up to 12.5%, as we further drive the Nordic growth at perhaps a slightly lower profit on ad spend target. Double-digit EBITDA in a strong quarter, and as we mentioned, it is higher than the reported figures as of Q4 last year. A significant improvement from the 5.5%, and it's a clean EBITDA with no suggested adjustments.
We did adjust a little bit last year following the closing of the Malmö office, having hired consultants, etc. Our OpEx is trending lower, and we believe it confirms our lower run rate. SEK 41 million reported when excluding marketing, depreciation, and amortization, in line with last year or just below. Yes, it is SEK 2 million higher than the adjusted OpEx of SEK 39 million a year ago, but we need to remember that we were a very different organization just a year ago. Just on the backside of closing the Malmö office, we were both smaller and in a very different position. Some one-off effects that we did not adjust for last year, but when comparing to the recent quarters, we believe we are on track to confirm that lower run rate that we have been talking about.
We're now more satisfied with the level and the long-term possibility to maintain it. Positive operating cash flow before changes in working capital of SEK 11 million. We did, however, reduce our merchant debt significantly during the quarter, impacting our working capital. After changes in working capital, operating cash flow was - SEK 24 million. During the quarter, we completed the directed share issue of about SEK 45 million. SEK 35 million of that has now hit our equity, and we expect another SEK 7 million of that to be confirmed at the upcoming EGM end of October. Cash balance remains stable. End of quarter balance was SEK 87 million, up from SEK 82 million at the beginning of the quarter.
We believe that this level is strong, and we have significantly improved the current ratio of the group during the quarter, both from the capital injection but also that merchant debt reduction. We are well positioned to invest in our future growth.
Yes. To summarize this, we continue with a strong momentum growth, both segments, both on GMV and gross profit after marketing. We yet have the positive effect from our new European merchants ahead of us, and we now have a capital injection that really can accelerate growth for next year.
That's great. Thank you so much. Let's dive into the Q&A. I suggest we start with some big-picture discussions on the market. We know anecdotally that the tariffs in the U.S. are impacting the sort of flow of wares, and some have mentioned that these flows maybe take their way into Europe instead. Could you elaborate a bit on the big picture regarding the impact from the tariffs and how that affects the European market and maybe how it impacts you?
Yeah, that was definitely one risk that we saw was that we would get flooded by Chinese, especially merchants or direct-to-consumer brands and such, since they couldn't really continue in the U.S. in the same way. Happily enough, we haven't seen that yet. Now it feels like it's back and forth every week now, so it's hard to say this long-term impact. We cannot see any impact so far during this quarter at least.
All right, thank you. On the market launches and the initiatives, or not market launches, but the investments maybe into growing in the markets outside of Sweden, is this relating to the brand marketing? Do you feel that you have a sufficiently strong brand in all markets, or do you need to, can you mention some particular market where you need to maybe enforce the brand?
Part of the Nordic growth opportunity is also the brand marketing, so they are separated, but that is part of it. We will probably start with Sweden since we are much more mature there when it comes to both the supply and the shopping experience. We have great improvements to do when it comes to awareness in the Nordic countries. We are strong, at least we could say looking east, we are a little bit weaker, and we are a little bit stronger looking west.
Okay, yeah. You mentioned also sort of like an underpenetration outside of Sweden. Is this mainly referring to the marketplace setup as a whole, or do you feel that you have this opportunity that you can gain market share here, or what are you referring to when you say that there's growth potential here?
I mean, I don't think we've realized our full potential. We have not been able to expand our full supply base. We're not paying enough attention to those markets internally. We can definitely make use and leverage the strong operational platform that we've now built. I think it starts, and connecting back to the strategy house, it starts with the massive increase of supply in parallel to improving the customer experience. Obviously, you need perhaps something to sell before you can work on the experience, but they go very much hand in hand. It is a joint effort between those pieces to the puzzle that we're now looking to accelerate across the Nordic markets.
All right, great. Thank you. We have a question on the, you mentioned on a strong September here, + 11% year over year. Was this broad based across categories or concentrated into specific verticals?
I mean, as we said for CDON, we grew largely in the home electronics market, but we also do see quite a broad sort of growth trend underlying. I mean, we are now heading into Q4. We're very happy to see that we have been able to generate growth across our sort of core categories. I mean, it's not only Santa who is writing this list and checking it twice. We believe we are well prepared with a broad assortment and extremely focused on delivering a strong Q4. I mean, hopefully beating, right, but building on the momentum that we have generated recently.
All right, great. Thank you. The next question is maybe like a big picture discussion as well. It's regarding the OpenAI recent launch of this sort of checkout solution. Can you comment maybe on the prospects of this? Is this a potential, maybe could it be a tailwind, or do you regard it as something that you have to face looking forward? What could be the pros and cons regarding this opportunity if we look ahead?
Yeah, I mean, that's probably one of the main topics we are discussing. I think we discussed it a little bit last earnings call as well. It can probably hit both ways. It could be a tail or a headwind. However, we must just adapt. That's the only thing. We need to run fast and be very agile when it comes to this and be a front runner as fast as we can. It's extremely interesting now when it comes to how OpenAI is opening up for Shopify and direct integrations for shopping and such. We need to really be there, and that's our strategy. We need to be very fast and try out now. I would say overall it could be quite positive for e-commerce in general because we have had a monopoly in the Nordics when it comes to online marketing named Google.
That has pretty much become an e-commerce tax that everybody has to pay around 5% - 10%. When we now open up for OpenAI and other LLMs, this could really put some pressure on that dynamics in the market. At least in the beginning, we don't believe that OpenAI will maximize their ad revenue on this area. Probably this could lead to a couple of years of less pressure from the Google tax, so to say.
Okay, great. Thank you. On the growth or the timeline for the investments that you pointed out here, can we expect them starting in maybe Q1? What is the division of the costs or investments looking ahead? If you could give us some more granularity here.
Q1?
Sure. As we said, Q4, our most important quarter, is just around the corner. We need to nail that. Of course, we are getting started. We're very happy with the confirmation in the share issue, and we have gotten started where we can without risking losing focus and attention. We will definitely be starting in Q1. We're still making those plans. We don't have an exact timeline for both initiatives and also expected costs and returns to it. We do believe that some of them for sure will be starting in Q1. Impact to the P&L, a little bit too early to t ell.
Okay, thank you.
It is also about striking a balance here because we have some things we could run already now. We really don't want to jeopardize the Q4, so we're holding back a bit. Some parts we already have started and are running on our plans.
Thank you. Like you mentioned, considering the importance of Q4, do you feel that you have momentum going into the fourth quarter? What are maybe, is the Q3 growth driven then by the consumer sentiment? What do you see currently with regards to the consumer sentiment and the macro picture for the fourth quarter?
Yeah, I mean, the momentum is quite clear here when it comes to us. We have seven consecutive growth months behind us, and if everything continues as it has been the last couple of months, it looks quite promising. At the same time, I'm quite humbled that anything can happen. The last couple of years have had a lot of grief around the corner, so to speak. It's really hard to say. Now it's so much changes when it comes to the search landscape, which is going to probably, we're going to see a big effect on this Christmas sales. It's a different pattern on how people are shopping online and getting inspiration on what to buy to their kids and spouses and so on. Yes, we have a momentum, but still everything can happen in the e-commerce business.
Thank you. On the snus category, could you give us an update here on the progress and what we could expect maybe for the fourth quarter here?
I mean, we have launched it as of October 1, right?
Yes.
We have made sure that we follow all the routines and protocols that we need to do. We are launching and working with a larger number of brand owners than we've done ever before. CDON sold snus back in the days, but we're now expanding that business. We don't have a specific target or at least don't communicate a specific target to it. It is a category where we need to be very cautious about marketing, and we definitely don't want to not sort of follow the rules to that. We are accelerating a bit carefully, so to speak.
Can you elaborate a bit on the margin impact from this vertical? Is it accretive or dilutive, or what could you expect if we maybe look for the midterm?
I think it's still a little bit too early to tell. I mean, looking at some of our peers, right? I mean, of course, there is attractive profitability. Their scale is just so much bigger than ours. Truth would probably be somewhere in between, and we would likely also be sliding quite a bit from sort of the starting position.
Yeah.
is still a little bit too early to tell, I would say.
Okay, yeah. On the growth in the average shopping basket, is this mainly due to big ticket items or what is maybe the driver here?
We're very happy to see that we are both regaining the confidence of the consumer to open their wallet with us and spend on mobile phones or TVs or more expensive home appliances. Yes, that is driving it. It's also us being more meticulous around what we bring on site so that we ensure that we have the supply that we want to. Those two forces are driving that larger shopping basket and, as I said, the lower number of orders.
Yeah.
It's typically like that. Also, when you optimize for GPAM in absolute terms, the higher ticket items will likely lead to that shift.
Okay, thank you. On marketing, could you just give us a picture of what currently, where do you currently see the best ROI, and do you see is there a challenge? I mean, if you're going to invest in maybe brand awareness looking ahead, naturally that's commonly a challenge to measure, but how will you go about doing that?
Yeah, we have done that a couple of times throughout the history, both of CDON and Fyndiq, so I think we have quite some experience from it. It is harder to measure, definitely, but there are ways to measure it. We have been measuring, as I mentioned before, our awareness and that we have a lot of data from. That we will be able to do. That is much more into next year. Now, ending of the year, it's much more of optimizing and maximizing all marketing efforts and make sure that we get as high return on investment as possible.
Considering the growth that you now reported, how do you feel that peers compare to this? Have you gained market share or have they posted maybe similar numbers, or how do you feel? How has the competitive landscape developed?
It is a very intensive day of earnings calls, right? We're definitely seeing a bit of mixed signals. Definitely a number of relevant peers that are growing strongly, both in Sweden and in the Nordics. At the same time, we've seen peers recently that are struggling a bit. I believe if we continue to focus on the right thing, momentum should carry on and we should be hopefully outgrowing the market going forward. I'm positive from that regard.
Agree.
Agree.
Thanks. One question on the operating expenditures, because you mentioned in the Q1 2025 report that you were on track on pushing them down. Could you just give us some details maybe on the development here and the cost structure that you currently have?
With the 401 that we report in the quarter now, that 4x is roughly SEK 40 million lower than at the point of the transaction in 2023. We have acknowledged that we have some higher costs in the first half of the year, which would not equate the end-of-year OpEx to the run rate targets. We now believe that we are getting more efficiency out of the organization. We are leaner but meaner. We are getting more operational leverage on our software costs, the important largest cost item, as we now continue to migrate and hopefully soon are through all three of the migration phases that we talk about internally. With this level, I believe we now can confirm that we are on track to realizing that. That was a - 40 target versus the level in 2023. We're now approaching the end of 2025.
With some inflationary pressure, the OpEx level going forward would likely hover around that level. We don't have a forward guiding or forward-looking OpEx target more firm than that.
All right, great. Thank you. You mentioned, I believe, in the last report on these maybe larger European merchants that you were planning to onboard. Could you give us an update on the process here?
Yeah, it looks promising. Still in the future to see if it is as good as we're hoping for. As we speak, sales are being made on some of them. However, we couldn't really see any larger effect in the third quarter. A little bit later maybe there than expected. We hope to see some effect now from Q4 and onwards.
All right.
Hopefully we can get back and report a little bit more in detail on that matter on next earnings call as well.
Yeah, we got one final question on this onboarding. Is this mainly currently focusing on some particular category or is it still wide?
To start with, it's mainly focused on CDON.
Yeah.
It's there. We really have the biggest gap when it comes to the supply. I think it's quite well functioning. In that territory, we're talking mainly about consumer electronics now. That's the first stage, and we will expand from there into other categories as well.
All right, perfect. Thank you. Thank you so much, Fredrik and Karl, for coming here and presenting today.
Thank you.
Thank you.
Thank you.