Good morning and a warm welcome, everyone, to this first ever presentation of Hemnet Group's quarterly results as a public company. My name is Cecilia Beck-Friis, and I'm the CEO of Hemnet. I'm joined today by CFO Carl Johan "CJ" Åkesson, and together we are excited to present to you a summary of the quarterly report published earlier this morning. Before diving into the presentation, I want to thank our investors and the participants in this call for your continued interest in Hemnet as we embark on our journey of being a listed company. It has been a long and demanding process, and we are both thankful for the support we have received so far and excited to be leaving that chapter behind us to be able to focus fully on delivering on our growth plan.
Without further ado, I would like to present to you the highlights of the Q1 2021 results. Starting with page three. This can be best summarized as a very successful first quarter. We saw strong financial performance with both top line net sales growth and expansion in adjusted EBITDA margin, both of which CJ will comment on later in the presentation. On March 1st, we made one of the largest changes to our business in recent time when we changed our broker compensation model to be more aligned with our growth strategy while at the same time updating our price model and revising the pricing for Hemnet Bas. We saw consistent growth in total average revenue per listing, ARPL, driven by continued increase in conversion and price adjustments to Hemnet Plus and Hemnet Premium.
Finally, there was strong momentum from business-to-business partners that continue to increase their spend on Hemnet, and as new customers recognize Hemnet as an advertising platform with attractive ROI. Turning to page four, you will see that our ARPL saw strong growth despite a slight decrease in volumes of new published listings during Q1. This is a good example of the resilience in our business model and the future monetization potential of Hemnet. On the right side of the page, you can see that the number of published listings on Hemnet typically follows a seasonal pattern across the year, and the amount of listings in Q1 was slightly below that of last year given the higher than usual publication volumes of 2020 before the onset of COVID-19. When adding in April, aggregated listing volumes for 2021 are, however, on par with last year.
Even with slightly lower listing volumes in Q1, we have demonstrated that we can grow revenue steadily, in this case, in excess of 20% for the quarter. Turning to page five, we will take a look at some of the key changes to our seller products that help drive ARPL during Q1. This was driven largely by three factors. Firstly, we have made it simpler for every agent to give a recommendation on choosing Hemnet Plus or Premium to their seller. A recommendation from the agent generally has a positive impact on the conversion rates to both products. Secondly, we have optimized the purchasing flow to make it easier for sellers to buy our value-added services. Thirdly, we continuously monitor delivered value from our Hemnet Plus and Premium package to ensure satisfactory ROI.
In addition to these changes, I also want to highlight two particular important changes to our product and business model. Turning to page six, we have highlighted two key product updates. The most significant update during Q1, and probably in the recent Hemnet history, is the launch of the new compensation model towards the broker industry. Up until March 1 2021, real estate agent offices would receive a fixed 50% administration fee on every Hemnet Bas and 20% commission on the price of our value-added services above the Hemnet Bas price. Starting 1st of March 2021, the administration fee was adjusted to 30% in order to make room for a higher sales commission of 30%-50%, something which we are hoping will help drive continued growth to Hemnet Plus and Hemnet Premium.
The commission levels for 2021 are temporarily higher to help with the rollout of the program, and we are adjusting the commission to 20%-40% starting from next year, the 1st of January 2022 and onward. The commission level varies based on what percentage of all office listings have purchased value-added services, further aligning the interest between Hemnet and the broker industry to sell value-added services. I am happy to say that the launch of this major change went smoothly, thanks in large part to the significant communication efforts leading up to the launch, as well as the potential to earn more money from selling Hemnet value-added services than before. That is not the only significant change we saw during the quarter.
We have had segmented pricing on Hemnet Plus and Hemnet Premium for some time and have now added this feature to our Hemnet Bas product, meaning that the price of Hemnet Bas is determined by more factors than asking price, as was the case before.This change gives us greater flexibility to work with ARPL on a more detailed level, giving us the tools needed to reach our ARPL growth targets. Let's take a step away from the commercial update and focus on page seven, including people, culture, and sustainability. At the end of Q1, there were 111 employees at Hemnet, the vast majority of employees works with product development. Like many other firms, we continue to work from home, which brings its unique challenges to the culture and wellness of our employees.
Despite this, I'm happy to say that we have some positive trend in employee satisfaction in culture and engagement across the firm since the onset of COVID-19. Much thanks to our efforts to find sustainable work approach appealing to both existing and prospective employees. We have also taken this opportunity to revisit our company mission and vision in an effort to bring us closer together around common objectives in a time when we cannot as easily be brought together in a physical environment. Employee wellbeing and defining a sustainable working from home solution will continue to be of great focus for us going forward as we search for new routines suitable for the post-pandemic office. Turning to page eight and our strategic goals. Our strategy is focused on three customer groups: consumers, property sellers, and agents and business partners.
For each, have defined a strategic goal that we can see on this page. For consumers, we have recently made an important organizational change that will allow us to focus more on improving the consumer experience, particularly on helping consumers finding the right property and making well-informed decisions. For sellers, we continue to focus our efforts on improving our products for sellers in cooperation with real estate brokers and making it as easy as possible for sellers to buy Hemnet's value-added services. For agent and business partners, we continue to leverage our strong growth in traffic and position as the go-to property platform to create and sell products that help our partners achieve their goals. Work with these focus areas will continue as we use the above strategy to execute on our growth plan.
Now we will turn to Carl Johan , who will provide us with the financial highlights.
Thank you, Cecilia. Indeed, it is great to finally be a public company and to be able to share with you Hemnet's first quarterly results presentation. Looking at page 10, you can see that this was a strong quarter for Hemnet with net sales growing 23.6% to SEK 142.5 million, and adjusted EBITDA growing 57.1% to SEK 57.2 million. This represents an adjusted EBITDA margin of 40.1% for the first quarter, compared to 31.6% for the same period last year and 37.1% for the full year 2020. In the quarter, we had items affecting comparability, IACs, of SEK 24 million, meaning EBITDA was SEK 33.2 million. The IACs consisted almost exclusively of costs related to Hemnet's IPO that was carried out in April. The ARPL, the average revenue per listing, it's our main KPI for linking financial and operational performance for our revenue for property sellers.
Here we saw a 26.4% increase compared to the first quarter last year. As Cecilia mentioned, there were several initiatives that contributed to the growth in ARPL. The drivers are a combination of, one, a new product in the form of Renew Your Ad, Förnya annons in Swedish. Two, uptake of our value-added services. Three, price adjustments on the value-added services, as well as, four, price adjustments on the base listing. Looking ahead, we are planning to continue to grow ARPL by working with a product portfolio for sellers, continuing to drive the uptake of the value-added services, as well as price adjustments across both base and the value-added products.
Finally, on this page, looking at our financial leverage, we ended the quarter at 1.8 x net debt to trailing 12 months adjusted EBITDA, which means we are now below the ceiling we set in our financial target where we said we would have a ratio below 2.0. I will now walk you through the main drivers of our adjusted EBITDA growth on page 11. Note that this chart excludes the IACs of SEK 24 million that I mentioned previously. Looking at the contribution from net sales, we saw increases across all our customer categories: property sellers, real estate agents, real estate developers, and advertisers. In total, increased net sales contributed SEK 25.2 million to adjusted EBITDA compared to the first quarter 2020, with the majority coming from property sellers, which obviously is our key customer group and a specific focus area for us.
The next item is compensation to real estate agents, which consists of three components. Firstly, the administration fee paid on the base listing. Secondly, the commission paid on the value-added services. Thirdly, the education compensation that is a specific item for 2021 only. The administration fee in the commission was in total SEK 31.5 million in the quarter compared to SEK 32.7 in last year. This represents only a small change year-on-year. In addition to this, there is also SEK 5.5 million of education compensation included in the first quarter, bringing total change for the period to minus SEK 4.3 million. The new compensation model for real estate agents was introduced on 1st of March, so this quarter includes two months with the old model and one month with the new model.
Turning to other external expenses, excluding the compensation to real estate agents, we see a positive contribution in the quarter of 2.7 million SEK. As you can see, we've continued to be disciplined on costs. One part of this development is also that we have been reducing costs for consultants as we have continued to invest selectively in new team members for the organization, thereby shifting costs to personnel costs, which is the next item in the chart. On personnel costs, we post increases of 3.9 million SEK, and we end the quarter with 111 employees compared to 100 at the end of the first quarter last year. Our investment in new team members is set to continue on a selective basis as we choose to expand mainly our product development capabilities in order to support future growth.
The final item includes other operating income, other operating costs, and capitalized development costs and has a positive contribution of SEK 1.1 million in the quarter. Capitalized development was SEK 2.6 million for the quarter, which then contributes with a positive change compared to last year of SEK 1.5 million, making up the majority of this item. That brings us to the total adjusted EBITDA of SEK 57.2 million for the first quarter. Turning to page 12 and our cash flow and leverage. Cash flow from operations before changes in working capital was SEK 13.8 million. It includes non-cash items of SEK 19.5 million, which is almost exclusively depreciation and amortization.
Amortization on PPA from the acquisition of Hemnet Sverige Group in 2017 makes up SEK 15.8 million of this item, and the amount is the same in both periods. The remaining part of depreciation and amortization is a combination of depreciation on tangible assets, amortization on capitalized development costs and leasing, and the leasing is related to our office premises in Stockholm. Paid tax is SEK 14.3 million in the quarter. Worth mentioning here is that our total tax charge for the quarter is 20.5%, very close to the nominal corporate income tax rate in Sweden, which is 20.6%, as we don't have any tax losses carry forward while we do carry deferred tax in proportion to the PPA.
The effect of changes in working capital is small, -SEK 2 million in the period, in line with the pattern we've seen historically on a full year basis as the business model has favorable working capital conditions. Cash flow from investing activities is SEK 20.7 million and includes a sale of current interest-bearing securities of SEK 24.7 million, after which no such items are held by the company. Cash flow from financing activities was -SEK 7 million, with SEK 5.1 million mandatory cancellation on the credit facility and SEK 1.9 million of amortization on these liabilities. Worth mentioning here is that as part of the IPO in April, we have also repaid this credit facility in full.
It was originally SEK 720 million, Replaced it with a new facility of SEK 500 million, with conditions that are suitable for a public company. To summarize, cash flow for the period was SEK 25.5 million. In terms of leverage, as I mentioned before, we end the quarter with net debt to trailing 12 months adjusted EBITDA of 1.8 x, with net debt being SEK 407.5 million as of 31st March. To close the financial chapter of this presentation, let's spend a moment looking at our financial targets on page 13. We are on track for all three targets. As you've seen, we posted growth of 23.6% in the quarter, meaning that our growth stands at 22.8% when measured as trailing 12 months.
Similarly, we saw adjusted EBITDA margin climb to 40.1% in the quarter and at 39.6% when measured as a trading 12 months, moving us towards our target of 45%-50% adjusted EBITDA margin. Finally, on leverage, we are below the ceiling we set of 2.0 x. With that, I'm now handing it back to Cecilia, who will bring us a summary before we move into the Q&A.
Turning to page 15 and the summary. We saw strong growth in revenue and profitability. The successful launch of the two largest changes to Hemnet's business in recent history. Continued demand for our value-added services and ARPL growth, and continued strong performance from business-to-business partners. Looking ahead to Q2, we can see now at the end of May that we continue to have a strong momentum and expect that net sales in Q2 2021 will also show a year-on-year increase that is above the upper end of the group's financial target range of 15%-20%. The increased sales continue to be driven by growth in ARPL on the back of increased uptake of our value-added services for sellers, price adjustments, as well as a good performance in business-to-business revenue.
I would like to wrap up the presentation by once again thanking our shareholders, both old and new, for your continued support, as we, Hemnet, embarks on this new exciting chapter in the company's history. We will now open up for questions.
If you have a question for the speakers, please press zero one on your telephone keypad now. There will be a brief pause while questions are being registered. Our first question comes from the line of Daniel Ovin from Nordea. Please go ahead. Your line is now open.
Yes. Hello, Cecilia and Carl Johan, and congratulations on a well-executed first quarter as a listed entity. Calculated on base listings, I derive at the price increase for Q1 of around 10% per listing, so I assume this is driven by your new pricing strategy. Does this means that you now have realigned prices, or is there more due to do more to do on this in the next few years? I wonder here if there's kind of a step change happening, or how we should think about this going forward. There's also one more question on the pricing, and that is if there has been a similar price increase for Hemnet Plus or Hemnet Premium. That's the first question. Thank you.
Hi. Hi, Daniel. On the base listing, you're correct. We have made changes to that during Q1 when we implemented the segmented pricing on 1st of March. We don't comment specifically on the sort of the magnitude of the changes, but we will work with segmented pricing, obviously, on a continuous basis going forward. We are convinced that there is more to do in that area over time as we see there's high value in the product versus the price that we're charging.
Similarly on Plus and Premium, we have been working also with a segmented price model in Q1 to make sure we move towards charging the correct price, so to say, to each property seller. We are very active in that area alongside, of course, the product innovation and product development that we do to the seller products.
Okay. Great. One more question here, if I may, and that is if you can talk a bit about the conversion rate that has and how that has changed post the new commission model for Hemnet Plus, Premium, Raketen, and republishing, and perhaps also some indication of what that level is now versus last year. Thank you.
We see a continuous growth in the conversion rate to Plus and Premium and to our other value-added services. I mean, we have embarked on a journey, where we continuously improve the products and the purchasing flow. Now during Q1, we also implemented a clearer recommendation feature for brokers so they can help their sellers to choose an upgraded package. That has absolutely helped in the conversion. We'll see that we can continue working with the product. We are on track. It has a lot to do with an ongoing improvement in the purchasing flow and the products and the value that they deliver, of course. More and more sellers choose to upgrade.
Okay. Perfect. One last question then, if I may, you also had a very strong growth in advertising services. Can you talk about what is driving this growth and if this is something you expect to continue to grow strongly or if there are any one-off factors in this quarter that we should take into consideration? That's the last question. Thank you.
We have for quite some time, I would say, seen, growth in our advertising business and that has to do with more and more customers as, kind of recognizing Hemnet as a great marketing channel and also, current, customers spending more of their marketing spend alongside, I would say, great work from our sales team. There might be a small factor given, kind of the high activity in the housing market and the traffic we have that also have a small part in the advertising growth during Q1.
Okay. Perfect. That's all questions from me. Thank you very much.
Thank you.
Thank you. Ladies and gentlemen, once again, I remind you that if you do have a question for the speakers, please press zero one on your telephone keypad now. We currently have no further audio questions. I will hand back to the speakers for any further remarks.
Yes, we have received some questions by email. Starting off with the questions from Miriam at Morgan Stanley, please, can the company give some color on how agents have been reacting so far pricing model change, anything different from your expectations?
We have, during the quarter, implemented two, I would say, major changes in our business model, so that's correct. The implementation of the segmented pricing for both as well as the new compensation model for brokers. I would say that the rollout has been overall very smooth. We have put a lot of effort into communicating the changes to the broker industry. We have so far had limited reaction and no unexpected reactions.
Thank you. Next question is, what are your expectations for listing growth for the rest of the year?
We don't specifically comment on the listing volumes. What we've seen historically, of course, is that it has been relatively stable on a full year basis. I think also worth pointing out is that the Q2 pattern historically, again, has been that Q2 and Q3 have the highest volumes due to sort of the normal activity in the market. The final thing to mention also which we comment on in the report is that I think 2020 is a bit of a special year in terms of comparables, where we had a slow Q2 primarily when we saw that there was a pause in the market due to COVID.
Then a quite significant strong finish to the year where Q4 saw high volumes. Overall, we ended up with a 2% growth last year. Again, on a full year basis, we seem to have a very stable pattern.
Next question is, how should we think about the cadence of EBITDA margins for the rest of the year?
On the margin, it's the same thing there. We don't guide specifically on that looking forward. We are at 40.1% in Q1, and historically we've seen that the Q2 is a stronger quarter. We've also commented on Q2 in the CEO comments, where we highlight that we think we're gonna have growth be above our financial target range of 15%-20% on the revenue side. I think that gives some color as well to the margin question. Please also keep in mind that we'll have three months with a new compensation model, while we only had one month with a new compensation model to brokers in Q1.
Now we have some questions from Eric at Carnegie. On ARPL growth, both in Q1 and into Q2, could you roughly split the growth between price increases and positive mix effects?
We don't give any details, but we can say that we see, I mean, our growth strategy is based on working with the product, the product innovation, the conversion, as well as price.
On product pipeline, do you have any specific product launches in Q2 or Q3 that will support growth for the rest of the year, or is it more multiple small tweaks?
We don't comment on our product roadmap. I think it's fair to say that, I mean, we constantly work with improving all our products.
Thank you. The final question, if possible, could you also share some thoughts on the focus on product development for sellers versus agents versus developers?
We have a very clear strategy that is based on our key target groups, the consumers, the sellers, and the brokers, and business partners. We work with all those three strategic pillars. It's a combination between growing the sellers and business to business revenue. I don't know if you, CJ, would like to add something.
I think we might add that up until now, we've worked very actively on the seller side, which I think you can clearly see in our numbers. There is a lot more we feel to do on the seller side. We will definitely continue to sort of make product innovations and working with price there.
There are no further questions.
Thank you so very much for this session and for your continuous support.
Thank you.
Bye-bye. Thank you. Bye-bye.