Good morning, everyone, and a warm welcome to this presentation of Hemnet Group's results for the Q2 of 2021. My name is Cecilia Beck-Friis. I am the CEO of Hemnet. I'm joined today by CFO Carl Johan Åkesson. Together we will present the summary of the quarterly report published earlier this morning. We are thankful for the continued high interest in Hemnet as a company and are pleased to be presenting yet another quarter of strong results. Kicking things off with the highlights on page three. You will see that we had strong revenue growth of 47.4% this quarter, underscoring our ability to capture significant monetization potential from across our whole range of customers and business partners. We will, of course, elaborate on the underlying drivers later on in this presentation.
We continue to enjoy the benefits of a business model with high operating leverage, with adjusted EBITDA margin increasing by 14.5 percentage points to 52.2%, as we leave behind the first full quarter with our new agent compensation model and the Hemnet Bas pricing model. Business to business has been an important contributor to this great outcome, with revenue growing by 27.5%. This is driven by strong advertising sales, including an all-time high display revenue in May. Clearly, advertisers are seeing the benefits of increasing their marketing spend on our content-close platform. Let's take a closer look at the underlying drivers of our revenue growth, starting with page four. As you can see on the left, the number of listings grew 18.8% in Q2, driven in part by an active property market.
This, coupled with a lower than average number of listings in Q2 2020, which saw lower volumes driven by the onset of the pandemic, has resulted in an exceptional growth rate when comparing quarter-on-quarter. Looking at the average revenue per listing, our main operational KPI, we see continued growth in the uptake of our value-added services for property sellers. Furthermore, this was the first full quarter of the new pricing model for Hemnet Bas, which has resulted in ARPL growing by 33.1% quarter-on-quarter, as you can see on the right. The exceptional revenue growth is a testament to our ability to execute in line with our strategy. On page five, I would like to give you some concrete examples from Q2 of how we are delivering on our three-pillar strategy.
I would first like to remind you that our strategy consists of three target groups: consumers, property sellers, and agents and business partners, with a defined strategy for each, seen here in the orange boxes below. To grow consumers' loyalty beyond the buy sell moment, we have launched more comprehensive sale price statistics on listing cards. We have also made it easier to save your favorite properties and searches when logged into your Hemnet account. We see personal accounts and the improved user experience this gives as a key area for increasing loyalty to Hemnet, and is something that we'll continue to invest in. On the property seller front, we are working towards making upgraded listing the obvious choice. Here, we have redesigned our purchasing flow to help make Plus the natural choice for property sellers.
Another important change is in Hemnet Plus, which now ranks higher than Hemnet Bas in the search result list, starting on day two after publication. We are already seeing how these changes have a positive impact on the conversion rate to Hemnet Plus. We have also made significant progress in creating unrivaled products to meet our agents' and partners' needs. Firstly, we have enabled agents to recommend a specific value-added product to their property seller. This is an important change, as it allows agents to have a greater impact on the product choice made by the property seller. Secondly, we have launched agent profile pages. This includes contact details, for sale, upcoming, and sold listings by any given agent. A new way for agents to market themselves on Hemnet.
Thirdly, we have changed the way we show listings with verified bidding in an effort to increase transparency and trust in the bidding process. Finally, we have been testing new ways of visualizing new development projects on Hemnet in an effort to create even better products for this important customer group. Looking at page six, we can see the impact of this and other changes on our revenue by product category. Revenue from value-added services, driven by growth in uptake and pricing, continues to be the fastest-growing revenue stream. This is underpinned by a healthy growth in revenue from listing fees, driven by an increase in the number of published Bas listings, as well as the implementation of the new Bas pricing model launched in Q1.
As mentioned before, business-to-business revenue was a significant contributor to the total revenue this quarter. I'm especially pleased with this result, as it continues to demonstrate our ability to monetize business customers in addition to property sellers. Finishing off with page seven and a few words on our ESG progress. Hemnet continues to grow alongside our product offering. We are now 115 employees, up from 111 in the previous quarter. We see stable employee satisfaction despite not being able to meet regularly, demonstrating our continued resilience as a company. I am very proud of how our teams have tackled the many months of COVID. Now I think we all look forward to meeting back at the office on a more continuous basis. We appreciate the need to meet more frequently and have therefore decided to increase the time spent at the office in a slow and responsible manner.
We will continue to adhere to guidelines and monitor the situation, but now expect most teams to work from the office at least one day per week. Furthermore, we are testing a new model for post-COVID work that revolves around flexibility and trust and includes both a work from home and an office component. With that, we'll turn to Carl Johan, who will provide us with the financial highlights.
Thank you, Cecilia. If we turn to page nine in the presentation, the financial highlights, I want to reiterate that this is an exceptional quarter for Hemnet. As you have seen and heard from Cecilia, we increased net sales by 47.4% in Q2, clearly exceeding our financial growth target. The Q2 has historically been strong. This year we have seen an active property market in terms of listing volumes, as well as having favorable comparables from last year due to the onset of the pandemic. The strong growth in net sales has of course also had a positive impact on our adjusted EBITDA, as our business model comes with significant operational leverage, and we posted adjusted EBITDA of SEK 110.9 million in the quarter, up 103.9% from last year. This resulted in an adjusted EBITDA margin of 52.2% in the quarter, up 14.5 percentage points from last year.
During the quarter, we had items affecting comparability of SEK 27.7 million, out of which SEK 25.9 million were related to the IPO in April. We have now more or less reported all IPO-related costs. Cecilia already mentioned the strong ARPL growth and underlying reasons, with ARPL up 33.1% year- on- year. We continue to be highly cash generative and delever at a good pace. Net debt is now down to 1.2x trailing 12 months adjusted EBITDA. Let's turn to page 10 to look at four factors that have led to this quarter being particularly strong. First of all, our published listings grew 18.8%. The combination of high volumes this year and low volumes last year is behind this larger than usual growth in the quarter.
Historically, we have seen that over a slightly longer period of time, for example, a year, listing volumes have been relatively stable, driven by an underlying demand in the property market, while individual quarters naturally can fluctuate more. Secondly, the conversion to our listing packages, Hemnet Plus and Hemnet Premium, have grown significantly. During the last 12 months, we have worked a lot with the products and how we present them to our customers, and they are now firmly established as part of our product portfolio. These products have also benefited from the general rebound in listing volumes that we saw in Q3 and Q4 last year, something that we then carry with us into this year. Thirdly, Q2 was the first full quarter with a broker incentive compensation model, and the new Hemnet Bas pricing model, both contributing to strong top-line growth and margin expansion.
Finally, we saw a strong development for business-to-business revenue as Hemnet's content-close platform continues to deliver ROI for our B2B partners. In summary, the growth is a combination of underlying and long-term changes that we have made in our business, as well as factors that are unique to this quarter. Next, we turn to page 11 to look at the building blocks of our adjusted EBITDA growth. As you can see from the waterfall, the vast majority of the increased results comes from top-line growth. You will also notice the operational leverage that we refer to, meaning that as net sales increase significantly, there is a more modest growth in our operating costs. We continue to be cost conscious and invest selectively in our organization to support future growth. Looking at the compensation to real estate agents, this consists of three components in this chart.
Firstly, the administration fee paid on the base listing. Secondly, the commission paid on the value-added services to property sellers. Thirdly, the education compensation that is specific for this year. The new compensation model that was launched in Q1 this year is a way for Hemnet to align our strategic objective of moving towards optional and value-added products with that of the broker community. The total compensation increased with SEK 2.6 million in the quarter. Over time, it is reasonable to think that this cost item can continue to increase from current levels if brokers continue to more actively promote value-added products. This should then also have a positive effect on our top line.
Next change is small in other external expenses, excluding compensation to real estate agents, up SEK 1.4 million from last year, while the change for personnel cost is slightly more significant with an increase of SEK 6.5 million, as we slowly but steadily expand the organization with a focus on product development as well as sales. The final item includes other operating income and other operating costs, as well as capitalized development costs, and has had a small positive contribution of SEK 1.7 million in the quarter, out of which capitalized development contributed with a positive SEK 1.2 million. That brings us to the adjusted EBITDA of SEK 110.9 for the quarter. We turn to page 12 and the revenue per customer category. Revenue from property sellers is the main growth driver, both in percent and in absolute terms, and we have covered the underlying factors on the previous slides.
The real estate agents category grew with 25.3%. In this category, you have the display product along with the subscription product, Hemnet Business, and also Mäklartipset. The majority of the increase come from display, illustrating that Hemnet is an important platform for both brand building and winning new customers. Real estate developers are showing more modest growth, 7.2%, and this has been a sector that in general has been somewhat subdued for some time, also for Hemnet. Finally, the advertisers category grew 47.4%, illustrating again the value of the audience Hemnet provides to all its business-to-business clients. This category also includes SEK 2 million of items affecting comparability this quarter, compared to SEK 0.6 million last year. This is related to marketing activities conducted together with Mäklarsamfundet. Moving on to page 13, where we look at the cash flow and leverage.
Hemnet continues to be highly cash generative, which in combination with a strong result, reduces our leverage significantly. Looking at the left-hand side, we see that cash flow from operations before changes in working capital increased with SEK 35.5 million to SEK 72.9 million. Included in that number is the SEK 20.4 million adjustment for non-cash items, and this is almost exclusively depreciation and amortization. Amortization on purchase price allocation, PPA, makes up SEK 15.9 million of this, and the remaining part is a combination of depreciation on tangible assets and amortization on capitalized development costs and leasing. Interest paid and received was a negative SEK 6.6 million, while paid income tax was SEK 6.6. Change in working capital added an additional SEK 3.3 million to the operating cash flow of SEK 76.2 million.
Working capital has historically contributed positively to a large degree, which you can see when comparing to the figure for last year. This is due to revenue and therefore account receivables normally being lower in June than in March. However, June this year was a strong month, and together with timing effect of payments, we had a smaller contribution this year. There is, however, no underlying change in the nature of our cash generation. As we mentioned already in the Q1 report, we replaced our previous credit facility with a new facility as part of the IPO process. While doing so, we also reduced our drawn amount, and as a result, we have a net SEK 233.5 million outflow in the quarter, which you find under cash flow from financing.
Here you will also find the cash inflow from the long-term incentive program of SEK 10.8 million, along with an outflow related to lease liabilities of SEK 1.9 million. To conclude this page, we see on the right-hand side, Hemnet de-leverages at a quick pace. We leveraged down 0.6 tons from the previous quarter to 1.2 x trailing 12 months adjusted EBITDA. Our cash and cash equivalents position was SEK 122.8 million at the end of the quarter. We're now finishing off this chapter by looking at our financial targets on page 14. Across all three targets, we've made significant progress this quarter, and particularly when looking at the net sales growth for the trailing 12 months to June, which now stands at 31.3%. We're also approaching our target range when it comes to profitability, while leverage continues to be below the ceiling of 2x adjusted EBITDA.
I want to finish off by saying that this was an exceptional quarter, driven by a strong operating performance, with growth also supported by somewhat lower listing volumes in Q2 last year. Looking ahead to the Q3, we expect net sales to show a year-on-year increase that is again above the upper end of our financial target range of 15%-20%, but to clearly moderate from the Q2. With that, back to you, Cecilia, to summarize.
Thanks, CJ. Yes, we will finish off this presentation with a quick summary on page 16. Q2 results saw strong revenue and EBITDA growth driven by an active property market, continued growth in ARPL, driven by both increasing product uptake and pricing. This was the first full quarter with both the new agent compensation model and the new Hemnet Bas pricing model. We enjoyed strong demand from our business-to-business partners on our products, highlighting our potential to further monetize this important customer group. With that, we will open up for your questions.
Thank you. If you do wish to ask a question, please press 01 on your telephone keypad. If you wish to withdraw your question, you may do so by pressing 02 to cancel. We have a question from the line of Andrew Ross from Barclays. Please go ahead.
Great. Morning, all, and well done on a very good quarter. I've got three questions, if that's okay. First one is to ask about how listing volumes are trending in Q3. I think on slide four, you've got a chart there, but I'm not sure it actually continues into July and August. Could you just tell us what you're seeing in terms of volumes into Q3? That's the first question. Second one is can you update us as to the penetration now of Plus and Premium in terms of listings? I think it was 15% of listings on Plus and 5% of Premium in January. What are those numbers now? The third question is, how many of your agents have now migrated to the new pricing model? Maybe update us as to how long it's going to take to move over those who haven't. Thank you.
Thank you, Andrew, for your three questions. Unfortunately, it might be hard to answer precisely, but I'll give some flavor on number two and three, then CJ can talk about number one. When we talk about the conversion rate, what we can say, we do not disclose exact conversion numbers. What we're seeing is that it's growing. What we have been doing during Q2 is also to work with improving the Hemnet Plus product, adding new feature and functionality to that product. We see that the uptake of that product is growing during this quarter. On the agent compensation model, what we can say is that we also see that more and more agents do sign the commission agreement. Maybe the most important thing also is that we also see more agents recommending our value-added products.
What we have done during the quarter is also to improve in the purchasing flow, giving the agents a possibility in an easier way to recommend our products. We're very happy about that agents start to recommend in a high degree. Maybe with that, CJ, maybe you can say a few words on the listing volumes.
Yes. We publish our monthly market report, and we've done so for July. What we could see there is that listing volumes were stable. That is sort of an early indication for Q3 that we shared with the market.
Stable year-on-year, right?
Stable year-on-year, exactly.
Yeah. Got it. Thank you.
The next question comes from the line of Isak Hjälfsten from Carnegie. Please go ahead.
Yes. Hi, guys. Isak from Carnegie here. Just want to follow up actually on that July report, CJ. One of the key findings was that an increased number of buyers expect falling property prices. This was also, I think, the third consecutive month where the buyers' barometer fell. I'm just wondering how that affects your ability to push more Plus and Premium and value-add products, and also how that potentially affects price hikes into the H2 of the year. I also have a follow-up question. I think that's for you, Cecilia. You talked about seeing more agents recommending your value-added products.
In terms of that uptick in value-added products, are you guys able to single out how much of the improvement that's driven by brokers actually pushing these products versus just sellers going on Hemnet.se and opting for the Plus and Premium packages because you guys are more successful in presenting on Hemnet? Thanks.
If we then start with your first question on the price expectations. Yes, we also noticed that there is sort of a shift in what property actors are expecting. For Hemnet, we don't see that as a major issue because we're concerned sort of with the volume on the market and the interest in the market rather than the price expectations. I think that's one key thing to take with you when you consider Hemnet's financials. In a very strong market, I think there could be a tendency to sell quicker and perhaps outside the marketplace. In a more sort of normal market, it could be even beneficial for us that we have our central place in the property ecosystem.
I think that's also the case when it comes to value-added services, where we have been very happy, I should say, with the uptake and the increase in conversion rates. If price expectations are shifting, we don't think that would be negative for us either. It could continue to support the growth that we're seeing.
To your other questions on the uptake. I would say that it is in our ability to present the products and working with the purchasing flow we have during this quarter, made a lot of improvement as well, and highlighting, for example, Hemnet Plus in another way. In some sense, we do have, if you could say, control over that flow. With that said, the agents are our main partners, and we do see them as ambassadors and partners in this. Of course, we believe that having them with us will gain a higher uptake. We of course follow. It's still early days, but we of course have a lot of data, and we do follow the data very closely in order to improve it even further.
Perfect. Thank you.
Just as a final reminder, if you do wish to ask a question, please press 01 on your telephone keypad now. We have another question from the line of Catherine O'Neill from Citi. Please go ahead.
Hi. Thank you. On the leverage, it's quite significantly below the target of 2x . Just wondered if you could talk about the potential for cash returns and timing of those beyond the ordinary dividend. The other question I've got is around the margin, which was 52.2%, I think, in the Q2. How should we think about the margin outlook into the H2? Because clearly that's also above your medium-term guidance range. I just wanted to ask about product rollouts and plans in the H2, if there's anything meaningful or notable we should take into account.
Okay. If we start with the leverage question then. As you say, we're below the ceiling that we set. We haven't communicated the floor. From that perspective, I think we feel we are in range, so to say. Given that we don't have any particular plans other than the ordinary dividend that we plan and communicate also as part of our financial targets. We will, of course, continuously monitor this, and if we have any news on the capital allocation, we will be sure to communicate that. On the margin outlook, I think worth, again, just reiterating that our financial targets are for longer periods than quarters. Q2 has been historically a strong quarter, and it is obviously a very strong quarter this year as well. We see the 45%-50% margin range as something that is still appropriate for us over time.
We don't guide in any other way on the EBITDA margin, but just the Q3 outlook on net sales. We are continuing according to our plan when it comes to costs. For example, with selectively recruiting new colleagues to expand our team. There could be fluctuations in costs as we don't manage these, particularly to quarter, that would not be rational, but we continue at a steady pace.
On the product rollout, we don't disclose our product roadmap. What I can say is that we work continuously with improving the products we have and adding new function and features and testing a lot. If you look at the product rollout that we had during Q2, maybe it's worth highlighting a few things that we will continue working with. For example, we are talking about that we have put some focus into logged-in users at Hemnet, and that's something that we will continue working with. We believe that that will enable us to create an even better experience going forward. As well as, of course, when you look at the property sellers and the products we have, we are still in the scaling phase and learning a lot along the way.
A lot of effort is put into improving and adding features and functionality in those products. As well as, like we were also saying in this presentation, is that we've been testing a few new business-to-business products. A lot of focus has been put into product developers and so forth. We will continue and monitor that and develop from there.
Okay. Thank you.
As there are no further audio questions, I'll hand it back to the speakers.
Thank you. We do have some questions via email. I believe we have some questions from Miriam Adisa at Morgan Stanley. We have touched on most of these. Here is one. Advertising revenue, very strong in Q2. Developer revenue has slowed sequentially. Could you share more on the growth drivers for these segments for the H2?
We don't share anything for the H2. What we said briefly in the presentation was that we are very pleased with the advertising revenue and that developers as a category segment generally in Sweden has been a bit subdued for this year. Hemnet has followed that as well within the same trend as the rest of the market.
Thank you. There are no further questions from email. If there are no other telephone questions, I suggest we wrap things up.
We have just a follow-up question from Andrew Ross from Barclays. Please go ahead.
Hey, guys. Sorry. Thought I'd squeeze one more in, if that's okay. Just on Hemnet Plus, it sounds like you've made some changes to that product recently. When did you make those changes? I guess I'm thinking of your ARPL growth in Q3 against Q2. Should we be thinking that there's a big positive impact in Q3 compared because of the changes you've made around the conversion of Hemnet Plus, or am I overreading into that? Thanks.
It is, again, a question which is a little bit difficult for us to ask in some sort of a detailed forward-looking statement. I think what we refer back to again is strong development and uptake. We have a plan where these products over time should continue to increase, and we are working continuously to improve them. I think so far it has worked really well. Our growth targets obviously indicate that we need to continue to work with these products so that they perform better over time.
Okay. Thank you.
There are no further questions at this point.
Okay. Thank you for listening in. Okay. Bye.