Welcome to the Hemnet Q4 2023 report presentation. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing pound key five on their telephone keypad. Now, I will hand the conference over to the speakers. CEO Cecilia Beck-Friis, CFO Anders Örnulf, COO Lisa Farrar, and IR Nick Lundvall, please go ahead.
Good morning, and welcome to Hemnet Group presentation of the Q4 and year-end results for 2023. My name is Cecilia Beck-Friis, and I'm the CEO of Hemnet, and today I'm joined by Anders Örnulf. He is Chief Financial Officer, as well as Lisa Farrar, our Chief Operating Officer. As seen on Page 2, the plan for today is to start with an overview of the fourth quarter results, as well as a summary of the 2023 results. Afterwards, Anders will dive deeper into some of the financial updates, and following this, Lisa will be taking us through a business update relating to our agent compensation model. As always, there will be opportunities to ask questions at the end of the presentation, and you can submit your questions via telephone or using the link shown on Page 2 of the presentation. Starting with Page 3 and the executive summary of Q4.
I'm proud of the strong results that we are presenting today, particularly that revenue from property sellers increased 55% year-on-year. This is largely driven by continued growth in demand for value-added services, as evident in the fact that ARPL contribution from VAS almost doubled from last year, meaning that sellers continue to see our value-added services as attractive investments in their property marketing strategy. Overall, investment in product pricing strategy, and growing demand for VAS resulted in ARPL growing 46%. Net sales grew almost 37% during the quarter, with an EBITDA margin of 51.5%, and these numbers further show that we have a unique and resilient business model and that we can grow even in challenging market conditions.
We saw some improvements to the market environment, and Q4 listings were higher than the listing volumes in 2022 for the first time this year. As I mentioned earlier, Lisa is joining us today to provide you with an update on the agent compensation model. Hemnet has a truly unique relationship with the Swedish agent community, and the compensation model is an important tool that enables the win-win relationship between agents and Hemnet.
The changes that we are now making to the model are meant to increase simplicity, fairness, and to drive the right incentives to ensure that the win-win relationship can continue to flourish in line with our strategy. We want to continue growing our business hand in hand with the agents, and we believe that we have found a sustainable model to enable this. More on this later.
Hemnet continues to be the place for buyers and sellers to meet, and I want to turn to Page 4 to give you more color. Hemnet is the Swedish property market and the best portal to maximize a property listing or agent brand. Our strategy is to show the most complete inventory of for-sale properties, combined with the best possible user experience.
On this page, you can see two reminders. On the left, that nine in 10 properties sold in Sweden are listed on Hemnet. Last Friday, we received early data for 2023 from Statistics Sweden for villas and can see that based on this official data, our reach is in line with last year. We can also see that our users continue to be most engaged with Hemnet, clicking on average 19x more on Hemnet listings than on listings on other portals.
It's therefore safe to say that, that as a property seller or buyer, you can be comfortable in the fact that Hemnet is the most relevant platform for your property transaction. Turning to Page 5 for an update on ARPL development. Q4 ARPL grew, 46% year-on-year, as the ARPL contribution from value-added services almost doubled. Increased demand for premium, driven by our investments in, products throughout the year, as well as our ongoing pricing work, continued to be the largest driver of this growth. Pay when listing is removed has now been live for several weeks, and the impact we've seen is in line with our pre-launch tests, specifically with regards to the increased flexibility for sellers. Now on to Page 6 and a note on the market.
While we continue to see encouraging signs in the market, as shown on the right side of this page, we are still not out of the woods, as volumes have not fully rebounded to pre-2023 levels. Early January numbers suggest that listing volumes are slightly above last year, and the market continues to be challenging for real estate agents and property developers, as you will see on the next page. So turning to Page 7, and net sales by customer category. I've already touched on the main drivers for seller revenue, so let's look at the remaining categories, namely the business-to-business customers. Marketing investments continue to be under pressure as our main business-to-business customer groups, agents and property developers, continue to be restrictive about further investments....
Q3 data from IRM showed that the display market decreased 16% and has likely continued on a similar trend in Q4. On a more encouraging note, though, we see a growing demand for Hemnet News in business- to- business products, so-called business- to- business value-added services such as Mäklartipset and Syns mer för säljare. This accounts for a quarter of total business- to- business revenue for the full year, and underscore that there is a high demand for unique Hemnet products that deliver clear value to our customers. So on to Page 8 and an update on the organization and recruitment. We remain 164 employees at the end of Q4, the same number as the quarter before. For the full year, we've added 19 employees.
I consider it to be successful year for recruiting, as we remained focused and successfully filled key roles in a market where many tech companies were instead forced to downsize. The market continues to be favorable to Hemnet, and we remain focused on our investments in talent, especially as, as these investments are yielding clear results, in execution of our strategy. We will continue to grow our organization during 2024, with a focus on key roles with product and tech. With that, I want to leave, the quarterly update behind and focus more on the full year results, starting with Page 9. I am thrilled that Hemnet has finally passed the milestone of SEK 1 billion revenue, while also delivering a respectable 52% EBITDA margin.
As you can see on these two charts, we are growing at a consistent pace and with high operational leverage. We continue to aim for an annual net sales growth of 15%-20% and the long-term EBITDA margin of over 55%. As a reminder, Hemnet does not provide financial forecast or guidance, but those figures are our financial targets, which we aim to, which we aim for. ARPL grew 37%, driven by the same forces as during Q4, increased demand for Hemnet Premium and ongoing pricing work. Now that we have touched on the high-level financials for 2023, let's turn to Page 10 and talk about the operational achievements for the year. On the left, I have included three achievements that I'm particularly proud of.
We managed to grow the business double digits, despite a double-digit decline in the listing volume. We remain in the Swedish property market, with nine of 10 properties sold on Hemnet, and our employees enjoy working here at Hemnet, and we have a high eNPS to support this fact. With regards to some of the product launches, I have included some of those that I consider most noteworthy on the right side of this page. Our new rules for republishing have a positive impact on the value of Premium, as well as to our user experience. Our upsell to the Premium package, in particular, including a free renewal, also yielded strong results, as can be seen in the growing demand for the product throughout the year.
Photos of sold properties give us a unique competitive advantage and was on one of the most requested features from users. This launch is truly a milestone that delivers significant value add to both users and agents. We've also seen engagement with My Home increase and are planning on adding more features to this product going forward. We launched the ability to pay for a listing once it's been sold or removed from Hemnet and the most requested feature from real estate agents. Finally, we launched an agent search tool, and we'll continue to develop this to better connect potential sellers and real estate agents going ahead. All in all, it has been a productive year, and I expect nothing less from 2024.
Besides the concrete launches on Page 10, I want to turn to Page 11 to discuss our work with ARPL. We think of ARPL growth as derived from four distinctive levers: product and packaging, agent partnerships, payment, and pricing, shown on this page. We can work with each lever separately and at any given time. Some periods, we may focus on certain features, and other periods we will have a different focus. The key here is that we have built and are even expanding a toolbox that should allow us for consistent ARPL growth to support the growth target of 15%-20% annual net sales growth. Turning now to Page 12 for a quick reminder on our view of the Swedish property market. This year has been an anomaly when looking at the market and especially listing volumes historically.
We've never seen listings drop like those during Q1 and Q2 of last year, but despite the drop in listings of over 20% in the first half of the year, annual listings volume came in at just - 12%. Uncertainty around affordability, interest rates, price trends, financing, and the shifting tendency to sell first and buy thereafter have all contributed to the state of the property market. That said, there continues to be a shortage of supply, a dysfunctional rental market, urbanization, and immigration to Sweden, all which increase the need for people to buy and sell property. We believe that in long term, the Swedish market will continue to be stable over time, driven by the underlying need to move as it has been in the past.... Now turning to my last slide of this section on Page 13 and an update on ESG.
I'm pleased to say that our long-term target for net zero greenhouse emissions have recently been approved by the Science Based Targets initiative, giving us a clear goal by which to reduce our carbon footprint. Furthermore, we are preparing for the upcoming CSRD regulations and defining the process going forward. And finally, we have conducted two initiatives with our CSR partners during the Christmas period. With that, I want to hand over to Anders for some color on the financial update, starting with Page 14.
Thank you, Cecilia. Let's turn to Page 15 directly, and the financial highlights for the fourth quarter. As you know, the first half year started very challenging, which resulted in around 20% fewer listings published during the first half year compared to 2022. These listings have improved during the second half of the year. In ending Q4, the listings were up 5%, and then we ended the year at -12, as Cecilia mentioned. Even though Hemnet performed strongly in the first half of the year, we are seeing a completely different financial outcome as the underlying volume develops with the fourth, fourth quarter as the shining star. So starting off on the left-hand side on this page, we have net sales increasing 37% to SEK 275 million.
As we mentioned earlier, we want to highlight a strong development for our property sellers' revenue, increasing 55%, driven by the ARPL growth. It is also worth highlighting that due to the increased average time on our listings, we moved from 37 days in Q3, now increasing to 40 days in Q4. Remember, that's a rolling twelve-month number. There are two effects to consider.
With increasing listing time, the revenues are recognized over 40 days, meaning that more revenues are moved into January. But in Q4, you also have the reverse effect since September has bigger volumes than December, and more revenues were carried into Q4 this year. The net effect is +SEK 22 million in the quarter. Reduced investments in marketing and display advertising from our B2B customers, particularly property developers, is behind the decline of 9% in B2B revenue over the quarter.
However, we continue to see increased revenue from value-added services to real estate agents and a stable demand from our bank customers. The decline is also a small improvement versus the first nine months. Our EBITDA came in at SEK 142 million, up 60% from last year. We will dive into the EBITDA development in the following slides. The EBITDA margin came in at 51.5%, up 7.3 percentage points from last year. With our business model, we had a great effect combining volume and ARPL growth, of course. Moving then to the right-hand side, we see ARPL increasing 46%. Cecilia talked about the drivers for this earlier, which were a combination of product updates, conversion to more expensive value-added services, and price adjustments across all seller products.
As expected, we continue to see a high cash conversion, which was 92% in the quarter and is further proof of our strong business model and cash generation. The small decline versus last year is primarily related to somewhat higher investments in the quarter. Leverage came in at 0.8x , rolling 12-month EBITDA, which is in line with the third quarter. This is an expected development with current earnings and an effect of our dividend, and of course, due to the continued return of capital to shareholders through our share buyback program. And I will come back to that topic in a few slides. Let's move to our EBITDA bridge on Page 16. I will go through the EBITDA development for both the fourth quarter and the full year as a summary.
As we have mentioned, very strong EBITDA development in the quarter, an increase of SEK 53 million. We have covered the drivers for the revenue earlier in this presentation, so let's instead look at the cost side. The compensation to real estate agents continues to grow at a pace similar to our seller revenue and is up SEK 24 million from last year. It is, of course, recorded as an expense in our P&L, but we also view it as an investment in the agent's commitment to our business. Lisa will soon take us through the update we are going to do this summer. Other external expenses, excluding compensation to agents, is down SEK 5.5 million.
Lower activity in general is generally driven by market conditions, but in this item, we also find, to some extent, an effect of successfully recruiting consultants as permanent employees for specific expertise, for example, iOS developers, which naturally have a positive impact on the cost item. Personnel costs have increased SEK 3.4 million, an effect of recruiting between the quarters and salary inflation.
Again, new FTEs were added in Q4, and that is the drivers behind the SEK 142 million in the quarter. Since it's a year-end report, let's move to EBITDA bridge on Page 17. Since it's a year-end report, I will also do an overview of the full year, even though the message is very much the same. As we have mentioned, full year EBITDA development, an increase of SEK 77 million, 17% that, that is.
The compensation to real estate agents continues to grow and is up SEK 41 million from last year. The absolute amount is SEK 225 million that we contribute to the real estate agent industry. As a proportion of listing-related services, meaning the compensation was around 28% for the full year. Other external expenses, excluding compensation to agents, is down SEK 3 million, despite new increased costs for a new head office and other costs related to an increased organization. Personal costs increasing SEK 60 million as we continue to invest in product development for future growth, which Cecilia also talked about earlier in today's presentation, and that is, in summary, good cost control, which is one important component when investing in future products and services and features, ultimately improving profitability for the growth journey ahead of us.
SEK 1 billion is an important milestone, but I also want to highlight the SEK 500 million in EBITDA for the year. That's also a milestone satisfying to break. Moving on to Page 18 and a few additional words on the cash flow. If we start with the graph on the left, it shows a rolling 12-month figure for free cash flow. You have heard me say this before, but being able to generate such a stable cash flow, close to SEK 500 million for the full year, in the market conditions we have had the first half of the year, is a very strong endorsement for the business and our model. We now live with the 2023 AGM decision to buy back SEK 450 million for the coming period. Hemnet's intention is to continue buying back shares and distribute excess cash to shareholders.
During Q4, we bought back 506,000 shares, equaling SEK 110 million, and for the full year, a total of 2.3 million shares, equaling SEK 418 million, have been bought back under both buyback programs. The buybacks have also played a part in increased leverage during 2023 to the current level of 0.8. It is gratifying to see an improvement and stabilization in third and fourth quarter, driven, of course, by the increased earnings. So with that said, if there's one takeaway from the financial update, listing down double digit and revenue up double digit, combining that with an increase in EBITDA margin, that is a meritorious business model. With that, I would like to pass over to Lisa Farrar to give a deeper understanding of an important update for 2024.
Thank you, Anders, and good morning, everyone. This is my 12th week as Chief Operating Officer at Hemnet, and I have so far spent the majority of my time meeting customers, agents, and getting to know the team. I've joined a company with an amazing culture and a unique relationship with customers, and especially with the real estate agent community. And I see many opportunities going forward, how we can continue to develop win-win products to further grow those relationships. Today, I will focus on a specific update we are doing to the compensation model. Turning to Page 20, our starting point is a mutually beneficial win-win partnership with the real estate agent community. From our foundations in 1998 to our growth strategy that is founded on growing ARPL, we work in close partnerships with the agent industry.
I want to specifically focus on the point in the bottom left that says, "Agents grow with Hemnet through the compensation model," and spend some time on this on Page 21. I think this is a powerful chart as it shows that our success is closely linked to the agent's financial success. This year, we will pay out SEK 225 million in total compensation to the industry. That's up 22% from last year. At the same time, our ARPL growth has been 37% for the full year. We have designed a model that can benefit Hemnet as well as the agent industry. Since launching Plus and Premium in 2019, we have revised the compensation model twice.
Once when we added the sales commission on top of the administration fee in 2019, and a second time in 2021, when we adjusted the commission levels and administration fee. We regularly review the impact of the compensation model to make sure that this is a sound investment for Hemnet, both from a relationship as well as an economic perspective. However, as our product portfolio for sellers has matured and both conversion levels and recommendation levels have increased, we consider the timing to be right to review this again. In line with the more mature product portfolio, we have gathered richer data and insights, and it is based on these insights that we have decided to make changes to the compensation model.
I therefore want to turn to Page 22 to walk you through the rationale behind the changes, as well as an overview of the updated model. Plus and Premium have become the obvious choice among sellers. We see that the potential for a successful sale increases with these products, especially since listings with Plus and Premium generate more traffic, which statistically leads to a higher sale price. Furthermore, increased exposure from such listings may generate more contacts and business opportunities for real estate agents. The agent recommendation play an important role in seller's selection of packages, with three out of four sellers following the recommendation of their agent. By changing the commission levels and calculating the commission based off total revenue from all products sold, not just all VAS products, we can better reward agencies that recommend Plus and Premium.
We will also make significant improvements in the publication process by removing the need for paper contracts for most sellers, and therefore, consider making the administration fee a fixed amount, an appropriate move following this change. We want to pay for performance similar to previous model, and have therefore made a VAS recommendation, a prerequisite for an agent to earn sales commission. Starting July 1, 2024, we will change the way we compensate agents in line with the updated model. I want to highlight that the primary driver for this change is to increase our VAS revenue and to provide agents and officers a fair, simple, and incentivizing compensation model to grow their business alongside Hemnet. Let us now turn to Page 23 for more details on the updated compensation model.
Here you can see the previous model on the left-hand side and the updated model on the right. We've also included the main changes in bullet form for clarity. Today, we have approximately a 50% recommendation level from agents, and as VAS recommendations has become a natural part of the agent's workflow, and that the publication of the listing has become standardized and will become even easier going forward. We believe that these changes will create the optimal foundation for agents to continue growing their total compensation alongside our ARPL. Turning to Page 24, a comment on the change to the publishing flow of a listing. Agents have a number of tools at their disposal to promote and inform about Hemnet's VAS. Educating agents about key selling points and advantages of VAS is a priority for our sales team.
We will also be launching better visualizations, so that agents and office managers can better track their compensation levels, and to be able to see both future as well as historical compensation. By launching a digital publishing flow, we are creating yet another tool for agents to better sell VAS. Historically, agents have had to carry with them a paper contract to their sellers for signing up to a property listing.
Starting in Q2, we will replace most physical workflows with a digital publication process, enabling agents to skip having to carry a physical contract with them to the intake meeting. Furthermore, by digitizing the publication flow, this will create opportunities for more agents to recommend the VAS and for more sellers to see this recommendation and to closer track the progress of the listing online than before. This is a great Hemnet benefit to Hemnet for increased compliance and satisfied customers and partners. With that, I will hand you over back to Cecilia.
Thanks, Lisa. I want to say again, how proud I am of those results, as well as the upcoming changes to our business. We have shown not only that Hemnet can grow in a challenging market, but that we can grow in close partnership with our customers to create a great user experience for both property sellers as well as buyers. With that, very brief summary, I want to thank you for your attention and turn to the Q&A.
If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Daniel Ovin from Nordea. Please go ahead.
Yes, good morning, Cecilia, Anders, and Lisa, and congratulations on a very strong report, and thank you for taking my questions. So the first question is on the very strong uptick we have seen here in the average revenue per listing, and it had also been strong previously this year, up around 30%, but now you have this very strong uptick here. Anders, perhaps you can elaborate a bit on this effect of longer duration of listings going up to 40 days, and if I hear correctly, you mentioned a number of SEK 22 million positive from that. So that seems to explain quite a big share of that uptick. So maybe you can talk a little bit more, if that is correct, and also, how should we think about this for Q1? What will be that effect? That's my first question.
Hi, Daniel. Thank you. Of course, I will. And also we can start with, again, telling you all that this is not a new accounting principle or something new that we have changed in our way of reporting. It's just an effect of the increased listing time, as you also said, Daniel. But, then again, there are two effects to consider. The special effect you have in Q4 is the fact that September has big volume than December, so we are carrying over more revenues from Q3. I mean, it's the old Q3 we talked about now, it's Q4 this year. And that effect, if you combine those two effects, the net effect is plus SEK 22 million in Q4.
And how to think about in the future, you will have the same effect going further, but it's also very much depending on how the listing time are developing. But if you have SEK 22 million on revenue, that is. Yes, and, of course, we will have the same story next year, meaning that if you end the quarter with a big volume month, more volumes will be carried over to next quarter, all else being equal, of course. I hope that gives you a little bit more understanding of the effect.
Yeah, but for Q1, then March, is that considered a big month then? Because the effect then for Q1, is that typically negative then, or?
Yes, March is a big volume month, yes.
Okay. Okay, all right.
You have to speculate how the listing average time are developing, and we don't know that.
Yeah. All right. Okay.
Of course, yeah.
Yeah, all right. Then just following up on that uptick in average revenue per listing. So, even including that SEK 22 million, there seems to have been a bit of an uptick as well. And I just wonder if this launch of pay when removed has been a meaningful driver of that, and if that is the case, maybe you can just mention if that conversion related to higher premium or premium listing, for example, or is that more based on, you know, pricing up for that service? That's the second question.
Yeah, I would say that the pay when listing is removed adds a flexibility for the sellers, so they can now choose between paying upfront or paying when they remove the listing. And I would say that it's one part of kind of increasing the flexibility and ARPL, but I wouldn't say that the uptake is linked to the pay when listing is removed. I would say that we have many, like I mentioned, we have many different levers, but I would rather point to that these products are really sought after. It's very demand-driven, and we've seen the uptake for especially Premium during last year increase over time, and especially then during Q4, leading up to year's end.
Okay, perfect. Then just one final question here also, and that's on the cash flow side here. And there seems to have been a quite big negative impact from working capital, much larger than we have seen in previous quarters. And I'm just thinking here that that is related to this, pay when removed service. So perhaps you can, Anders, talk about that, if that is the case, and also how to think about that going forward. Is, is that the—shall we continue that to come up even further, or, or will you still be kind of operating with negative working capital going forward? That's my last question. Thank you.
Sure. It's—yes, you're right. Pay When Listing is Removed is one of the reasons why the working capital movement is negative in the quarter. But again, looking at the working capital movement for the full year, you see something else, only a negative SEK 4 million or so. But there are one other effect that you need to understand, and it's Q3, again, ends with a high revenue amount, September, with a correspondingly high amount of deferred income liability, with Q4 ends with a low revenue amount, with a correspondingly low amount of deferred income liability. And of course, this seasonal effect amplified the longer listing duration. I mean, working capital liabilities are essentially free financing for operations, so going down, that's negative for us. I would say there are two big explanations of the negative development in the quarter.
All right.
If you look at the positive cash flow development, the line below.
Yeah. Okay, okay. Great. All right. That's all my questions. Thank you very much.
Thanks.
Thank you.
The next question comes from Pete-Veikko Kujala from Morgan Stanley. Please go ahead.
Hey, guys, it's, it's Pete. Three questions from me. Could you give some, some color on, like, how common has the pay when removed become among consumers? So I'm, I'm not talking about the, the upsell impact of that, but has it become a, a popular product with, with sellers? Then the second question is on the commission share with, with agents, and more precisely, the fixed 600 SEK fee per published listing. So will this fee be updated, I don't know, on an annual basis, or do you expect it to stay at that 600 over, over time? And then the last one would be: How do you think about hiring new heads for product development in 2024? Thanks.
So the first question I can answer was on Pay When Listing is Removed, and we don't disclose the exact numbers, but we do so, we can see that it's very well received, and it's in line with during the test that we ran during last spring. So I think it landed very well, and I mean, our strategy going forward is to continue working with it, kind of giving our customers the flexibility, and this is one step in that direction.
Maybe I can take the second question as well, and just to mention on the commission fee that, yeah, I mean, now the starting point now is SEK 600, and we might review that going forward, but that's a question for later. But we will, I mean, review it on a regular basis, I would say. And on the third question with recruiting, we've had the successful recruitment year this last year, especially when it comes to certain talent and certain that we have been lacking actually before. So we're very happy with that, but as you saw, also during Q4, we're quite flat.
Looking into this year, we will continue to recruit if there are any specific competence or any specific skills. But we will also put a lot of effort into making sure that we are fit for fight with the organization that we have, and that's also one part of Lisa's job now, to kind of make sure that in the stage that we are in, that we have the best possible way of working with the people that we have today. That's the main focus, that we will add competence and people where needed in order to deliver on our long-term growth strategy.
So it sounds like you are a little bit more, like, opportunistic in terms of personnel needs, as opposed to saying that, "Yes, we already know that we have a need for at least, like, 20 new people next year." Is that correct?
Yeah, I would say, I think that we're in the middle right now of making sure that we are fully set to take on the next step in our journey. We know that, I mean, that's been the case for the years that I've been here, that we need to make sure that we add on people while we grow. For example, the last year, we had a lot of focus on active developers, for example. We've also brought in more BI and so forth. I think that it's, in a way, natural to bring in an upgraded, an upskilled organization with new competence as we go. But I would say it, we haven't really set. It's rather making sure that we'll have the people and the skill set to be able to deliver on the strategy and the plan going forward.
All right, many thanks for these. Thanks.
The next question comes from Giles Thorne from Jefferies. Please go ahead.
Thank you. The first question, not surprisingly, is on the. In fact, all questions are on the new commission model. So the first question was, it would be interesting to know how many agents would see their total compensation go down under the new model, assuming no change in their behavior, you know, no change in their level of recommendations.
The second question is, it would be interesting to hear at what point the value of Premium to a seller begins to diminish because so many people in their area have taken it. And actually whether you're seeing that in any particularly popular areas of Sweden. And then finally, and forgive me for asking the obvious question, and apologies if I've completely missed it, but what's gonna be the impact, you think, on margins from the new compensation model? Thanks.
So what we can see on the compensation model is that we have seen an increased uptake on agents signing on this provision agreement, and also that more and more agents are recommending these products. It's a very positive momentum, I would say. And we have also, I mean, we are, in a way, maturing, as we go along the journey, and we get more data as we go. And one thing that we added, I don't know if it was a year ago, maybe one and a half year ago, was also the possibility to follow and track and make sure that we could link the agent, the work that the agents are doing and recommending the product with actual sales.
So when reviewing this model, I think it's a very natural step to kind of review the model, based on the data and insight we have. And it's clearly so with this model, that we want to award an incentive. I mean, we want to incentivize everyone to put some time and effort and into recommending and selling this product. But it's also clear that it's a pay-for-performance model. It was the case before as well, but I would say it's even a bit sharper this time, meaning that we want to make sure that we reward the agents that actually put the effort in there. So there will be agents that get more rewarded, but that and some people that will, in a way, lose out.
But I would say everyone has the same possibility going forward, and we will also put a lot of effort in both the time and resources during the spring to make sure that the agent community or the offices, that they are aware of the model and making sure to help them how to kind of address this. So we want to be a partner in that sense, that we have some time now to explain the model and make sure that they are fully aware and ready when the model is launched first of July. So the second question was on the value to sellers, and I think that it's again coming back to seeing this as a journey where we are maturing and that where we're improving, adding future functions in the different products and packaging.
For example, if you look at Premium as a product, and then there are two, I would say, clear value adds to that. One is that you can stand out in the search result list. You have more pictures, for example, and the other one is also the free renewal, and both of them are, I would say, drivers behind the sale. We don't see, and we don't hear, from our customer that the value is of those sell products are diminished, rather actually that the sellers appreciate this product. And this is obviously something... I mean, we follow and track that and make sure that we have the most relevant products depending on the market situation.
I've said this before, and I think it's worth repeating, that now this, the product portfolio we have today is the one we have today. But going forward the next coming years, that will probably continue evolving and making sure that we add value, change value, change the packaging, maybe add a new package and so forth, to make sure that we always are on top of and delivering value to our sellers and to our customers. And the third question, impact on margin. I think this compensation model, we did a change, and now it's three years ago, when we did a bit of a change where we changed the foundation of the model, and this is the next step. I would say that this is another type of change.
It's another update. And the main focus now, our main ambition here, is to increase sales of our products. That's the main part, and we're very happy with partnering with the agents and also seeing the value that they add into the process. So that is kind of our key focus. And hopefully, this will also make sure... I mean, this will help us in continue growing for the years to come and reach our 50%-20%, and also making sure that the agents are part of that growth. So that was a very long answer without answering your specific questions.
Very good. Thank you. See you.
See you.
The next question comes from Eirik Rafdal from Carnegie. Please go ahead.
Yes. Hi, team, Eirik from Carnegie here. Thank you for taking my questions. I've got a couple. I think maybe this first one goes to Lisa. You, you said that around 75% of the sellers follow the recommendation from the agent and that around 50% of agents actively recommend today. Could you say anything about those 50% that are actively recommending a package today? How many of them are already recommending a plus or a premium package?
Thank you for your question, Eirik. We don't comment on those details, unfortunately, further than what I gave in the comments earlier.
Okay, that's, that's fair. Just to follow up on the commission model as well. Again, beyond the alterations to the pricing and the structure, will you be altering any other terms with the new model that we should be aware of?
No, Eirik, nothing, nothing further than what we already shared with you, so no other changes.
Okay, perfect. Thank you. And just a final one from me as well. You know, you're heading into a year where volumes will be more like not the tailwind instead of a headwind. If you were to overshoot your long-term growth guidance like you did in 2021 and 2022, how should we think about capital allocation and excess cash in 2024?
I think... Should I start, Cecilia or you?
Yeah.
I think there's no change to that. I think the dividend policy we have, together with, the saying we have done this year, and together with AGM decision, that we will continue to use excess cash to, to, distribute to shareholders. That won't change.
And then we can anticipate the proposal for a new buyback program by the new or the next AGM, maybe?
Yeah, that's what you can prepare for, at least.
Perfect. Thank you for taking my questions.
Sure.
The next question comes from Giles Thorne from Jefferies. Please go ahead.
Thank you. I think it's better to get back on so quickly. It was a single question. It would be useful to understand how involved agents were in the development of the new commission model. Were they in the room giving feedback as you went along, or were they nowhere, and they're learning about it today? Just some color there would be very useful.
Yes. I think for us, it's been very, very important when reviewing this model to make sure that we put the right incentives in place. I would say that the team here has put a lot of effort into looking at different alternatives to make sure that we really, truly find a win-win and sustainable model over time. We have not communicated this model until today, actually. So this is the first time we communicate. We have had some agents having some pre-information, but otherwise, we're now putting a lot of effort from today and the rest of the spring to make sure that everyone understands the benefits of the model and the change that will take place from first of July.
Yeah. Thank you.
As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad.
Thank you. It looks like there are no further questions on the telephone line, so we will address a couple of the questions that we have received in the chat function, starting with the following: As you have started to digitalize the listing workflow, still early days, but can you discuss any initial signs, trends in package selection? Is it developing as you expected so far?
It's a bit too early. We're still in development phase. This is an initiative where we have had a lot of different feedback throughout the journey from agents, making sure that we put a good workflow in place. But it's still too early. It's something that we will roll out during the spring, so no data as of today.
Thank you, Cecilia. The next question is: Can you talk through your revenue recognition of the Pay When Listing is Removed and Hemnet's Premium products? Should we expect cash flow from operations to lag revenues? And similarly, can you talk about when agent commission costs are recognized?
Yes. A bit of background, short one. Before introducing Pay When Listing is Removed, we had a pricing structure based on pay when published. When we introduced the additional payment option, we were naturally required to differentiate them in terms of pricing, a practice that is common today. So we established a regular price and another one, if you choose to pay early. And of course, we take that into consideration, and of this and everything else when we do determine our pricing.
But what you also should remember is that when you choose to Pay When Listing is Removed option, it's actually based on Pay When Listing is Removed or at the latest four months. And then you also know that the average listing period is 40 days. So then, you know, we can calculate fairly well how the effect will be. So the people choosing the later option will pay their for the listing in average, 40 days after, as per today, at least.
When it comes to Premium, it does not change. And when it comes to revenue recognition, it does not change. Because, I mean, the revenue recognition is steered by the average listing period and not the payment option. Can you talk about, there's no change when the agent commission costs are recognized. It will be the same as previous.
Thank you, Anders. Here's another question for you. We mentioned that SEK 22 million was carried over to Q4 due to longer listing times. Is that total accrued income, carried over in Q4 2023, or is it + 22 compared to Q4 2022?
So that's a comparison with Q4 2022, so the net effect in Q4 2023.
Thank you. The next question, I believe, is for you, Cecilia. You commented that nine out of ten sales in 2022 went through Hemnet. However, there has been media talk about this now being only eight out of ten. Do you monitor this yourselves, and do you see a negative trend?
First, I think it's important to say that there has always been properties sold outside of the open market, and that will probably continue doing so, going forward. When we look at our data, and we base our data on the statistics within this, on sold, sold properties, I would say. So that's the official data. We can say, say that nine out of ten sold properties have been advertised on Hemnet sometime during the sales journey, and that has not changed. That has been very stable over time, you know, a bit up, a bit down, but very stable over time. So we haven't seen anything any change. And I would also add that last week, we also received the first preliminary data from Statistics Sweden for villas last year.
When we're looking at the data and analyzing that, we cannot see any change. Then I would like to add also that looking at different surveys, I mean, I've been with the company for seven years, and I think that a couple of times, you know, once, sometimes, you know, you get these surveys, and I think it's very important also to make sure that you ask yourself who is actually behind the survey, what's the purpose, and how is the survey conducted?
I think it's very important to look at. I mean, we base our data on the fact and the sold data versus some of the surveys are also based on the feeling or subjective feeling of something. So obviously, I mean, we monitor. This is very key to us, that we get you know, as many properties for sale at our platform, and we haven't seen any change to that.
Thank you, Cecilia. We have one more question in the chat, and then after that, we can address a final question in the telephone queue. But here is one more for you, Cecilia. Could you please elaborate on how the Pay When Listing is Removed adds flexibility to the historical setup, as well as how it adds value to Hemnet?
Okay, so flexibility, I think we're coming from a place where everything was quite fixed. You had one product, you had one way of paying and so forth, and we're moving into a now a world where we will add flexibility to cater for different needs. So from a seller perspective, you can choose now to pay up front, or you can wait with the payment until you remove your listing or sell when your listing is or your property is sold.
So that adds a big flexibility, and it's also been a request from both agents and sellers. And obviously from Hemnet, I mean, this is also adding this new flexibility. I mean, we work with pricing and packaging on different ways. And today, if you choose to pay now, you pay one price, and if you pay at a later stage, you pay another price.
Thank you, Cecilia. Those were the questions in the chat queue. We'd now like to address the final question in the telephone queue, please.
The next question comes from Pete-Veikko Kujala from Morgan Stanley. Please go ahead.
Hey, guys. It's Pete again. Actually, I have two. But one follow-up on the commission changes still. Well, not necessarily the change, but I know Giles was asking about, like, whether agents have been involved in this update process or not. But I guess I would frame it a bit differently, like, how actively does Hemnet have discussions with agents about the commission in general? So what portion, essentially, what portion of agents in the market might not even notice this change that you're making? That's the first question.
I mean, we have an ongoing dialogue with the agents, regarding different matters, always, like, on a daily basis, and then, from our sales team, to our customer support, to our business development, to product development. So there's a lot of dialogues and a lot of feedback, coming in. And I think with this model, I mean, our model is this, we have an agreement with the agent office, and, as I said, now we have some time, to roll this out during the spring to make sure that everyone is involved. We did pay out almost SEK 250 million last year to the agent community. We're very proud of that, and, I mean, our ambition is to increase our sales and also make sure that we grow and the agents grow with us, and that's our, our key messaging and our key ambition here.
Right. So basically like the agents out there on the street, like helping their customers, how closely do you think they are thinking about this commission structure when they are guiding and talking with their clients?
No, but I think it's. I think today it varies. I think it varies a lot, and I think that we also need to make them aware also of the different benefits, and we need to make sure that they understand our product, the value our product delivers and so forth. So that's our focus during the spring, to make sure that everyone is on board, so to say. So that is our focus. But then also from another perspective, I would say that, I mean, the model that we are bringing out there, it's also very important.
We know that these products are adding a lot of value, but, I mean, this could vary depending on where you are in Sweden, what kind of product you need to take on. We trust that agents, you know, have high integrity, and they are the ones that know the local market and know what's needed. So the model is also... I mean, we're not forcing everyone into recommending Plus or Premium. That's also very important to say. So it's a flexible model in that sense.
Yeah, understood. And then the second one is a quick one, kind of triple-checking on the SEK 22 million impact that you were talking about from the listing duration. So just to be clear, like, is this SEK 22 million, that the impact was SEK 22 million larger than it was in Q4 last year, in 2022? Is that the way how to interpret this?
Yes.
All right. Yeah. Thanks a lot. That's all for me. Thank you.
Thanks, everyone, for dialing in, and have a good day.