CDON Ab

Good afternoon and welcome to the CDO on the third quarter 2025 earnings call. My name is Hjalmar and I work at the bank as an analyst. We are joined today by CEO Fredrik Norberg and CFO Karl Andersson. Welcome, gentlemen. Thank you. And we have a lot to talk about, so let's dive right in.

All right. Yes, I'm very happy to report another strong quarter. First, let's dig in a little bit about Sirion Group. We consist of Sirion and Fyndik. We have about 100 million annual visits and we are operating an asset-light, scalable business model with a very efficient working capital structure. And we are operating in an attractive market with large potential, where we see that the marketplace is very underpenetrated in the Nordic market compared to the rest of the world. Looking into this quarter and summarizing it, we now are very happy to say that we have seven consecutive months of GMV growth and five consecutive months of gross profit after marketing growth. We still have the positive effect from our European merchants that we have been talking about yet ahead of us. And in the quarter, we have also secured a capital injection of 45 million SEK that I will dig a little bit deeper in. Looking into the hot numbers, we grew our top line sales, GMV, with 8% for the group compared to last year. Our main KPI, our gross profit after marketing, we grew even more with 12% compared to last year. And our result, our EBITDA, is now 11.5 million compared, more than doubling than last year. And worth noting is that it's even larger than the total Q4 EBITDA last year. Looking at left side, we can see the growth of GMV. We had a horrible start of the year, January and February, and then we have hit a more solid growth journey for the rest of the year so far. I'm happy to see also that both segments are growing. And the categories that stands out this quarter is electronics for Cedeon and toys for Findic. Looking on the right side, we see our gross profit after marketing per quarter. And we can now see that this is the strongest Q3 we have had in the last four years. It's plus 12%. And it's particularly strong, given that we still have a little bit headwind when it comes to the marketing costs. So with this capital injection of 45 million, we are now leaving an era of this company that we have called Back to Basics. For two and a half years, we have really been focusing on the foundation of the business, making sure to integrate and combining the two different companies, Sirion and Fyndik, into one organization in one headquarter in Stockholm. We have also migrated two different platforms into one. We have now one platform facing the consumers and also facing the merchants. We still have some stuff left when it comes to the financial flows and ERP that will be done during Q1 next year. But all in all, we are now operating the whole business from one platform. I have been talking a lot both externally and internally about this back to basics approach. It's all about having the right products at competitive prices and generating a happy customer at the end. And now with this money, we are entering into a new era, the growth and innovation. And this will be fueled by four distinct growth initiatives. Starting from left, we have the Nordic Growth Opportunity. We are already live with both segments in all four Nordic countries, but we are very under-penetrated in the other Nordic countries compared to Sweden. We know which levers to change, and we just need to focus and put a little bit more capacity in that direction. So that's the first growth initiative, to really accelerate Nordics. The second growth initiative is Tech Resource Boost. We are now adding engineers over tech, product and data departments. And this is really to grasp the opportunity now that AI comes into the picture and gives us. We have a new platform and we really want to fuel everything we're doing now from internal processes, how consumers are acting on the site and how we are integrating with the merchants. Everything can really be emphasized now with AI. And this is what we want to accelerate with this additional resources. The third part is brand marketing. For many years now, we have not done any brand marketing for neither Cedion or Fyndik. We have, though, high brand awareness. The aided awareness of Fyndik is well above 70%, and for Cedion, it's well above 80%. However, the associations, especially for Cedion, is quite weak, and this we now want to change for next year. We have been talking about this for quite some time now, and now we see that we are mature enough, and we have a supply that we can be already now quite proud of. We have competitive prices, and we are becoming better and better at the customer experience. So now for next year, we're looking forward to really reintroduce both Sirion and Fyndik to the Nordic consumers. And last but not least, we have retail media. This is pretty much playbook 1A when it comes to global marketplaces. And it consists of two parts. One is to enable for the merchants to promote their products on site. And the second part is to enable external brand owners to promote their products at relevant categories. For instance, it could be that Samsung wants to promote their latest TV in our TV category, where they know that customers are very close to choosing a TV. But still... We are very guided by our mission to unleash the power of the marketplace and to enable the best shopping experience in the Nordics. And the path to this is guided by these three main strategies. It was two before, and we have added one. So to start with, we have the massive supply, a massive supply of products that people want at competitive prices. Great customer experience. And the last addition now is an AI-first approach within the company. And by doing this, we believe also that we can close the gap to our global competitors that have much bigger resources and to really fuel everything we're doing with AI. Yes. Let's dig into the numbers now.

Thank you very much, Fredrik. Let's start with an overall high-level view on our financials. We were able to maintain momentum into Q3 that we generated earlier in the year, and we saw a double-digit EBITDA in the quarter. 8% higher GMV in a strong quarter for both of our segments, which we're now very happy to see for a second consecutive quarter. 7% higher net sales as 3P business was carrying the declining 1P business. GPAM increased by 12% in the quarter, following the higher take rate, which offset the higher marketing costs. 11.5 billion EBITDA is a significant improvement from the 5.5 just a year ago. Looking at our two segments, we saw GMV growth across both of them, following that strategic focus that we initiated earlier in the year. We continue to see growth momentum across both segments, and I'm very happy to see that they contribute to the overall 8% growth. Also very happy to see that our average order value has increased by 18% versus the same quarter last year. This is largely driven by CD-ON. We did, however, see a decline in orders, and that correlation is natural, as we then focus, and this movement is very intentional, and where we want to be from a brand positioning perspective. CDON segment grew by 5% versus last year. As we heard, home electronics is a large contributor to that. But we also believe that we're now seeing some signs of tailwind in Swedish e-commerce, which further supported this growth. A very robust and strong quarter for Findic. We grew 17%, largely driven by continued high double-digit growth from markets outside of Sweden. So two segments that are performing well in their respective focus areas and something to be building further upon. There were minor movements in take rate. They remain on healthy levels. Merchant performance fees for CD-ON offset the slightly negative mix effect that the products had on CD-ON. Selling more expensive products typically yields a slightly lower take rate. It's up to 14.7, up from both Q3 last year as well as recent quarters. The small decline in Findic, but as we remember from Q2, there were some one-off effects to that. So the 29.7 is higher than that of last year and more or less in line with what we have seen for 2025. Higher GPAM than GNV growth is something that we're really striving for. Very happy to see that. And now that CDON segment has been returning to growth for some time, we're very happy to see that GPAM in the segment grew by 7% compared to the 5% that we were talking about when we talked about GNV. The margin increased slightly versus last year as well to 7.9%. GPAM for Findic increased by a staggering 18%, slightly higher that as well of the 17% of GMV growth. And Findic GPAM now makes up just below 50% of Group GPAM. The margin was up slightly to 17.3. Our marketing costs remain high for the Group, and as we can see, the cost for Findic increased further in the quarter. We do remain very dependent on paid traffic, and it is a strategic focus of ours to reduce that dependency. We have not seen the development that we want, and we continue to focus and put all our efforts behind reducing that dependency further. At the same time, our marketing spend that we are putting in is yielding the return on investment that we are expecting, so there has not been a negative effect on our GPM margin from that perspective. Marketing costs for Cydion at 6.7% in the quarter, up versus last year, but more or less in line with recent quarters. Findic was up to 12.5% as we further drive the Nordic growth at perhaps a slightly lower profit on ad spend targets. Double-digit EBITDA in a strong quarter, and as we mentioned, it is higher than reported figures as of Q4 last year. A significant improvement from the 5.5, and it's a clean EBITDA with no suggested adjustments. We did adjust a little bit last year, following the closing of the Malmö office, having hired consultants, etc. Our OPEX is trending lower, and we believe it confirms our lower run rate. 41 million reported when excluding marketing, depreciation and amortization in line with last year or just below. Yes, it is 2 million higher than the adjusted OPEX of 39 a year ago. But we need to remember that we were a very different organization just a year ago. Just on the backside of closing the Malmö office, we were both smaller and in a very different position. Some one-off effects that we did not adjust for last year. But when comparing to the recent quarters we believe we are on track to confirm that lower run rate that we have been talking about. We're now more satisfied with the level and the long-term sort of possibility to maintain it. Positive operating cash flow before changes in working capital of 11 million. We did, however, reduce our merchant debt significantly during the quarter, impacting our working capital. So after changes in working capital, operating cash flow was negative minus 24 million. During the quarter, we completed the directed share issue of about 45 million. 35 of that has now hit our equity, and we expect another seven of that to be confirmed at the upcoming BGM end of October. Cash balance remains stable. End of quarter balance was 87 million, up from 82 at the beginning of the quarter. We believe that this level is strong and we have significantly improved the current ratio of the group during the quarter, both from the cash injection, but also that merchant debt reduction. So we are well positioned to invest in our future growth.