Hemnet Group AB (publ)

to this teleconference of Hemnet Group's presentation of the results for the first quarter of 2023. My name is Cecilia Beckstruth and I am the CEO of Hemnet. And before I introduce my colleagues, I want to take a moment to briefly talk about this fantastic picture that decorates the cover of the report. This is a photo from the fourth installment of Good Hemnet Gala that took place in March this year. This is an annual gala that Hemnet organizes to recognize the achievement of the real estate industry and has, since its inception, become an essential part of the annual calendar for many agents, franchise owners, and property developers. It was an entertaining and important learning and a great opportunity both for myself and many colleagues to mingle with some of the most important with some of our most important business partners. With that, let's turn to page two so I can introduce my colleagues who participate in this call together with me. With me today, I have for the last time as interim CFO, Jens Melun, as well as Nick Lundahl, our IR manager, who will be assisting with the Q&A. Now turning to page four for a summary of the quarter. Q1 was a challenging quarter for the Swedish property market. Concerns and uncertainty over interest rates and cost of living have contributed to some consumers choosing to hold off on selling and buying a home. Despite this, I'm happy to say that Hemnet grew revenue from sellers by 11.7% and total net sales by 5.8%. all while seeing paid published listings decrease almost 20%. This is the greatest decrease in listing volume that we have recorded in our data, which is why I hope that the demand for our products, especially the seller products, and our ability to execute our strategy outweighs the macro and economic challenges present for us. This quarterly result is also a clear testament that our product remains attractive even in a weaker market. ARPL, the average revenue per listing, continues to be the main driver for our growth, with growing demand for our value added services, as well as ongoing pricing work, building the main contributors to ARPL growth. It grew 2%, resulting in a margin of 45.9%, This moderate growth is partially a result of significantly lower listing volumes, as well as our continued investment into product. Overall, I'm pleased with this result, especially given the circumstances in the property market. Turning now to page five and the article development. Arpil grew 38% during Q1, driven by a combination of product, conversion, and pricing. This growth offset the 19% decline in listing volumes. The growth in Arpil is a result of increased sales of our larger packages, especially premium, and of the value-added service renewal, as well as continued work on pricing. This shows that our investments in product development are creating the desired demand and added value for our customers. For example, the increases of renewal are a direct result of the changes we made to make restarting the listing on Hemnet faster and easier. By working in an agile and adaptable manner, we can make sure that we meet our customers' needs and build more relevant and impactful products. Moving now to page six and the net sales by customers. Let's dig deeper into where the 5.8% growth in net sales comes from. The predominant driver is revenue from property sellers, which despite the all-time low listing volumes grew 12% this quarter. Our continued work with product and pricing can be attributed to this growth. Real estate agents' revenue grew 3% despite continued high uncertainty in the real estate market. Agents continued spending on Hemnet in order to secure their next seller, strengthen their branding, and gain an advantage over the competition. This growth is especially encouraging given our many product improvements since last year, and specifically as real estate agents. Property developers continue to struggle as the market uncertainty means that consumers are less willing to buy properties under construction, and material cost increases are impacting project budgets for property developers, leading to necessary reviews of the overall cost base, including marketing investments. Net sales from advertisers declined 11%. partially due to declining traffic, as well as widespread reviews of companies' cost base due to the uncertain macroeconomic environment. We attribute the traffic loss to fewer listings, fewer visits from our so-called power users, and tough comparables in 2022, when the property market was more active. Banks are a clear exception, with increased demand and marketing spend from this customer group. As Sweden's fifth largest web platform in terms of reach and with high relevance and affinity, we are well positioned as the best option for companies looking to reach audiences interested in the housing market. Let's turn to page seven and the quick update on our 2023 roadmap. During the previous quarterly report, our studio and my colleague, Francesca Cortese, walked us through the Q initiative and product roadmap for this year, 2023. I want to refer back to this roadmap shown here to provide you with a brief update on the most important product launches during Q1. As this is a page we have talked about before, I will not spend more time here, but instead turn to page nine and our product updates. For consumers, we have identified three key initiatives for 2023. These are secure listing content, content discovery, and super personalized experience. During this quarter, we spent most effort working on the first and the last of these. With regards to securing listing content, this is important to strengthen and maintain a homeless position as a go-to property portal with the most comprehensive and relevant inventory. Starting off with an important update on how listings are renewed using a renewal product. Previously, a listing would have been taking off for 23 days before being able to be renewed. We changed this rule during Q1 2023 so that now any listing older than 30 days can be renewed with real-time statistics. For HEMS premium, this service is included in the package, whereas BOS and PLUS packages pay extra for renewal. We are also testing a pay-lative feature, allowing sellers to pay for the listing once it has been sold, or after a fixed amount of time. The purpose of this test is predominantly to increase the entry barriers to HEMS and reduce the number of reasons for listings to be off-market. This is a test to secure listing content, but if and when launched, such a product will be structured in a way to have a positive impact on article and seller revenue. We are structuring the product to have a minimum impact on our networking capital, cash flow, and credit risk using a payment partner to manage these aspects. So I'm sorry about this hiccup. We have some technical issues today, unfortunately. But coming back to the presentation, I was talking about our product improvement and development on our consumer side during the quarter. And I want to finish off on this slide, also saying that we're working on providing consumers with a more personalized experience by developing our valuation product launched earlier this year. A user will receive the prompt when the valuation for the tracked property changes giving users more resources to come back to Hemlent. Now turning to page 10 and seller products. On the left side of this page, you can see our artful growth from value added services. We are making good progress on this front as a result of increases of our larger packages and of the renewal product, as well as continued work on pricing. The continued growth in ARPL is evidence that our investments in product development are creating the desired demand and added value for our consumers. In addition to ARPL growth, a key focus is leveraging the agent boss recommendation. Today, one in three agents recommend the bath to their seller, the value-added services to their seller, but two in three sellers follow that recommendation. So here we see the potential in growing the number of recommendations. We have, during this quarter, for example, added a new step in the listing package selection flow that prompts the seller to reconsider if they select another package than the one recommended by their agents. Now turning to page 11 and business-to-business. Demand for HEMD products from real estate agents remains consistent, and we are pleased that traffic to our agent search flow launched in 2022 continues to grow. Furthermore, we continue seeing conversion to Sundsmed till Säljare increase as more agents want to stand out in the agent search flow. We continue working with our attractive and diverse product portfolio for agents and are also working on new commercial products that will be launched during the year. The market for property developers remains exceptionally tough. A high hesitance discourage the buyers from buying unfinished products or projects with high leverage. Despite the challenging market, there is demand for HEMNET products also from this customer category as they are to dispose of existing inventory stronger than ever. We have updated the terms for our listing package aimed at small and medium developers to be a subscription rather than a one-time fee, and have opened up unsold Mäklä Pipsa plots to developers. Now turning to page 12 for an overview of our organization. During Q1, we added fix and produce for a total of 141. This is a year-on-year increase of 20 employees compared to 121 in Q1 2022. As previously communicated, most of the joiners for Q1 were already signed during Q4 of 2022. We continue maintaining cost control across the business. An approach we consider sensible given the current financial climate, despite the stable and cash-generative nature of our business. I want to reiterate that the recruitment stage for the remainder of the year is expected to be significantly slower than that of last year. On Tuesday next week, I look forward to welcoming Anders Ernaas as our new CFO. He will join earlier than previously communicated and replace Jens Melun, who has served as interim CFO since August 2022. And he will now go on paternity leave before rejoining him as head of group accounting and control. I want to take the opportunity to thank Jan for stepping up into this important role and doing a fantastic job during his time as interim CFO. And we wish you the best of your leave and look forward to welcome you back during the fall. I want to finish by saying that we are currently looking into how to best organize our commercial operations going forward. This is to optimize the strength of our talent pool and to leverage our investment in future growth. Now turning to page 14 and an update on the market. We, of course, received a lot of questions on the property market. even more so in the past few months, given the development in listing volume. This is totally understandable, as we are faced with unprecedented drop in listing volume. While we do not have a crystal ball for when the situation will turn, we have prepared some slides to provide you with an understanding of some of the drivers behind the current market environment, as well as potential catalysts that can lead to more normalized markets going forward. I think that the words uncertainty and hesitance summarize the current state of the Swedish property market. Uncertainty both around interest rates as well as affordability. Consumers are uncertain around the direction of interest rates and mortgage costs as well as inflation, cost of living and affordability. This hesitance in turn has a direct impact on both buyers and sellers and leads to fewer listings and transactions. We can see that transactions are being done, and there is a balance in the market, but at a lower pace than before. Nineteen percent is the largest drop in the new property listings for any quarter for as long back as we have comparable data, which is why, in particular, plans at Hemnet during this time grew its revenue for property sellers by almost 12 percent, despite the difficult market conditions. Turning now to page 15 for an overview of historical listing data. Looking at historical quarterly data for as far back as we can, we see the fluctuations have varied from approximately minus 14% to almost plus 30% for any given quarter. Q1 2023 is clearly an outliner as we have more previous lists in any quarter with a sharp drop in listing volume. What we can observe, however, is that most periods of uncertainty in recent times have both positive and negative quarters. Negative quarters are usually followed by some sort of catch-up effect. However, it is difficult to predict exactly when this effect comes into play. Looking on the right-hand side of this page, we can see that annual listing volumes tend to be stable despite quarterly variances. and we remain confident in the stability of the Swedish housing market driven by need to live. Turning to page 16 and the potential catalyst that could impact the market going forward. We are still in a hesitant market when it comes to listing volume. However, we have identified a number of events that are potential catalysts to a more fluid and normalized property market. With regards to interest rates, there is some expectation that rates will peak at some point in the near future, perhaps during this year, 2023. Once the trajectory of interest rates becomes clear, we believe that the decrease in uncertainty around affordability and higher willingness to transact could have a positive impact on listing volumes and market sentiments. During 2023, there is a high amount of mortgages up for refinancing, according to the Swedish financial institution. Refinancing of mortgages may drive homeowners to reconsider the living situation in order to manage living expenses, which could also have a positive impact on listing and transaction volume. In our internal data, we saw that sale prices and asking prices are converging, while sale times are going down from the peak we saw during Q4. This is evidence that there is greater alignment in the expectations among buyers and sellers and heads well to a more fluid property market. Finally, our buyer barometer survey, a survey we conduct on a monthly basis to measure price sentiment in the market, is showing the most positive price expectations since mid-2022. 62% of respondents expect prices to remain unchanged or increase. This, too, is true as we find that expectations are aligning as transactions volume may pick up. During 2022, I spoke about the gridlock effect, during the greatest stress to the mobility of the Swedish market, if buyers and sellers become locked into their property because transactions have frozen. It is therefore positive that expectations are moving closer between buyers and sellers, and this significantly reduces the risk for a gridlock effect. Now turning to page 17 for some closing thoughts on the market shutter. Despite the challenging property market, we remain confident in the long-term outlook of the Swedish property market and of our business. The factors that we have control over are progressing well, and we continue to invest in products and in our teams in order to be in the best possible position for when the market normalizes. This includes maintaining Hemnet's position as the number one property portal. It is important here to note that despite the dropping listing volumes, we have not seen a material effect on our market share of transactions. These are not happening off-hamlet, but instead happening at lower volumes. Focus on updating product and pricing in our seller portfolio and continuing development and commercializing the agent search flow that was launched in 2022. I will now hand over to Jan who will provide us with a financial update on page 19 for the last time before handing over to Anders.

Thank you Cecilia. Let's turn to page 19 and the financial highlights for Q1. As Cecilia has talked about, 2023 has seen a historically slow start to the year for the property market. This of course affects Hemnet's financial performance and especially so since we want to continue investing in our products. That said, I think that this quarter shows the resilience of Hemnet's business model as we have continued to grow despite these challenging market conditions. So starting off on the left-hand side on this page, we have net sales increasing 6% to 190 million. As Cecilia mentioned earlier, This is mainly driven by a strong development for our property seller revenue, which increased by 12% even though listing volumes were down 19%. Our adjusted EBTA came in at 87.2 million, up 2% from last year. The adjusted EBTA margin came in at 45.9%, down 1.7 percentage points from last year. This is, of course, a combined effect of the current challenging market conditions and that we have continued to invest in our product development capacity. Moving down to the right-hand side, we saw ARPL increasing 38% in the quarter. Cecilia talked about the drivers for this earlier on page 5, which were a combination of product updates, conversion to our more expensive value-added services, and price adjustments. As expected, we continue to see a high cash conversion, which was 98% in the quarter. This was in line with the full year 2022 and follows that we have a favorable working capital dynamic as we grow our seller revenues. Finally, leverage came in at 0.7 times, rolling 12-month adjusted EBITDA, which is a slight increase compared to year-end 2022. And this is in part due to our leasing contract for our new head office and partly due to the continued return of capital to shareholders via our share buyback program. And I will come back to the topic of buybacks in a few slides. Let's move to our adjusted EBITDA bridge on page 20. We continue to grow our profit EQ1 from 85.5 million in 2022 to 87.2 million in 2023. We have covered the drivers for the 10.5 million growth in revenue earlier in the presentation, so let's instead look at the cost side. The compensation to real estate agents continues to grow at a similar pace to our seller revenue and is up 8% from last year. As a proportion of seller revenue, This meant that the compensation was around 28% per quarter. Other external expenses excluding compensation to agents is up 1.6 million. This mainly following increased costs for our new head office and other costs related to an increased organization. Otherwise, we continue to focus on cost control in order to maintain a controlled growth journey and increase profitability over time. Personnel costs have increased by 5.3 million, or 14%, as we have continued to invest in product development capacity, which Cecilia talked about earlier in today's presentation. Moving on to page 21 and a few additional words on the buyback program. As we communicated yesterday, the 450 million buyback program initiated after the 2022 AGM is now completed. During Q1, we bought back 602,000 shares, followed by another 220,000 shares in April. In total, we have bought back almost 3.1 million shares under the buyback program, equal to around 3.1% of total shares. With this, Hemnet has in total distributed approximately 505 million to its shareholders in dividend and buybacks since the 2022 AGM. And in doing so, we are following our dividend policy to distribute excess cash back to our shareholders. As mentioned previously, the buybacks have also played a big part in the increased leverage, which has gone from 0.3 times at Q1 2022 to the current level of 0.7 times. Sending a decision by the 2023 AGM, Chemnet's intention is to launch a new program in order to continue buying back shares and thereby distributing excess cash to shareholders. Before heading back to Cecilia to wrap things up, the final slide in this section is our financial targets on page 22. Our growth rate measured as an LTM value is now at 18%. Our profitability measured as an LTM adjusted EBTA margin remains at 50%. In conjunction with our year-round report for 2022, we introduced a new long-term profitability target of exceeding 65%. Leverage was 0.7 times as previously mentioned. And as we've said before, the management team is looking to meet or exceed the set targets. So that concludes my section here today. But before I move back to Cecilia to wrap up, I just wanted to take time to mention that this is my last report as M's Interim CFO. And as Cecilia mentioned, next week our new CFO, Anders, joins the company and will be here for the Q2 report and onwards. I myself will after my parental leave instead go back to my usual role in the finance team I look forward to working closely with Anders in the future. So with that, over to you, Cecilia.

Thank you, Jan. I will now turn to page 24 for a summary. This has been a challenging quarter for the Swedish property market with an unprecedented 20% decrease in property listings on Hemnet. Despite this, we saw a 12% growth in revenue from property sellers and a 6% net sales growth, a testament to the attractiveness of our product offering. We continue to invest in product development for the future, for when the market normalizes, to the best position we can to capture the opportunities that open up. Thank you for your attention, and we will now move to the Q&A.

If you wish to ask a question, please dial star five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star five again on your telephone keypad. The next question comes from Daniel Oving from Nordea. Please go ahead.

Yes, good morning, Cecilia, Jens, and Nick, and thank you for taking my questions. You mentioned that an important contributor to growing ARPL is the value-added service renewals. Can you give some indication of the penetration of this in the quarter and perhaps also how it's come up versus last year? And then also a follow-on question to that, and that is, is this mainly purchased by BOS and PLUS customers, given that premium, I think, has a free renewal for the first seven days is it also premium customers buying that after those seven days that's the first questions thank you.

Hi Daniel thank you for your question so we don't disclose the exact numbers but I can maybe give some color on the renewal product I think that's The changes we've made is to meet the demands from property sellers and brokers as well to be able to restart and get on top of the listing in a quicker way. And what I can say is that we've seen a very positive effect on that product change. And what we have seen during the course, I would say, over the year actually in the changing market is that the the trend for this product has changed a bit. It was very clearly before a product that we sold both in January and after summer, but now we have seen a bit of a shift where we actually see customers picking up this product throughout the year, and we're very happy with the change we made, and we're also very happy with the uptake, but that's the only thing I can say. We don't really disclose the exact numbers.

Adding to that, I think what we can also say is that just to clarify, these renewals are not included in our number of published listings that we disclose.

Okay, perfect. That's great. Thank you very much. Also, one question on the relationship here between Plus and Premium. I know previously that You said that premium has been stronger, what you have expected, perhaps on the expense of plus listings and giving the price changes that you did here in the beginning of the year, where it appears that you raised prices on premium quite much more. Have you seen that relationship change now back to going in the direction that you wish for, so to speak? That's the second question.

What we have seen during the quarter is a continued high demand for premium output. And I think that the changes we did to the product last year, when we actually added a renewal into that product that has increased, been well received and that is I would say the key for that product and that has continued to be the case throughout this quarter as well. So if you look at the ARPL growth the main drivers from a product perspective is premium and renewal.

Okay perfect thank you and then last question here and that is on personal expenses. So you're now taking in seven, eight new employees like you have guided for before. And I just wonder on that number, then the kind of 43 million in personal expenses, is that a good base to work on going forward with smaller or slightly increases this year? Or was it that many of these new employees came in perhaps end of the quarter or something like that? So the question is really, is the 43 million a good base or is there any kind of unusual one-offs there or anything? That's my last question. Thank you.

So what we can say about the personnel cost is that most of the joiners for Q1 were signed already in Q4. So I would say that many of them joined early in the quarter, but of course we have continued to have an inflow during the quarter as well. So basically what we can say is also what Cecilia mentioned in the presentation that we are expecting to keep a slow recruitment pace going forward in 2023 given the market conditions. So I think that's what we can say here now.

Yeah, okay. Perfect. That's very helpful. Thank you very much for answering my questions.

Thank you.

The next question comes from Andrew Ross from Barclays Please go ahead.

Great. Good morning, everyone. Thanks for taking my question. My first one's a short-term one around the new listing development. Obviously, it wasn't good in March. It looks like it's been quite volatile in April, and I guess you've had Easter moving around, some weather, et cetera. So what do you think is actually happening in the market right now? Do you think it is... getting any better? What are you actually observing in terms of underlying new listing trends when you think about Q2? And then as an extension to that, you've given a medium-term growth guidance of 15-20. Are you expecting to get into that range in 2023? And if not, could you give us some kind of more precise thinking for your revenue growth for this year, please, given that trajectory and listing volumes?

Hi Andrew. So on your first question, what we can say currently is that we're still in a hesitant market. We continue to be in a hesitant market in the beginning of April. Looking forward, there are a few factors here in the market, because we get this question a lot, and it's of course super hard for us to predict the listing volumes going forward. But a few factors that I think are important to bring with you is first, the historical data that we have, and as you know, the historical data shows that the volume, the listing volumes as well as transaction volumes have been very stable over time. You've seen fluctuation of quarter by quarter, but over time it's been very stable. And we still believe that that's the case. So we believe that the listing volumes will over time stabilize. The second part here is the drivers behind the lower lifting volumes. And our belief is that there is, like I said in the presentation, that uncertainty is a key thing here. I mean, there are transactions being done. So it's not a dead market at all. It is a market. And there are transactions being done. There are some consumers that are hesitant because it's so hard to, you know, the uncertainty, the trend, how the inflation will evolve and the interest rates and so forth. So I think once we have a better picture, a more clear picture on the trend going forward, I think that will put some more certainty, the consumers will be more certain and be more kind of safe. And I think that the volumes will really kind of normalize. Also, if you look during the quarter, and I have to give some data on what we're seeing as well during the quarter. Last year, we spoke a lot about, and I spoke a lot about the delta in between the sellers and buyers' expectations. What happened last year was that we were going from a super hot seller market, and then suddenly we regulated in just a couple of months, actually, went from seller market to buyers' market. It's taken some time for sellers and buyers to align on Europe price levels. What we've seen during the quarter is that that that seems to be happening more and more transactions, that sellers and buyers are more aligned on price. That is a good signal, I would say. And we also, from our buyer barometer, saw that more and more buyers believe that prices will increase over time. So there are some, I would say, highlights or positive signals. I think it's too early to say what that means from a volume perspective. On your second question, on our target, because we don't have any guidance. So what we communicate is our targets, not guidance. And we still believe in our targets. We haven't changed those targets. Obviously, given this quarter, it will be a bit more challenging this year. But from our point of view, currently, we don't see any reason to change the targets.

So just to be clear, do you still think that the target of 15 to 20 is doable for 2040, or are you saying that that's a sensible target in the medium term, but you may be below it this year, just to be clear?

I think that we haven't changed the communication with it from the beginning of the year when we re-directed our financial targets, and we also communicated a new long-term, I would say, margin target. And the target remains, and it's driven by our belief that if you will look at the behavioral trends, historical behavioral trends in the market, we can see that that volume will over time normalize.

Okay, but you're expecting some volume recovery in the second half to get from 15 to 20 for this year, logically, or is there something else I'm missing, just to understand why you're confident in that?

No, but I think, I mean, we're only in April, and last quarter we reiterated our targets. I think that for right now, the targets remain as communicated. We haven't changed anything. uh and and uh we again looking at the different factors we're seeing and then if you look back at the historical data and how the property market behaves normally uh we expect over time that the listing volume will stabilize but we don't have the crystal ball we don't know exactly when and our focus has to come back to our focus is what we can control. And I think that during Q1, we have succeeded in mitigating a bit of the decrease by actually with the product investments and the product improvements with them, with the pricing work, that we can also mitigate some of the decrease in the volume with things that is within our control. And looking ahead in this year, I think that I am quite excited for some of the things that we're doing right now and what we are is also building a better and more improved product offering. So we will, I mean, for this market, but we will also be ready when the market turns.

Perfect. Thank you.

The next question comes from Pete Veko, Kujala, from Morgan Stanley. Please go ahead.

Hey, it's Pete from Morgan Stanley. A couple for me, then I'll jump back to the queue. Firstly, on intangible asset CapEx, it's now at $9 million in Q1. Can you give any information on your CapEx plans for the year? Is this the level that we should expect to continue? Or should it ramp up from here or not? Because there's a clear trend, an upward trend. So what are your plans for intangible CapEx? Thanks.

Yeah, so what we can say is that as we have invested in product development capacity, it's a natural development that our capitalized development also increases. And that's a key one. We've also initiated a project for modernizing a platform. So that is part of the increase year over year. And that project is of course going to continue throughout the year. But that said, I think in Q1 we had some projects running from Q4 or from last year as well. So I think the Q1 is probably a bit higher than what we'll see in the coming quarters.

Okay, understood. Thanks. And then just like on the tangible CapEx, I guess that's just relating to the new office or is there something else there?

That is great.

Cool. All right. And then the second question on the buy now, pay later, which I think you referred to as pay after sale in the presentation. Does that mean that you're kind of thinking about that the user could in theory remove the listing from the site without it triggering a payment? Or how should we think about this? And also just making sure that you're not taking credit risk on this, or like the credit risk is carried by Klarna, or how does the model work?

Yeah, so the test itself is paid when removed. And it's a contained test that we currently run, and we will continue doing so during the spring. And the reason why we're doing the test or looking into this is also that we want to make sure that we don't remove all potential hurdles when publishing your listing on Hemnet. So what we are testing is a pill when removed, meaning that you will pill. sold or not, you will pay, but you will pay when you remove it. And most probably, I mean, most listings will be sold, but if not, if you haven't sold it, you will still pay. And it is a test again, so it's a bit too early to say what we will do with it. We will learn along the way, so to say. And it's right, you're absolutely right, we don't take any credit risks. We use Klarna as a provider in this test.

All right, very clear. I'll jump back to the queue. Thanks.

Thanks. The next question comes from Catherine O'Neil from Citi. Please go ahead.

Hi. Thanks for taking my questions. I just had a couple coming back to actually your thoughts on revenue growth trends this year and your target. I know listing, I guess, is hard to predict, and presumably you're expecting some recovery in the second half, but how are you thinking about ARPL growth? Do you see that one key trend as sustainable? Is that what gives you some confidence on the revenue target? And could you also maybe give us a bit more color on the other revenue lines, so agents, developers, advertising, and how you see those perhaps developing across the course of the year?

So I think my answer, we don't give guidance. I think that's important to say. We talk about targets. We don't want to talk about how we view this exact year, but if I can put some color on how we view both the art fall development as well as other revenues. And if you look at the ARPO development, and again, I think we quite encourage also soothing that in the shifting markets, I mean, the relevance of this product has grown, I would say, and also the changes and adjustments that we've made to products have also been very well received. We continue working with product development, improving the products we have. We're adding new products. We're looking into the payment flow, how you shoot your products, making that as good as possible. We continue working with pricing, and we will continue doing so. So we're focusing a lot on the things we can control, and we haven't changed our view on the potential we have in growing ARPL over time. And if you look at other advertisers, obviously, it is hard. I mean, from a market environment currently, if you look at investments, again, I think hesitancy is a good word when it comes also to the business revenue. What we do see if we look deeper into the different customer groups is that they continue feeling consistent, I would say, demand from real estate agents. And that's encouraging as well, given that we put some investment and effort into building a new I would almost say an ecosystem with finding an agent in place last year, and we started to commercialize, and we continued during the year also to add products into that area. And we also see a great momentum with banks as advertisers that are also increasing their marketing spend. Whereas on the other hand, we continue selling, and we've seen that for some quarters now property developers holding back on their marketing investments. And we've also seen, and we saw that Q4, we continue seeing that Q&Q and that other advertisers are also hesitant in their marketing investments. And I think that coming back to, I mean, we don't have the crystal ball. I think that one key thing here is that if the consumers and households will have a clearer view on the trends going forward. Once they have that, I think that the market will normalize. And when that happens, we don't know.

Okay, thanks. And just one other quick question. I'm not sure if I didn't catch it earlier, but you've nearly completed your current buyback. Are you planning to put another buyback in place? And what kind of level or amount are you thinking, if so?

So what we can say is that as we communicated yesterday, the previous 450 million buyback program was completed on Monday. And it is up to the upcoming AGM here later this week to decide if we get the mandate for another buyback program. And if so, the board will have to take a decision on that.

Okay, thanks.

The next question comes from Eric Raftel from Carnegie. Please go ahead.

Yes. Hi, team. Thank you for taking my questions. Just a couple last ones here. On the recommendations from agents, it seems to be kind of among the lower hanging fruits to continue to drive out the added services penetration. And if I understood it correctly, you sent out kind of an educational package to the agent community earlier this year to kind of boost recommendations. Can you say anything about the percentage of recommendations in Q1 versus Q4 last year and also after you sent out that educational package? That would be my first question. Thank you.

Hi, and thank you. No, we don't disclose the results of tactical efforts doing it with you and the company. uh i could say that when it comes to recommendation as you're saying we also said that the potential and potential for low-hanging fruit in improving improving the recommendation levels and we're doing several things in order to to uh to increase the recommendation level the communication and we are doing that on an ongoing basis and then in the product during q1 we also added a feature within the flow, the publication, the payment flow, where we can prompt the seller to reconsider. If the seller hasn't bought the product that the broker recommended, we prompt and ask if they want to reconsider. So that's one example. I did another picture where actually we can put in heaven's recommendation if the broker isn't recommending. So we're doing a lot of smaller things, I would say, but that all together will have a positive impact on the recommendation level.

Okay, perfect. Thank you. And just one final one for me, and I think it's one for Jens. I think it says in the deck, and you mentioned it as well, Cecilia, that listing durations are going down. Could you just remind us how this impact revenue recognition now in the quarter kind of comparable to when it was rising? And is this a headwind and or a tailwind this quarter?

Yes, what we can say about listing duration is that we had an increase in duration during the second half of 2022, peaking during Q4. And after that, we have seen decreasing duration times. And what we can say in general about the listing duration and the effect on revenue is that an increase in listing duration, of course, means that more revenue gets pushed into the following period. And this then could amplify the seasonal pattern of MNET weakening Q1 and Q3 while improving Q2 and Q4.

Okay, perfect. Thank you.

The next question comes from Giles Thorne from Jefferies. Please go ahead.

Thank you. It was a single question, please. I wanted to come back to the Hemnet Buyer's Barometer. And if I recall correctly, the March data points saw a big increase in the number of buyers expecting price increases over the next six months and a big reduction in the number of buyers expecting a price reduction. It was mentioned earlier in an earlier response to a question around the barometer as a lead indicator on potential listing developments. My question is, how good a lead indicator has it historically been

on how developments uh how listings are developed over any upcoming period thanks and i i think that the buyer barometer has been historically quite a good barometer on on the listing development overall of course we don't know but it doesn't have historically i think that I would add the biobarometer together also with, I would add, yeah, also to clarify that the biobarometer is on price, so the price expectations. So we don't know, so if we follow historically, the biobarometer and the price have been very much aligned. That doesn't mean that the volumes will increase. But I think it's a signal together also with that data we have during Q1, where we saw that buyers and sellers actually are doing transactions, and that they are lying more on price. I would say it's some sort of signal, at least. I think it's too early to say anything more, but we are seeing a bit of a shift now in the beginning of this year compared to last year, both when it comes to the listing duration, buyers and sellers actually transacting, and the buyer barometer. Of all those three data points, I would say it's going in the right direction.

Cecilia, are you happy to put a... a number of months or a time period between an inflection in the buyer's barometer and then the impact on listings, or are you not comfortable with that?

No, I won't.

Okay, fair enough. I tried. Thank you very much.

The next question comes from Pete Vaco, Kujala, from Morgan Stanley. Please go ahead.

Two questions. So on the developer revenue side, it looks to me like developer advertising is probably the main drag, but can you give any comments on that revenue line and maybe also on the impact of the new products would also be helpful. And then the second question is, I think in the presentation you showed that one in three agents recommend value-added services. Why do you think it's only one in three agents Or did I misunderstand? Because I think agents are financially incentivized to benefit from upgrades. So why wouldn't basically everyone try to upsell the value-added services? Thanks.

So on the first question, I'm not sure I got the full question, but you asked about the effect of the adjustment we did towards the property developers and the uptake, I believe, right, and their investments. I would say that the property developer as a customer segment is the most challenging customer segment. And we've seen that for some quarters now. And that affects both their overall, I would say, marketing investments in display, but also their listing investments. We have, as you know, invested in improving our product portfolio, and I think that that has been very well received. We've been targeting small and big size property developers during this quarter to make sure that they have a relevant product offering. But I think given the market environment today, we cannot really draw any conclusions on that. I think we have more of a long-term view in this customer segment. We know that at a certain point that we need also to come back and start investing, and then we are ready with our improved product offering. On your second question on recommendations, yes, it's correct that one out of three agents do a recommendation. I think this is a journey, I would say, with the agents. We've done a lot of different things throughout the years. in order to improve our product offering, but also the partnership we have with agents. I think there is, if you look at the dynamic, how it works, we do incentivize the office, but not necessarily the individual agents. It's the office that actually work in driving and kind of owning only the work process in the office and for the individual agents. I think that might be one aspect. We've also done a lot of improvements last year in how to recommend and make sure that they know and like we talked about earlier on this call also with communication and reminding about the value with the packages. So we're doing a lot of different things in order for the brokers to increase their recommendations

levels uh but i think there is a lot of potential in this area as we said and just to clarify when we give this data this does not mean that two out of three do not recommend it means that one out of three make a recommendation yeah so a lot of the communication efforts are around actually getting the brokers to make a recommendation in the first place yeah can you just repeat the the last thing that you just said so

I understand everything that Cecilia was saying, but what was the clarification that you just made?

The clarification was that when we say one in three make a recommendation, this does not mean that the two in three that don't make a recommendation, they don't recommend a value-added service. It means that they do not make a recommendation at all. So they don't enter the flow of make a recommendation. So one in three agents actively make a recommendation to their seller. And our job is to, of course, increase that number so that more recommendations are made. And hopefully these recommendations will also be four plus and premium.

All right. Thanks for that. That's all from me. Thank you.

The next question comes from Andrew Ross from Barclays. Please go ahead.

Hi, guys. Sorry, just one more small modeling one.

I think this will be the last one. Sorry, yeah. Go on, Andrew.

I'll be quick. So just some of the other external expenses, which I think was 25.6 in Q1, kind of up 6% or so year on year. Is that kind of year-on-year increase a good way to think about that line for the rest of the year because the absolute uh spend has come down uh relative to the second half run rate last year i know there was some one-off consulting fees and stuff going on in that but when we think about your cost base for the rest of the year what do we need to know about that line thanks yeah so what we can say basically is that we are uh keeping a cost-conscious uh approach uh to our other external expenses

What we can say also for Q1 is that, of course, the capitalization of development of consultants also affects this line, lowering it for Q1. But I think going forward, we are not seeing any big increases coming in.

Okay, so a similar absolute number. Okay, thanks.

Sorry, Andrew. And I also want to apologize for the technical hiccups in this presentation and for running a bit over time. Thank you all for listening in.