Hemnet Group AB

Welcome to Hemnet's Q2 conference call. 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. Please go ahead.

Good morning, everyone, and a warm welcome to this 2026 Q2 release call for Hemnet Group. My name is Jonas Gustafsson, and I'm the Group CEO of Hemnet. We are a slightly bigger group than usual today, given the extended agenda. Today, I'm joined here at our Stockholm headquarters by our Chief Financial Officer, Anders Arnulf, our Chief Operating Officer, Lisa Farrar, our Chief Technology Officer, Hanna Lindqvist, and our Head of Investor Relations, Ludvig Segelmark. Today, we have called for an extended session to cover an update on some important strategic and commercial topics and will therefore have a slightly longer presentation than usual. With that, let's have a brief look at the agenda and what we have ahead of us for the coming 120 minutes. Please move to slide number two. Firstly, we will start with a normal quarterly presentation where we will go through the financials and a business update from Q2. After that, we will follow up with a deep dive on Hemnet's market position, followed by a deep dive on both the commercial and product side, as well on the technical and AI side. As always, there will be opportunities to ask questions at the end of the presentation. We will combine the Q2 Q&A with a deep dive Q&A into one session in the end of the presentation. Today's presentation will be moderated by our operators. So please follow the operators instructions to ask questions through the provided dialing details. So with that, let's get started. And let's move on to slide number five, please. During the quarter, net sales decreased by 23%, driven by lower listing volumes paired with a timing shift in revenue recognition from Sell First, Pay Later. The financial results reflect an expected transitional phase following the nationwide rollout of Sell First, Pay Later. Amish will explain this revenue recognition effect in more detail further on in the presentation. Published listings declined by 14% and amounted to 43.3 thousands. Paid listings came in at a total of 32.9K with a difference between paid and published listings being explained by the sell first pay later listings that were published but not yet sold in the quarter. ARPL average revenue per listing grew by 12.4% in Q2 driven by higher demand for Hemnet value added services. The EBTA margin amounted to 46.4% in Q2. The lower margin year-on-year is explained by lower revenues driving lower fixed cost leverage. As volumes improve and our sell-first-pay-later listings continue to convert into sold listings, we will see a stronger margin development going forward. Now, let's turn to slide 6 for a quick look at the financial performance. Net sales amounted to 372 million SEC, down 23% compared to Q2 last year, driven by a combination of a timing effect and revenue recognition from the introduction of Sell First Pay Later and a decline in listing volumes during the quarter. As a result of the lower net sales, EBITDA decreased by 33.9% to 172 million SEC. Lower revenues leads to lower fixed cost leverage, which explains the lower margin in the quarter. The EBITDA margin amounted to 46.4%. As per usual, Anders will break down these profitability dynamics in more detail as we move on in the presentation. Now, let's turn to page 6 for a look at the underlying property market and the listing volumes development during the second quarter. In Q2, we saw a sequential improvement of listing volumes compared to the previous quarter. On the right-hand side of this slide, you will see a combined chart showing published listings per quarter and yearly published listings, as well as the year-on-year change between quarters. Published listings decreased by 14.3% year-on-year in the second quarter. The trend improvement in number of listings versus the previous quarter is driven by a number of factors. 1. The launch and the rollout of Sell First Pay Later 2. The introduction of strategic partnerships 3. New regulations implemented by the beginning of the quarter 4. More healthy underlying market transaction dynamics However, the market remains soft and the slow market also continues to be negatively impacted by longer selling times. And the average listing duration on Hamnet has increased by 33% year-on-year to 64 days compared to 48 days in the same period during the last year. Please remember that this is a LTM figure. This number is also impacted by the higher number of transactions that we saw in April and onwards, where more old inventory was sold, which pushed up the age of the sold listings on the platform. I will break this down in more detail on the next slide. All in all, a broader market recovery is progressing slightly slower than anticipated at the start of the year, but we do see clear signs of gradual improvement during Q2. So with that, let's turn to the next slide and have a closer look on the historically high supply levels going into 2026 and how that impacts the market recovery. From the spring of 2022 up until the fall of 2025, we had a gradual and steady buildup of supply of listings on Hemnet. That means that during this three-year period, more listings were published on Hemnet and in the market that were sold. You can see this quite clearly on the graph on the left-hand side of the slide, where the supply graph is higher every single year from 2021 to 2025, leading up to the record levels that we saw during the last year in 2025. During the second half of 2025, this trend started to reverse, and during the first half of 2026, we've seen a declining year-on-year trend for the first time since 2022, which you can see in the graph in the middle of the slide. This follows a pattern that we've seen historically, where a period of oversupply is followed by a correction where the number of transactions outweigh the number of new listings on the platform. From a short-term perspective, this has negative impact on Hemnet, but from an overarching level, this positively impacts the market dynamics in the quarters to come. In the last graph on this slide, you can see the age distribution of sold listings in 2026 and how that compares to sold listings in 2021. In 2021, almost 80% of sold listings were less than 30 days old. In 2026, the same number is 44%. On the same note, in 2021, only 5% of sold properties have been on the platform for longer than 90 days, whereas today that number is almost 30%. As the property market is showing signs of improvement and recovery, more sellers and buyers are able to meet, which is driving more transactions and more of the existing supply being sold. This has a short term effect on the listing days development, but it's very positive going forward as it opens up for new listings to come to the market and onto the platform. Let's move on to the next slide and break down why we expect to see a continued improvement in the Swedish property market for the second half of the year. The Swedish property market is showing signs of improvement going into the second half of this year. In Q2, transactions on the property market increased by 11% compared to the same period last year, driven by the east credit restrictions that were put into play by 1st of April. A more active market where sellers and buyers are able to meet is very positive for Hemnet and tends to drive more listings to the platform over time. After several years of higher interest rate environment, rates have stabilized into 2026. A stable interest rate environment creates predictability for buyers and sellers, which is a good sign for the period to come. We have also seen a strong price development in Q2 2026. During the quarter, prices increased by 6.2% for apartments year-on-year, while the development for detached houses was plus 4.5%. In addition to the strong price performance, we're also seeing a continued positive market sentiment on price expectations in our monthly buyer barometer, where a significant share of prospective buyers expect prices to continue to increase in the coming six months, whereas the share expecting prices to come down continue to be below historical averages. All in all, there are a number of positive signs that indicate that the market will be stronger during the second half of next year and next year, which will help listing volumes on the platform as well. And with that, I will hand over to Anders for a financial update, starting with page 9. Anders, over to you.

Thank you, Jonas. Let's turn to page 11 and the financial summary. As Jonas mentioned earlier, we are seeing a gradually improving market environment. While the volume of new published listings fell by 14% year-on-year, this represents a significant recovery compared to the steeper declines we experienced in the first quarter. The underlying volume trend combined with the deferred revenue effects from our sell-first-pay-later model resulted in a 23% decline in net sales, landing at 372 million. While paid listings fell by 35%, the widening gap between published and paid listings is driven by the SFPA listing that remained unsold at the end of the quarter. I want to emphasize that Q2 is the peak quarter for absorbing the financial impact of this transition. Following our nationwide rollout in April, where the service was offered to all property sellers for the first time, we naturally saw a high volume of initial listings under the new model, but with a relatively low share of listings actually sold and invoiced during the period. The vast majority of the revenue decline stems directly from this timing effect. In Q2, 40-45% of all published listings were under the SFPL model. At the same time, we are building a clear pipeline of around 10,000 unsold listings, which will be realized as revenue as these properties are sold going forward. Also, on a positive note, we continue to see strong underlying performance in our paid ARPL growing 12.4%, once again proving the sustained and increasing demand for our value-added services. Another noteworthy point is the average listing time, which on a rolling 12-month basis increased from 48 days in Q2 2025 to 57 days in Q1 2026 and now 64 days in Q2 2026. The year-on-year effect of the longer listing duration time is negative 13 million in revenue and the sequential effect of the seven additional days from Q1 to Q2 is negative 5.5 million. The development of listing duration time is important even at a time when parts of the revenue are recognized in full upon invoicing. Listings sold as pay now and pay when listing is removed are recognized over the advertising period. EBITDA for the quarter amounted to 172 million, corresponding to a margin of 46.4%. The margin contraction is primarily explained by the lower net sales as we maintain a large portion of fixed costs that cannot be fully adjusted in the short term to offset the drop in listings. One important component in the EBITDA margin is compensation to real estate agents. When expressed as a percentage of property seller revenue, this ratio increased year on year from 30% to 31.4% in Q2 26, driven by a further improvement in both recommendation rates and actual conversion. The high commission reflects a substantially stronger underlying improvement in our value-added products. I will walk you through the specific cost dynamics in more detail on the following slides. The increase in leverage to 1.1x is primarily an effect of our active capital allocation, combined with a drop in paid listings during the period affecting rolling 12-month EBITDA. Notably, we expanded our share buyback program from 450 to 600 million at the 25 AGM and the current mandate from 26 remains at 600 million. We ended the quarter with a headcount of 184, representing a strategic increase of 19 employees compared to the same period last year. This growth was primarily driven by reinforcements within product and tech, as well as new resources within the sales team to enhance engagement with the agent community. Additionally, we have strengthened our marketing capabilities. With that overview, let's turn to page 12 to our revenues by segment to take a closer look at the Q2 figures. Our largest segment, property sellers, which we have previously covered, generated revenue of 318 million. Revenue from real estate agents decreased by 8%. While this was impacted by the weak market volumes, it was partially offset by the continued growth in our sold by us product. Revenue from property developers increased by 1%. This reflects lower display revenue on reduced listings volumes, offset by our new annual subscription package launched in January 26. Revenue from other advertisers increased by 7% to 17 million from continued growth from bank integration and also demonstrating our ability to improve performance with price. The B2B segment is performing well, despite the fact that the lower volume of listings reduces impressions, which negatively impacts display sales across the B2B business. Continued optimization and focus on Hemnet Unique products are making a significant difference, keeping B2B revenue broadly flat, down 1.6% year-over-year. Turning to page 13 in our EBITDA bridge, we can clearly see the dynamics at play this quarter. We start with an EBITDA of 261 million for the second quarter of last year. The primary impact, and by far the largest, of course, comes from net sales, which had a negative effect of 112 million. Once again, a majority of that negative revenue is from SFPL, where revenue is recognized only when the property is sold. Compensation to agents decreased in line with the decline in revenue from property sellers, resulting in a positive impact. Other external expenses increased by 6 million, largely due to overall marketing spend. This was aimed at capturing earlier traffic in listings leading up to and alongside the launch of SFPL. Personal costs increased by 3.2 million, driven by headcount expansion and salary inflation. However, cost growth is not pacing directly with the headcount as our average FTE count remains below our total headcount. Finally, other items had a positive impact of 3 million, driven by higher year-over-year capitalized development costs for our own staff, underscoring our intensified focus on product development. In total, this results in an EBITDA for the quarter of 173 million. Finally, let's move to page 14 for an update on our cash flow and financial position. Our rolling 12-month free cash flow amounted to 621 million. While our lower EBITDA is reflected in this figure, we maintain a highly robust cash conversion rate. This cash generation combined with a strong balance sheet enabled us to consistently return capital to our shareholders. As illustrated, we repurchased shares for 147 million during the second quarter, representing approximately 1.5 million shares. At the current valuation, we view the share buyback program as an exceptionally attractive capital allocation tool that allows us to deliver significant value to our shareholders alongside our dividend. Turning to the chart on the right, you can see our net debt and leverage ratio. Net debt stood at 689 million, representing a leverage ratio of 1.1. While this represents an increase compared to previous quarters, we remain comfortably below our long-term financial target of under 2x, ensuring we retain substantial financial flexibility. In line with maintaining this flexibility, we have secured a 50 million extension of our revolving credit facility, bringing our total credit facility to 900 million. This extension was driven by a one-off effect related to the implementation of SFPL, coupled with our ongoing commitment to our attractive share buyback program. With that, I will hand the call back to Jonas to summarize the quarter.