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Edited Transcript of ADEB.OL earnings conference call or presentation 12-Feb-20 8:00am GMT

·65 min read

Q4 2019 Adevinta ASA Earnings Call Oslo Apr 2, 2020 (Thomson StreetEvents) -- Edited Transcript of Adevinta ASA earnings conference call or presentation Wednesday, February 12, 2020 at 8:00:00am GMT TEXT version of Transcript ================================================================================ Corporate Participants ================================================================================ * Gianpaolo Santorsola Adevinta ASA - CEO of Spain & Brazil * Marie de Scorbiac Adevinta ASA - Head of IR * Ovidiu Solomonov Adevinta ASA - SVP of Global Markets * Rolv Erik Ryssdal Adevinta ASA - CEO * Uvashni Raman Adevinta ASA - CFO ================================================================================ Conference Call Participants ================================================================================ * Eirik Rafdal Carnegie Investment Bank AB, Research Division - Research Analyst * Martin Stenshall Danske Bank Markets Equity Research - Senior Analyst * Oliver Schüler Pisani Nordea Markets, Research Division - Analyst of Consumer Goods * Preben Rasch-Olsen Carnegie Investment Bank AB, Research Division - Analyst of Consumer Goods and Cruise ================================================================================ Presentation -------------------------------------------------------------------------------- Rolv Erik Ryssdal, Adevinta ASA - CEO [1] -------------------------------------------------------------------------------- All right. Good morning to all of you, all of you who are present here in Oslo and those also following us on the webcast. Welcome to this full year and Q4 presentation for Adevinta. So today, I will go through the main points and take the overview, then Uvashni will, as normal, go through the financials. Then we have Gianpaolo, here, Santorsola. He's the EVP who's responsible for Spain and also for Brazil in our portfolio. So he'll go through that in some more depth. And then afterwards, I will finish with the outlook. And then all of us, also joined by the -- Ovidiu Solomonov, will be available here for Q&A. So let me start by providing an overview. And since this is the first full year for Adevinta, I thought it would be good to start with an overview of the full year. So it's been a good year for Adevinta. This has been the first year as a separate established company since April 10. And you can see that our revenues have grown with 15% and 18% in what we call the important core verticals. So the core verticals for us are: of course, real estate, the biggest; second, cars; and thirdly, jobs. They are growing well, and that is where we put a lot of emphasis. And you know you've also followed that this is the same trend for the full year. EBITDA is increasing handsomely and also cash flow. This gives us a good financial position, and we can get back to that a bit later. And it has indeed been an eventful year. It was a successful IPO. I can tell you, there's a lot of work going into that. So I'm happy that, that was successful. I'm also happy that we're through with it, so that we now can concentrate more on the operations. And of course, we have a lot of new faces in Adevinta. So Uvashni, you started to get to know. She started around the time of the IPO. So here's another example of a manager, and that is Giuseppe Pasceri. He's running our Italian operation since just 2 months back. He has this background from product and technology and has quite some determined plans about what he's going to do in his new role in Italy. So many new faces. And also then we have established a management group, which is then focused solely on classifieds and Adevinta. So I think we've got a good setup now for the years ahead. We also have done a number of investments the last years. We've done the -- the big acquisition we did last year, actually, was the -- in Spain where we bought out a minority stake in Adevinta Spain. Many of you probably wouldn't notice too much about it, but for us, it's important because we've relocated all our Spanish businesses to one headquarter in Barcelona together with the central units. So now we have free flow of knowledge and competence and technology between central product and tech and Adevinta Spain. So that's -- we're very happy about that. Then we've said, as part of our strategy and also part of our growth targets, actually, that's where we're going to do bolt-on acquisitions. And we've done a number last year. We've actually done 3 of them in France. So PayCar is relatively small one, but it's about removing frictions when consumers are buying or selling cars between each other because there's -- the payment itself could be cumbersome, and there's the trust question. But by launching PayCar, we hope to remove that friction. Locasun is a very successful holiday rental home directed towards the French, renting out holiday homes in France and Spain. And with the boost of the traffic that we can give them and also -- we're also expanding into Spain, we're seeing that, that's a good opportunity for us. Group L'Argus was, of course, a major investment for us last year, and I think this goes into our strategy of strengthening our position in the core verticals. L'Argus is a fantastic brand name in France. They've got the best valuation tool by far, very much acknowledged by car dealers and consumers, and they got a lot of competence in the car sector and also important data management systems for car dealers. So when we bundle that together with the leboncoin competence and offers, we can make better offers for the car dealers. Then I thought I'd just show you that, what we're doing also, we have our own investment in new models. We have a department that is kind of looking into what's happening on the marketplace, and we're doing small and selected investments, not the biggest money. But this allows us then to follow what's going on, on innovation. Outside our own house, we're innovating, of course, a lot, but there are so many new concepts taking place in the marketplace. So two of them are here directed in the real estate vertical and one is more for holiday homes kind of. So we think it's important that we follow up, and this gives us a lot of knowledge and insights into what is happening. I think it's important also to mention the CSR perspective because we're getting increased focus on this from customers, from employees and actually also for some investors saying, what are you -- how well are you contributing to the society. And we have, for many years, measured the secondary effect of what we're doing. And you can see that the estimated annual savings equates to 19 million tons of greenhouse gases, and you see that's the same as emissions for 2 million European cars. It's quite impressive. And we're seeing -- I've seen, when I travel around especially at university, people are very engaged in this, and say, what's -- how are we contributing to society. So we're putting more emphasis on having more transparency on that. Then people engagement is, of course, important for us. So these are a few selected examples of how we're doing and how some of our companies are doing in the Great Place to Work and similar exercises. All right. Then on to the Q4, you can see that the important vertical revenues continue to grow, and that is 20% growth, including L'Argus. The total revenues increased 16 million (sic) [16%], and you can see the cash flow growing handsomely and also a good increase in the EBITDA. But Uvashni will get more into this, so I'll go more into the operation. And here is France. So I think what we're seeing in France is that they continue to deliver on what they should do, and that is a very strong growth in the verticals. I think that acquisition, as I said, was a very good one and a smart one to do, and there's a lot of integration work that are taking place. Traffic is developing in a positive way. And of course, perhaps the most important of all, we continue to develop our products. So in France, we're working with -- we've launched our transactional models for consumers, meaning that if you sit in one part of France and you went to buy something on leboncoin from someone sitting in the other part of France, we take care of everything. Communication, negotiation, payment, shipping, and that's kind of the way that consumers expect us to do. So in France, we're quite far ahead of that, and I'm happy that they've -- on what they're doing there. Then, of course, they've also done a lot of things for professional customers, launching new dashboards for car dealers and for real estate brokers, enabling them to measure more effectively, the effectiveness of their apps. On the search side, we're doing new things all the time, adding new filters, so that you can more easily search for exactly what you want. And those algorithms are getting more and more -- are getting better. Revenues, up 25% or 30% if you take out L'Argus. I think that is the same pattern as we've had for most of last year. Then, of course, fourth quarter in France was somewhat negatively affected by the strikes going on. I think you've seen that in the media. And of course, what happened was that towards the end of the year, there was a slowdown in the total French economy. That also affected us. Advertising, some advertising campaigns were canceled. There was also lower activity then from some of the big customers on the classified side. So that affects us somewhat like it does with the rest of France. There is a continuing advertising softness, but we think that the trend is improving. We're doing quite a number of exciting things this year, so I hope that we'll see a more positive development. And I think we're seeing some signs of that now in -- on the display revenues in France. Then on the margins, I think I did say 3 months ago that we have delayed some marketing campaigns from Q3 to Q4. And so that will always go a bit up and down, but it's important for us to be present in the market and market the new products as we're doing, such as the product launches and transactional I just mentioned. And in France, I see a good outlook for further growth. So we have the core verticals, and that's the majority, of course, of our revenue. I think we can continue to expand our market position there and do more for car dealers and for real estate brokers. And we have -- although there are not enough official statistic, I think we have a strong sense that we're growing more than the market itself. And that's also the response our salespeople are getting when they're out talking to car dealers and real estate brokers. The ads on leboncoin work, and it's interesting to do more business with us. And I think that acquisition of L'Argus also allows us to do that. Then we're also seeing several new opportunities in the French market. So the consumer goods, I mentioned the transactional model. Now if that really takes off, then we can see that there is an expansion of the classified market. Now that, in itself, does not have the same, I would say, sky-high margins as we have in our core verticals, but it's a very interesting avenue for growth. And also, the holiday homes that I mentioned could be a good way for us to capitalize on the leadership in those markets. Right. Spain is something Gianpaolo covers, so let me just show you the main numbers. A lot of product development going on. And there's been a bit of a macro slowdown even in Spain. But in spite of that, we've continued to deliver as planned with the growth of 13% and many interesting things going on, both in the cars and the real estate and also in InfoJobs. So Gianpa will get back to that. Gianpaolo will also cover Brazil for you. And what I can say there is kind of the same trend as we've seen the other quarters last year. We have a leading position in the car vertical, and we're also seeing now a stronger growth and promoting our position in the real estate. Now for me, the disappointment in the last quarter is, first and foremost, in the Global Markets. And as you know, that's kind of the rest of the portfolio because it's quite mixed, what's going on there. Those are in an earlier phase, and they're more reliant on the display advertisement market than the biggest sites. And we see that, especially in Italy, we've been hit quite hard actually. It's been the trend last year, but we saw it especially in the fourth quarter where we're actually reducing our revenues in display advertisement. So they're doing well in cars, which is important, but the display ad revenues is still such a big part of it. So when we're hit there, that's negative news. And then -- so what we're doing in Italy, we're seeing here that we have some action plans in the implementation. So we have put new management in place, very strong background, product and tech. We are shifting the strategy towards more virtualization, more heavy emphasized on the motor market because we're seeing that we're doing well there, and that's more -- that's less volatile revenue source. And we're making better products for -- in products and technology also both for motors, but actually also for the display ads, where we have not been good enough at targeting audiences. But there, we're doing good product development there. And at the same time, of course, looking at the customer optimization to see that we got the right cost structure. On the EBITDA side, I'd like to also highlight that Ireland and Hungary, showing you the operational leverage. Then there is a write-off of EUR 1.5 million in Morocco who affects the group EBITDA. Then in Italy, in Global Markets, I talked about -- I've covered Italy, and there's a lot of work going on there. Ovidiu is here also. We can tell you more about it on the Q&A. But from the group, we're concentrating our efforts in helping develop Italy through this difficult phase. As I said, a lot of interesting thing going on, and we hope to be able to turn that around. Willhaben had a somewhat weaker quarter than I had expected, but they are -- they have negative trend last year in this by advertisement. However, their position in the verticals are very solid. It's very solid, and we expect that to continue. In Ireland, it's a good performance in the core verticals. There is a -- I think the Irish real estate market looks exciting, and it can bring a good development going forward. And they're also showing actually increased EBITDA and increased operating leverage. So that's very good. In Hungary, we also experiment with the transactional footprint. So -- and as you know, we're, by far, the leader in generalist and also in cars. So that develops well. Shpock is in an interesting development phase where they are implementing this transactional flow, and we're experimenting now in the U.K. market. And what I can say is that the early results like -- look quite promising. All right. And I think I'll hand it over to you, Uvashni, for the financials before Gianpaolo will cover Spain and Brazil. -------------------------------------------------------------------------------- Uvashni Raman, Adevinta ASA - CFO [2] -------------------------------------------------------------------------------- Thanks, Rolv Erik. Rolv Erik took you through some of the key highlights for the quarter. What I will do is just wrap that up and summarize what are some of the key elements that impacted on the quarter, and then I'll do an overview of the full year and some of the material elements that affected the full year results as well. So on the quarter performance, again, from a revenue perspective, I think we're basically 16% up. Yes, L'Argus has contributed towards that. As Rolv Erik said, Global Markets did disappoint for -- in terms of the quarter 4. The expectation there was, of course, we expected slightly higher improvement in display advertising. Italy was a core element of that, and the expectation is that we'll see some development -- better development in advertising in this quarter and expectation that the revenues will start to come through. I think for us, disappointing on the core business, Argus does -- has contributed, but the verticals continued to contribute really well, and we're quite happy with the development there. EBITDA did disappoint, and they asked a couple of one-offs in the current quarter that I'd like to emphasize on. Going through the year, we went through quite a bit of the Global Markets portfolio, we looked at rationalizing that portfolio, we looked at some of the -- in Mexico, what we've done is we've looked at areas of redirecting to the transaction model, really trying to understand that. And one of the things -- and then in Morocco as well, looking at that business. One of the key elements there was the write-off of bad debt, and I'd just like to emphasize why. Over the years, we've generated quite a bit of revenue, but the collection of that had been quite -- over 2 years, had not happened. We put a stringent plan in place in the last 6 months to collect those, and then we took a view on what we anticipate we won't be able to collect. So we actually did a write-off of EUR 1.5 million of debt. That was a key element of drivers. We did emphasize in Q3, the marketing costs in France. Of course, we've moved it over to Q4 and there were other smaller elements of marketing costs in the Global Market as well that moved to Q4, which we didn't anticipate. We finally -- I mean settling, I think, in terms of the headquarter costs, there were some elements that came through in Q4 that wasn't anticipated, but we believe that the trajectory on headquarter -- P&T headquarter continues now. P&T investment in France and in Shpock, ahead of the transactional. You will see in Q4, and that will continue slightly in Q1 and Q2, but revenue generation expected. We did, and the Global Markets investment losses, emphasize and say in Q3 that we will be around just below EUR 10 million, and that's what we came in at. And that really is, again, influenced by some of the early signs we're seeing within the Shpock transactional, and we did a bit of investment there on the P&T side. So we're pretty comfortable that the investments that we've done, we'll see revenue generation going forward. Of course, operating cash flow continues to increase as we increase and generate EBITDA and revenues. Really strong performance there, even excluding Argus. So we're pretty happy with that development. On the full year, okay, again, the full year revenues up there. It would have been better if we had better performance in display advertising impacted, yes, by Argus, but the base verticals, again, as Rolv Erik said, growing quite well. On EBITDA, well, this year was impacted by the setup costs we have within the corporate functions and heavy investment within the P&T space. Those are the main contributors of that. And you'll see that -- really, that's people investment to deliver the P&T elements of it that we see come through. On the operating cash flow, similar story, good generation of operating cash flow, and we continue to see that come through on our -- through the numbers. Again, verticals, 18% growth. It's really leading the growth. We're seeing less emphasis in terms of the total contribution from advertising, which we like because we know our verticals are fixed income. We understand that quite well. We're quite happy with that development, and we will continue to invest to ensure that verticals grow and continue to grow. The expectation of advertising is it is improving. You've seen the improvement come through in Q4, but at the end of the day, still not growing at the rate we've seen previously. So vertical is where we'll concentrate our efforts on. Some -- just impacts in terms of EBITDA contribution for the full year. As you can see, coming across all of the portfolio, Global Markets, yes, has contributed quite nicely this year. Now we just -- in terms of EBITDA, we'll work on that further to emphasize that. Of course, the one thing we must remember is we always said in the Global Markets portfolio, there's investment phase businesses there where we play around with models. And sometimes, quarter-on-quarter, we will decide on some investment in those quarters depending on the trending we see or depending on how we would like to increase capacity in terms of advertising spend and marketing spend. Headquarters and other, of course, we had to set up the business this year from a stand-alone IPO. We have to set up all the functions, Schibsted was a great company to be with because all the costs were held centrally. We had to set that up. But I'm glad to say we've managed to do that now, and we expect that run rate to be where we would want it. So overall, great development on EBITDA for the year. The main nonoperational items. I just thought I'd emphasize to you some of the elements that happened below EBITDA. We did take an impairment loss in Mexico of EUR 25 million, and the key element -- or the main element of that was in Mexico. And that was -- once we had changed the whole stance on Mexico and where we were going, we had to assess goodwill in terms of the revenue projection. So we took that write-off. Other expenses, we had IPO-related expenses, of course. And then within the EUR 30 million was some restructuring. As we expected to bring businesses together, there were some restructuring costs we did in Mexico, in Shpock, in Spain and even in the headquarter or the P&T within the U.K. -- SPT U.K. environment where we moved everything out of the U.K. into our main hub, Spain and France. So that. Our underlying tax rate from 33.5% to 28.2%. Really, what we've done there is some of the acquisitions we've made in the past in France, we've now utilized some of those assessed losses. If we had to take away that, it's almost in line with 32.7% compared to last year on your effective tax rate. Strong cash flow generation. As you can see from EBITDA, the main impact on that is tax paid and the majority of that is within the French space. We've paid a lot of tax in France, almost 90% of that relates to the tax rate. On other, that's just your other expenses that I just spoke about with respect to cash flow. And then your working capital movement, some positive movement where we had some of the acquisitions that came in that contributed to that. But overall, operating cash flow, solid. I think in terms of our leverage ratio and net interest-bearing debt, starting at 0.7 at the end of December. So still a lot of capacity within the balance sheet. What we are doing now is renegotiating and -- to refinance our RCF. What we are looking to do is increase our facility to EUR 600 million, and we're looking to use about 6 consortium banks with a tenure of 5 years. And that, of course, to give us the capacity as we anticipate further growth, et cetera, and to provide that flexibility that we would require for additional growth going forward. So still very strong financing debt leverage and also looking to increase that capacity for the year. Dividend policy. As you know, we have done a large amount of investment this year in acquisitions, both the Spanish one and then the one in France. We have cash and cash equivalents of EUR 72 million at the end of the year with a revolving credit facility, of which we have drawn out EUR 200 million. That was -- a part of it to repay the shareholder loan to Schibsted and then another EUR 50 million to draw down for some of the acquisitions that we have done. Our dividend policy remains unchanged at this stage. But as we always said and we said at IPO, we'll decide that subject to the flexibility around growth that we see. We did announce at IPO that there won't be a dividend paid for 2019, so we will stick to that policy. So there was no dividend paid for 2019. With that, I hand over to Gianpa. Gianpa will take you through the OLX Brazil and Spain. Gianpa? -------------------------------------------------------------------------------- Gianpaolo Santorsola, Adevinta ASA - CEO of Spain & Brazil [3] -------------------------------------------------------------------------------- Yes. Good morning, everybody. Thanks, Uvashni. So I'm very pleased to be here to present a bit more in detail, Brazil and Spain. Let's get started. First of all, we believe that Spain and Brazil represent a huge opportunity for further growth in Adevinta. It will be one of the key drivers of growth in Adevinta in the future. We believe that so because we see that, from a structural perspective, there is still room for growth. When you look at Internet advertising spend per capita comparing to European benchmarks, you see that there is still a lot of room to grow in Brazil and Spain versus France or Norway or Sweden. But also when we look internally at our OLC revenues on our classified revenues, we believe that we monetize the interim use in different markets with different intensity. So I tried to convince Rolv Erik to remove Norway and Sweden from this benchmark because it's pretty humbling for the rest of Adevinta. But even if we consider only France and our -- the graph on the right, we can see that, in France, every user spends approximately 50% more on our sites than what we do in Spain and 6x more of what we do in Brazil. So a lot of room for growth. Let's start with Adevinta then. The structure of this presentation, it's very simple. We will quickly introduce the assets, our position from a competitive standpoint. Then we'll look at the financials, the financials developed during 2019. Then we will have deep dive -- short deep dives on the key verticals and some final remarks. In Spain, as you know, we have a portfolio of brands that is the result of several acquisitions throughout the years, but these positions have leadership positions in the marketplace in the verticals that really matter in classifieds: real estate, job and motor. I believe that we have the strong financial operational performance during 2019. I hope that I will be able to show you and to illustrate to you later during the presentation, despite a macroeconomic scenario that has been a bit softer than what we expected. And we are relentlessly working to converge our several tech platforms towards common tech stack. And we are continuing investing in talent and people and technology, particularly in machine learning to continuously evolve our user experience in favor of the satisfaction of our users and our customers. Adevinta in Spain is the largest online classified group. We engage more -- around 18 million unique visitors every month across all our brands, and we serve them approximately 17 million ads every month. So there's no player in Spain that has this depth and this market penetration at the moment. When it comes to the competitive position, I have to say that there's not a lot of changes versus what we, for example, presented to you during Capital Markets Day. InfoJobs, still also a very strong position in the job category, also supported by Milanuncios that has a significant presence in the blue-collar part. coches.net, motors.net, so the car and the motorbike verticals, together with the generalist, Milanuncios, keep a strong #1 position, both in traffic, in listings and in customers. This situation is not as clear as in real estate. We could claim putting altogether our brands, both the generalists and our 2 verticals that we are #1 in listing and #1 in customers, but we know that our vertical competitor, the local one, is ahead of us in terms of traffic. So we see this leadership still has a weak leadership that we want to develop further, and we are very happy with the progress that we have observed during 2019. And finally, we know that the Milanuncios have a stable #2 position. And I'm actually happy to announce that Milanuncios has been back to very positive double-digit growth during the last months of 2019 in terms of traffic. So this is a very good sign, in particular, because we know that compared to its app-based competitor, Milanuncios is very strong in the core verticals. Our strategy stays unchanged. This means that we want to solidify and strengthen the leadership position we already have. We believe that there is room to do that. We believe that we have done it already in 2019. We believe there's a room to increase further our customer base, increase further our ARPU, but also enter new adjacent businesses and experiment with new models. So we believe that there's room for growth there. Then as I told you for real estate, the key priority of the full company in Spain is to regain leadership -- a clear leadership in real estate. We are taking all our decisions based on this priority. And also, we want to reduce the gap in the generalist space. These are the vertical strategy -- the segment strategy that we have, but we also have cross-brand and cross-company initiatives that we believe underpin our transformation and our delivery. The first one is to put users and customer satisfaction at the core of our road maps, of our processes and of our operations. I'm happy with what we've done during 2019. We have to do more. We're also working to attract and to retain the best talent in the country. We're also deploying a new way of working that we call peak that allow us to have a very agile way of working in Spain, and this is delivering very good results. We are happy with both what we see, but also with the engagement from our employees. And finally, we believe that cross-marketplace data and leveraging those much more represents a unique competitive position in this market. Good. Let's look at how the financials moved. So I'm very satisfied. Revenue reached EUR 182 million in 2019, growing 14% on a very positive trajectory of what we see, despite, as I said, some kind of macroeconomic softness. And EBITDA grew above EUR 60 million. This means, in other ways, that revenues have grown 14% year-on-year, and EBITDA has grown 28% year-on-year, double. It also means in a way that we've been able to generate approximately EUR 30 million of fresh EBITDA over EUR 22 million of fresh revenues. This is what we usually call operational leverage, and this is what has allowed us to reach an EBITDA margin of 33%. That is, again, 1 year more, increasing our EBITDA margin by 4 percentage points. So we've increased our EBITDA margin by 8 percentage points over the last 2 years. How we've done that? Well, in Adevinta Spain, we constantly work to achieve more with less. So talent acquisition, talent retention, talent capability, technology is our key priority, and we have hired more than 100 people during the last year, but we have managed to do so, keeping our costs under control. So personnel cost is increasing less than our revenues, and this means that the total weight of our personnel and salary costs over our revenues has reduced by 3 percentage points over the last 2 years. This kind of effect is even stronger in marketing. On the graph on your right, you can see that our marketing spending has been pretty stable during the year. We are constantly optimizing the ROI of our marketing campaigns. And we believe that by doing so, the weight of marketing investment over total revenues has reduced by 5 percentage points over the last 2 years. And this -- what makes me particularly proud of is that this has not affected growth at all. Actually, we are seeing a speed up in traffic growth in our brands. So we are just spending our money every day better. Always negotiating with media agencies and with media, better deals to get the best out of our marketing dollar. And what makes me particularly satisfied and thankful to my teams in Spain is that the numbers and the results that you achieved, revenue growth, EBITDA growth, margin growth and efficiency, have come in a year in which the market fundamentals that underpin our verticals have softened. We come from 4, 5 years of good tailwinds, and in 2019, those tailwinds softened up significantly. So as you can see, the number of new contracts signed in Spain during 2019 was more or less flat. Still, you will see that InfoJobs has grown significantly despite a flat market. The number of secondhand cars transaction has also been approximately flat during 2019. Still, you will see that coches and Milanuncios and motors.net have increased a lot of their market penetration and market delivery. And the same, the GMV of houses sold in Spain has been actually flat and slightly declining during 2019. And yet for the cars in Habitaclia, despite also a tough competitive position, have done very well in the market. So let's go now in the vertical deep dive, and let's see how we managed to do that vertical by vertical. So in short, in jobs, we have worked a lot, and in particular, we have worked for improving our matching experience between hiring companies and candidates and also to increase user engagement. Let me take a couple of examples that I particularly like because they are win-win situations. With how you match, we are able to combine the job profile or the job offer with the CV of the candidate. And while this person is applying to the position, we are able to tell to the person, this job matched very well with you or doesn't match very well with you. This is a win-win situation. Why? Because, first of all, it gives predictability to the candidate on how the process will go, right? So now we avoid negative frustration in case you will not get selected. But also we boost their confidence in the case, we say, "Hey, your match is very high." At the same time, on the hiring company side, we will allow companies to really screen and better search the incredible amount of candidates we provide them based on how well this candidate match with the job posts that they are offering. So win-win position that is receiving positive feedback both from users and customers. Another thing that we have just released 2, 3 weeks ago is a follow company and employee reviews. So we've been collecting feedback from employees secretly, let's say, for the last 12 months, and now we have come out with more than 1.6 million reviews of the companies. Again, I believe that this is a win-win solution because it creates more transparency on the quality of the working experience of the company where you are planning to apply. But also, it gives a positive and a very good employer branding tool to hiring companies because the hiring companies that treat and engage their employees fairly are able to show themselves, to show how good they are. And now users, seeking for jobs, are also able to follow a company and to get updates from this company. So very good product development. We've done a lot of work in InfoJobs, much more of what I've showed you, but this has been also reflected in the key operational metrics. So in traffic, it's -- our leadership is still very strong. We have slightly increased our gap in terms of usage versus the #2 social network competitor. So our usage is increasing for the experience of looking for a job slightly, I have to say, but very largely when it comes in comparison to #2 and #3. So the distance from #2 and #3 has extended significantly. But the liquidity is on par to what we showed during Capital Markets Day last year. We keep our superiority in terms of effectiveness in the market versus our social -- sorry, versus our vertical competencies and aggregator. By doing this, we also have managed to increase revenues by 13% during the year in this segment. I believe that this is positive. And as I told you, volumes have not been spectacular during 2019. So most of this growth comes from more value delivered to customers and more ARPU as a consequence of it. This was job. Let's move to motor. In motor, we have worked a lot in content, liquidity, supply and also in new products for our most sophisticated customers. Let me go through it. At the beginning of last year, we realized that for coches.net to really answer the full needs of the total audience of Spain, we were missing a part of the inventory that represents a significant part of the transaction of secondhand cars in Spain, the cheap cars, the cars that are a bit older, the cars that belong mostly to privates. We were missing those cars. So we started to improve our ad process in coches.net to get more content from there, but also we have amplified and strengthened a lot, our content-sharing policy with Milanuncios. This has allowed us to sky rocket our supply from 200,000 cars available December 2018 to almost 300,000 cars available in December 2019. We have done this gradually because we wanted to make sure that we would keep the liquidity in the marketplace. And actually, we're very happy with the results. Leads for professional have increased, but we've seen a very, very good development in the lead generation from private sellers and also traffic has grown consequently. We knew that by doing this, we would favor in a way, private sellers. So we're also trying to balance this kind of experience with products that can provide better and more leads to our more sophisticated customers. This is why we have developed a couple of products. One is similar ads and the other one is Call Me Back. So similar ads is nothing more than showing and giving privilege to ads coming from our premium customers in advance and reference packages when we show similar ads to our users. So when you, as a user, provide the lead or show interest in a car, after doing that, we show you more ads. And first of all, we show ads that match your search. But if there are several ads that match your search, we give a bit of priority to the cars that are in the inventory of our premium customers. This is giving them a significant amount of new leads and that they are very satisfied with. Another solution that we found, listening and talking very openly with our customers is trying to improve and help them managing better their leads. So with Call Me Back, we allow cautious users to take an appointment with the car dealer for a phone call. This gives like a better user experience for the users, so a win-win situation. But also allows car dealers, the most sophisticated one, to manage their workload, right? So they can schedule when they're open to receive calls or not based on when the inflow of customers in their physical shop is higher or not, so we can allow them to better manage our leads. And we, over time, realized it is not only about providing leads that we are doing in a massive amounts, but it's also about helping our customers manage this incredible amount of leads in a better way. These have had very, very good results. You can see that in motor, we keep our #1 position, both in traffic and in content. I would like to emphasize the contents of the graph in the middle, where you can see that our generalist player has twice as much content as our generalist competitor, and our vertical player is twice as much content as our vertical competitor. So a very good leadership that we keep building on with further product development. And revenue-wise, I believe that has been a fantastic year, right? Revenues in this segment have increased 27%. And I think I showed the same number last year. So, please don't get used to this kind of growth rate, but it's been like exceptional, the team has done an exceptional job. And as you can see, it's a balance of both volume expansion in the customer base, but also ARPU development. And ARPU development is only a consequence of the fact that we are delivering much more value to our customers. Let's move to real estate. In real estate, we have put our focus in 2019 on content. So when people look for a house, this is most likely the most important investment in their lifetime. So nobody wants to miss a single property in their neighborhood of choice. So having all the content is particularly important in real estate. I would dare to say that it's more important in real estate than any other vertical we operate on. For doing this -- for this reason, we really put a lot of emphasis, both in commercial activity to really grab content from our customers, but also in terms of product improvement. In terms of product improvement, we have developed an aggregation system between Fotocasa and Habitaclia. And also, we have massively improved the user experience of our tools for professional when they post their content. More content also generates more traffic because more content leads to more SEO, but also more content drives better engagement because your alerts are rich -- are richer. The content that you show in your recommendation is much more profound, much more interesting. This generates much more leads. I believe that through the enormous amount of work that we have done to improve our alert system in Fotocasa and Habitaclia in 2019, we've experienced unprecedented level of growth, both in traffic and leads generation. How this has translated into the operational metrics? So we still believe that our vertical local competitor in Spain is ahead of us in terms of traffic. I have to say -- that is to say I believe, because the traditional, open sources for information on traffic, we feel it are becoming less and less reliable lately. This is why we have used now, in this presentation, the same usage survey that we used for the other 2 verticals. No surprise, even the survey tell us that we're #2, right? So -- but it also tells us something different. That position #2, position #3 and position #4 belongs to us. So we will keep working on it. We are not satisfied with the situation. We are happy with the progress, but we want to do more. In terms of content, the distribution is more balanced. You would see that Milanuncios, our vertical competitor and Fotocasa, are more or less in the same pack. Out of this, Fotocasa doesn't show the ads that are coming for Habitaclia. But in terms of user experience, they are able to see both sources of content, so I would dare to say that in terms of experience, we show the same number of content. The 3 players on top show the same amount of content to their users. And revenues have increased 11% during last year in this segment. Despite GMV that is flat and despite a competitive situation, this is tough. And we have privileged growing our customer base, mostly because our customer base brings us new content, and content is king, as we said and this is why ARPU increased only 5%. By the way, last year was 3%, so we're also improving how we extract value from our customers. I'm almost done for Spain, only one final slide, I know that is interested for some of you. I know we have several platforms. I know that we would all like to converge on fewer platforms that can allow us for a leaner, faster and better product development across all of our portfolio. We are working relentlessly on it. Of course, we had already 94% of our infrastructure is based on the cloud. It is common across all our marketplaces. 100% of our web front-end developers and engineers and our app engineers work exactly on the same common platform, so we're able to move a front-end engineer from Fotocasa to InfoJobs whenever we need or vice versa. We also have unified a lot of third-party tools to optimize our costs, and we have 91 software components that we share across our marketplace. And the most significant ones are also components that come from the group. And for 2020, we want to do more. A few example. We want to finally complete our work in moving our data platform to our common -- to have one common data platform. We want to do the progressive consolidation of different CRMs to one single CRM. We want to move the back end behind Fotocasa and Habitaclia to a common stack. And we also want to experiment with 50 more and more use cases of machine learning across Adevinta Spain. So I believe there's been a positive progress for Spain. I'm very happy, very thankful to my team for the work they've done in 2019 and I'm eager to get your question later on. But let's move to Brazil first. Brazil has the leading position in the main segments, but in a market that is still at early stage. We believe that there's a big opportunity, driven by a cyclicality recovery in 2020 and also to a shift to online that is only partially up until now. The position in cars is very strong, you will see. And we are continuously working in improving the user experience for a more convenient and safer experience. It's important in Brazil. In real estate, our position is improving, you will see. But we compete with very strong local competitors. And as Antoine present for leboncoin in the last quarterly presentation, also in Brazil, we are starting to experiment with migrating our initial user experience toward the transactional model. And we believe that this will represent, as for France, a new growth potential that is untapped until now. So in terms of brand power, when we ask a Brazilian, "Where do you want to sell your second-hand stuff?" OLX ranks on top. Nevertheless, you can see that Mercadolibre and Facebook also are very well-positioned. Mercadolibre is a giant in Latin America and Facebook is doing very good inroads with Facebook Marketplace in all LatAm. But we are ahead, we want to keep this position is why also we will keep investing in marketing going forward to keep this position. When we ask buyers, "Where do you buy second-hand stuff?" The situation in autos and real estate is very clear. OLX is their top of mind, by far, much ahead of any other competitor, both vertical players or generalist players or social networks. The situation is a bit different in horizontal, but we believe that this is mainly due to the fact that on Mercadolibre, you can buy both new goods and second-hand goods. So when we ask this kind of question, really our users don't really differentiate a lot their experience in their top of mind. But again, one more evidence that we need to keep -- to sustain our brand going forward. When it comes to the financial performance of OLX Brazil, we believe that -- we see that we have reached BRL 97 million in this quarter, Rolv Erik presented before. This totaled BRL 349 million is for the full year. This represents a 29% year-on-year growth on local currency and a significant improvement in margin. You saw that last year, for the first full year, we managed to put the company in black numbers, achieving 11% margin. We have improved EBITDA margin by 10 percentage points during 2019. Let's go vertical-by-vertical a bit quicker. In cars, we are working a lot to reduce friction in the buy and selling experience. Already in 2018, we started to experimenting offering financing solution to our users. We have now improved that experience. We've added more partners to the experience. And we also have added now an insurance partner. So you can also book your insurance on OLX now. We have done also a lot of work on safety improvements to improve our fraud detection algorithm and also to improve the user identification to avoid the frauds in the marketplace. When it comes to the operational metrics, you can see that we are the leader, both in traffic and in content. The traffic leadership has expanded in the last year while the content leadership still big and stable. Revenues in this segment have grown 31%, mostly coming from customer base expansion. This is normal, right? There are still a significant amount of car dealers in Brazil don't even use online solutions yet. So why we'll bring these customers on board? We bring them usually in big quantities, but also at low entry points. In real estate, we have worked to improve the discovery experience. This might sound a bit more boring for you. OLX is a generalist, right? Moving a generalist to a verticalized experience take a lot of work, introducing maps, introducing a more filter, introducing better attributes for the real estate items, requires a lot of work, and we have also implemented new ways to make sure that our customers can measure the quality of the leads that we provide to them. In terms of metrics -- also here, we have #1 position in traffic. And this leadership has expanded during 2019. In content, we are still #3. But if you can compare this graph with what we showed you last year in the Capital Markets Day, you will see that the distance between us having the #3 position and our #2 competitor has reduced drastically. So we are now more or less on par. Also here, revenue growth has increased by 31%. And also, yes, most of the growth has come from customer base expansion. As I said before, we are experimenting with the transactional model in the miscellaneous category in the everyday goods. Our solution will include wallet, escrow solution and also financing. We believe that this will open up a significant, untapped opportunity so far because it responds to a huge demand from Brazilian users. Many Brazilian users are still unbanked. Many of them, they can -- they don't feel safe. So escrow solution will help them a lot. And as we said for France, and as also Rolv Erik already pointed out earlier in the presentation, we believe that on one side, this represents an exciting growth opportunity for OLX Brazil, but at the same time, that this new revenue stream will come with lower margins compared to our traditional core business. I'm done. Only a recap for both countries. Both countries show structural growth potential. We can get closer to France. And after France, we'll get closer to Norway and Sweden. We have strong leadership positions in the verticals that matter, cars, real estate and jobs. Let's remember that even if I didn't present it explicitly, in Brazil, we also have a job vertical, InfoJobs Brazil, that is doing very well. This showed a very strong financial performance during this year, improving revenues, improving margins and improving operational leverage, and we still believe that there is a lot of room for growth in our verticals, both increasing our market penetration in the core business but also entering adjacent businesses. And finally, we are committed to continue investing in technology and people and talent to continuously be able to sustain the always evolving expectations of our user and customers. Thanks a lot. I hope that you found it useful. -------------------------------------------------------------------------------- Rolv Erik Ryssdal, Adevinta ASA - CEO [4] -------------------------------------------------------------------------------- Very interesting. Thank you very much, Gianpa, and then I'll be very brief in summing up on the outlook. So we will continue to work as we do now. We'll continue to strengthen our market position. We believe that we have -- are doing well in the big market, Spain, France, Brazil, and we'll continue to develop that. We will, as Gianpa mentioned, also Invest in product and tech. And the user experience to improve that is at the utmost important for us. We see many interesting new tracks to expand the total markets of classified or marketplaces, transaction mill being one of those. And I've said and I will repeat that, that we will continue to explore can we do more on the M&A side also with the markets that we're already in or in adjacent market. Then many of you asked questions about advertising, yes, it's been a tough year for us last year. And -- but we are seeing some improving trends. So all in all, I would say that Adevinta is well positioned with our positions we're having. We're ramping up to new models. And we are doing what we can to improve the whole portfolio, also the global portfolio now. And that's why that's we're very confident when we're looking ahead. But now, and I think I'll end there, and we're taking some more time than we normally do, but I think it's interesting for you to get a deeper insight into parts of our businesses. So now, I'd like to invite my colleagues, also Ovidiu and Gianpaolo in here. I think -- because of the camera, I think we should probably stand together, is that right? -------------------------------------------------------------------------------- Unidentified Participant, [5] -------------------------------------------------------------------------------- Yes. -------------------------------------------------------------------------------- Rolv Erik Ryssdal, Adevinta ASA - CEO [6] -------------------------------------------------------------------------------- So let's do Q&A. And then I think you should take the opportunity to -- now that we have Gianpa and Ovidiu here to ask a question about the businesses, not only the financials. Of course, we'll answer those as well, but please take the opportunity to ask these gentlemen about the businesses we're having. ================================================================================ Questions and Answers -------------------------------------------------------------------------------- Rolv Erik Ryssdal, Adevinta ASA - CEO [1] -------------------------------------------------------------------------------- Are there anyone in this room? Yes, here from Carnegie. -------------------------------------------------------------------------------- Eirik Rafdal, Carnegie Investment Bank AB, Research Division - Research Analyst [2] -------------------------------------------------------------------------------- Yes, Eirik from Carnegie. A couple of questions. In France and in euro nominal terms, approximately how much marketing cost was moved from Q3 to Q4. Do you have a number on that? -------------------------------------------------------------------------------- Rolv Erik Ryssdal, Adevinta ASA - CEO [3] -------------------------------------------------------------------------------- We're not going to be that specific. But I think it affects the margins for a couple percentage points. -------------------------------------------------------------------------------- Uvashni Raman, Adevinta ASA - CFO [4] -------------------------------------------------------------------------------- 2.2 percentage points. -------------------------------------------------------------------------------- Rolv Erik Ryssdal, Adevinta ASA - CEO [5] -------------------------------------------------------------------------------- Yes. -------------------------------------------------------------------------------- Eirik Rafdal, Carnegie Investment Bank AB, Research Division - Research Analyst [6] -------------------------------------------------------------------------------- Okay. And just a quick question on the impairment in Mexico as well. After the impairment, how much goodwill is left, approximately? -------------------------------------------------------------------------------- Uvashni Raman, Adevinta ASA - CFO [7] -------------------------------------------------------------------------------- We don't specifically disclose that, but it's sufficiently enough to -- based on the forward-looking elements of it, we don't anticipate any further impairments, if you -- if that's where you're heading towards. -------------------------------------------------------------------------------- Eirik Rafdal, Carnegie Investment Bank AB, Research Division - Research Analyst [8] -------------------------------------------------------------------------------- And final question for me. I guess, there's a bunch of other questions as well. Can you give any comments on price hikes introduced so far in 2020 in the different countries and in the different verticals? -------------------------------------------------------------------------------- Rolv Erik Ryssdal, Adevinta ASA - CEO [9] -------------------------------------------------------------------------------- I don't think I want to say anything else that we're continuously working to expand our products. If we launch new products, then we can also set new prices. And this is a continuous process that we're doing in all countries, but it's not like we're 1st January are suddenly just hiking the price list. -------------------------------------------------------------------------------- Gianpaolo Santorsola, Adevinta ASA - CEO of Spain & Brazil [10] -------------------------------------------------------------------------------- Yes, I confirm. I confirm that. -------------------------------------------------------------------------------- Rolv Erik Ryssdal, Adevinta ASA - CEO [11] -------------------------------------------------------------------------------- Yes. Martin here. -------------------------------------------------------------------------------- Martin Stenshall, Danske Bank Markets Equity Research - Senior Analyst [12] -------------------------------------------------------------------------------- Interesting to see such a good presentation. First, you mentioned that you're continuing to strengthen the positioning in France and Spain. It kind of sounds that there's a hike in ambition to strengthen. Does that mean that we're likely to see an increased marketing efforts in France and Spain? -------------------------------------------------------------------------------- Rolv Erik Ryssdal, Adevinta ASA - CEO [13] -------------------------------------------------------------------------------- Well, when I say that I want to strengthen the position in those countries, is we want to have a bigger footprint, right? And first and foremost, I'm talking about expanding our positions, either organically grow into new things such as transactions or do acquisitions, like we did in France like last year. So to use those -- the strong vehicles we have to enlarge our footprint, that's what I meant. -------------------------------------------------------------------------------- Martin Stenshall, Danske Bank Markets Equity Research - Senior Analyst [14] -------------------------------------------------------------------------------- Okay. And maybe to follow-up on that. So would you be able to comment on the overall product and tech spending you're planning for this year? -------------------------------------------------------------------------------- Uvashni Raman, Adevinta ASA - CFO [15] -------------------------------------------------------------------------------- Not to get to the specifics of numbers, but I think for us, from a product and tech perspective, as Gianpa outlined -- as France outlined earlier on, and in France, we're really looking to invest more around the transactional, which we expect to see revenue probably toward the latter part of this year. And of course, in terms of Spain, Gianpa outlined where the investment is. But we do anticipate because in Global Markets as well. Where Ovidiu will talk to -- and transactional when we look at Shpock and moving towards verticalization, some elements of that. So the spend profile will follow those elements, I think. -------------------------------------------------------------------------------- Martin Stenshall, Danske Bank Markets Equity Research - Senior Analyst [16] -------------------------------------------------------------------------------- Okay. And then on to Global Markets. First, a question regarding Shpock. I think that the discussion we have had all the time is basically that you were to make a consideration on what to do with Shpock by the end of last year. And it seems to me like they're continuing to develop Shpock with the transactional model. Any other comments regarding the potential in Shpock and why you're sticking to only Shpock? -------------------------------------------------------------------------------- Ovidiu Solomonov, Adevinta ASA - SVP of Global Markets [17] -------------------------------------------------------------------------------- Okay. So I'll -- what we've done, right? So in Shpock, we took a quite big change in strategy in 2018, moved away from a generalist, let's say, traditional classifieds, kind of content publishing model towards the transactional. We cut costs significantly. We're quite happy with our run rate costs through 2019, and we have been developing the whole transactional funnel, right? So enabling users to pay to ship the goods, offering escrow services, bag protection services in the U.K. Now we're seeing good traction with that and we're actually ramping up our daily transaction numbers. And we're dedicating more product and tech resources to accelerate that. I think there is -- I mean, there is still a few quarters to, let's say, validate the unit economics in transactional, but we're seeing good early signs. -------------------------------------------------------------------------------- Gianpaolo Santorsola, Adevinta ASA - CEO of Spain & Brazil [18] -------------------------------------------------------------------------------- I think that's Shpock also contributing positively on all the experiments that we are doing in transactional model across the group, right? So they are lending a lot from what France is doing, but also vice versa with Brazil and the further experiments we are doing in Spain. -------------------------------------------------------------------------------- Ovidiu Solomonov, Adevinta ASA - SVP of Global Markets [19] -------------------------------------------------------------------------------- But the big -- in the big KPI that we're looking at there is how much GMV do we get transacted in the app, right? Because there was GMV transacted on Shpock and now we're shifting that GMV in -- towards transaction, which is where we're controlling the flow, providing a better user experience and monetizing a share of that value. -------------------------------------------------------------------------------- Rolv Erik Ryssdal, Adevinta ASA - CEO [20] -------------------------------------------------------------------------------- Further questions? -------------------------------------------------------------------------------- Oliver Schüler Pisani, Nordea Markets, Research Division - Analyst of Consumer Goods [21] -------------------------------------------------------------------------------- Just a quick one from me. Oliver Pisani, Nordea. I think the quarter was negatively affected by unrest and strikes in France, and have you seen an improvement in the business environment so far in Q1 in France? -------------------------------------------------------------------------------- Rolv Erik Ryssdal, Adevinta ASA - CEO [22] -------------------------------------------------------------------------------- Well, I think those immediate effects that we saw was kind of -- had a dampening effect, they're gone. Then let's see what happens with the macro environment. So what I'm curious to see is France is the number of house transactions, how that developed. And it's a bit early to say, but those problems we have Q4, they -- we stopped -- when the strike stops, but then again, you never know if there's going to be a new strike in the summer. I don't know that, but those problems are a bit behind us. Again, I would -- you can always call (inaudible) and ask about the Spain, France, Brazil and global markets, but I would actually ask you to take the opportunity to ask these gentlemen questions around it. -------------------------------------------------------------------------------- Preben Rasch-Olsen, Carnegie Investment Bank AB, Research Division - Analyst of Consumer Goods and Cruise [23] -------------------------------------------------------------------------------- Preben Rasch-Olsen. I'll try. Could you talk a bit about Mercadolibre and the position they have in Brazil, how they have developed over the past 2 years? And if you see any changes in how they operate in the market? -------------------------------------------------------------------------------- Gianpaolo Santorsola, Adevinta ASA - CEO of Spain & Brazil [24] -------------------------------------------------------------------------------- So in general, we don't comment a lot about the strategy of our competitors. But I believe that Mercadolibre has had a fantastic story in all Latin America. And they've done a good progress. I think that have had a bit ahead of us in terms of implementing logistics solutions, payment solutions and escrow solutions, financing solutions. Mercado Pago is very common in -- throughout all Latin America. So we consider them both an example and also their competitor. But also it's fair to say that their business is way much more balanced toward new goods rather than second-hand goods. So we seems to be more complementary than substitute -- substitutive one of the other. We are happy with the progress that we see in OLX Brazil, but I cannot comment on the progress from Mercadolibre because I don't -- the manager should do that. -------------------------------------------------------------------------------- Preben Rasch-Olsen, Carnegie Investment Bank AB, Research Division - Analyst of Consumer Goods and Cruise [25] -------------------------------------------------------------------------------- So we'll try to see if there was any changes in how you see them as a competitor? -------------------------------------------------------------------------------- Gianpaolo Santorsola, Adevinta ASA - CEO of Spain & Brazil [26] -------------------------------------------------------------------------------- No, I think there's not substantial change. I think that's now -- if I have to be open, right, the more -- the most change that we see in Latin America and also in Brazil, is Facebook Marketplace, right? That is a new entrant that is entering the cheapest categories, the miscellaneous goods, the new user segments and a bit also the female segments a bit more strongly. So this is something that we are watching closely. And this is why we are continuously working on our user experience. But I don't see any particular shift from Mercadolibre. -------------------------------------------------------------------------------- Rolv Erik Ryssdal, Adevinta ASA - CEO [27] -------------------------------------------------------------------------------- I think Mercadolibre is a very good company. And I think what they're doing is actually helpful in the sense that they're helping to educate people to use digital channels. Martin here. -------------------------------------------------------------------------------- Martin Stenshall, Danske Bank Markets Equity Research - Senior Analyst [28] -------------------------------------------------------------------------------- Yes, just a few more questions. First one, regarding HQ costs. Are you able to put some comments on the level of HQ costs this year? -------------------------------------------------------------------------------- Uvashni Raman, Adevinta ASA - CFO [29] -------------------------------------------------------------------------------- You want to do it? I think the HQ cost in the quarter is pretty much getting to the levels where we anticipated. And remember, HQ also includes central P&T. So it's getting to the levels we -- it may increase slightly, but we don't anticipate now the increases you've seen in the current year. -------------------------------------------------------------------------------- Martin Stenshall, Danske Bank Markets Equity Research - Senior Analyst [30] -------------------------------------------------------------------------------- And then on to the DSD tax and transfer. So I can read here that pretty much the list -- the risk of you actually hitting a DST tax, you consider that to be maybe lower than in, let's say, what we discussed back in 2019. -------------------------------------------------------------------------------- Uvashni Raman, Adevinta ASA - CFO [31] -------------------------------------------------------------------------------- Yes, in Q3, we did say to you that we've taken the view that we don't believe we hit the threshold based on some of our assessment of the income. And I'm talking about the EUR 750 million threshold at the group level. We've maintained our view on that perspective, and we haven't paid, but we have mentioned the risk associated with our view. Our guidelines still haven't come out, so we'll wait in anticipation on that, and we continue to engage with the authorities around our view. -------------------------------------------------------------------------------- Martin Stenshall, Danske Bank Markets Equity Research - Senior Analyst [32] -------------------------------------------------------------------------------- But just on reading the text, it seems to me like you have maybe see a lower risk of actually... -------------------------------------------------------------------------------- Uvashni Raman, Adevinta ASA - CFO [33] -------------------------------------------------------------------------------- The risk is lower because of some of the press that you would have seen around them delaying the payment of the tax in April. And then the expectation that they will look at what the OECD comes up with. We think if they do go with that, I mean based on the principles applied there, we probably be better off because it's user-based and a whole lot of things, and we already paid tax in France. But other than that, we're not saying -- there's no risk because the government has been very clear around the fact that they haven't withdrawn the tax. -------------------------------------------------------------------------------- Martin Stenshall, Danske Bank Markets Equity Research - Senior Analyst [34] -------------------------------------------------------------------------------- And then naturally, it's necessary that both Italy and Austria, they are also then imposing a DST tax. Have you heard anything about Spain and the other countries that could hit you harder? -------------------------------------------------------------------------------- Uvashni Raman, Adevinta ASA - CFO [35] -------------------------------------------------------------------------------- Yes, Spain did announced something, but they also subsequently announced that they will hold off on it, implementation until the OECD one comes into play as well. -------------------------------------------------------------------------------- Martin Stenshall, Danske Bank Markets Equity Research - Senior Analyst [36] -------------------------------------------------------------------------------- Do you have any preliminary calculation on what Italy and Austria, what -- in terms of EPS impact we could see on the... -------------------------------------------------------------------------------- Uvashni Raman, Adevinta ASA - CFO [37] -------------------------------------------------------------------------------- We're taking the same view when it came to them in terms of our thresholds. They're kind of going with the French one, but we do have it, and it's not as material as you would see in France. No. -------------------------------------------------------------------------------- Rolv Erik Ryssdal, Adevinta ASA - CEO [38] -------------------------------------------------------------------------------- Should we move on to some questions from the webcast now, Marie? -------------------------------------------------------------------------------- Marie de Scorbiac, Adevinta ASA - Head of IR [39] -------------------------------------------------------------------------------- Yes. Actually, we have a lot of questions on the webcast. So I will focus on the most asked questions. As we have Gianpa, maybe on -- lots of questions on the outlook on Brazil, both in terms of top line and margin development. -------------------------------------------------------------------------------- Gianpaolo Santorsola, Adevinta ASA - CEO of Spain & Brazil [40] -------------------------------------------------------------------------------- Yes. I think you know we don't provide forward-looking statements on our assets. We are confident that OLX will continue to grow. We believe there is a huge opportunity in the market, still a lot of customer base that needs to be captured, also potential to make our customers perceive the value of the leads we provide to them, so also increase ARPU over time. So we are happy with the current level of growth, and I think that we will, and if there are not big surprises will continue more or less on the same path. -------------------------------------------------------------------------------- Marie de Scorbiac, Adevinta ASA - Head of IR [41] -------------------------------------------------------------------------------- And now maybe following up on the transactional model discussion that we had, some questions about the economics behind this business model. And basically, why is it lower-margin business and when would we expect revenues to actually materialize. -------------------------------------------------------------------------------- Rolv Erik Ryssdal, Adevinta ASA - CEO [42] -------------------------------------------------------------------------------- I think it will take some time before revenue materializes. So I don't expect anything significant, at least in the first half of the year. But then I think after that, if we're successful, and you can see a pickup, then I think this could be -- I think we have to take the user perspective here, what do users want, what do they expect from us. And they expect to have as little friction in the daily life as normal, so we need to develop the services to do that. Otherwise, other companies will do it. So I think it's both an inspiration, but also a necessity to do it. And then I think it opens up new business opportunities because, I mean, this is a market that doesn't exist today or it's very, very small. And then -- but this opens up new business opportunities. Because if there's huge volumes in this, of course, there's a willingness to pay for it. And there's a willingness to pay, I think, more on the buyer side, actually, than on the seller side. If the volume is high, then it gets very interesting economics. The margin itself is not the same as in the jobs or real estate vertical because you have the fee that you get for income, but then you have to pay for the payment and the shipping, et cetera. So the margin itself will be lower, but it's still a very interesting business. -------------------------------------------------------------------------------- Marie de Scorbiac, Adevinta ASA - Head of IR [43] -------------------------------------------------------------------------------- Thank you. Now questions on the long-term outlook. So you did maintain the long-term margin outlook, but referred to businesses with lower margins. So how do you reconcile everything? -------------------------------------------------------------------------------- Rolv Erik Ryssdal, Adevinta ASA - CEO [44] -------------------------------------------------------------------------------- Well, I think we demonstrated -- I think Gianpa just demonstrated that we have increasing margins in Spain and in Brazil. -------------------------------------------------------------------------------- Gianpaolo Santorsola, Adevinta ASA - CEO of Spain & Brazil [45] -------------------------------------------------------------------------------- Yes. -------------------------------------------------------------------------------- Rolv Erik Ryssdal, Adevinta ASA - CEO [46] -------------------------------------------------------------------------------- I think you've seen the same thing in Global Markets, increasing margins. So I think that we're on the right track. And I think also in France, of course, we can do more in the bigger verticals. So I think -- that's why we maintain our longer-term target of 40%. -------------------------------------------------------------------------------- Marie de Scorbiac, Adevinta ASA - Head of IR [47] -------------------------------------------------------------------------------- Thank you. Regarding more global, high-level question maybe on consolidation potential. And what would be the rationale for notably a geographic expansion for Adevinta. -------------------------------------------------------------------------------- Rolv Erik Ryssdal, Adevinta ASA - CEO [48] -------------------------------------------------------------------------------- What we've said is that we believe that we should do more in markets that we're already in or in adjacent geographies. And then since our biggest presence is in Europe, it's a natural thing for us to continue to look at other opportunities in Europe. As I said, both in markets that we're in but also in adjacent markets. -------------------------------------------------------------------------------- Marie de Scorbiac, Adevinta ASA - Head of IR [49] -------------------------------------------------------------------------------- And then on ARPU development, maybe it was indeed very good in 2019. What's the outlook going forward? And how dependent are you on market growth? -------------------------------------------------------------------------------- Gianpaolo Santorsola, Adevinta ASA - CEO of Spain & Brazil [50] -------------------------------------------------------------------------------- Well, I think our first question, we don't provide forward-looking in terms of where ARPU will move. I think that the best prediction for the future is looking at the past. So we will keep trying to deliver more and more value to our customers and to extract a small part of it. We are confident with the position we have, we can do it. When it comes to how dependent we are from macroeconomic scenario, I think that it varies from vertical to vertical. I believe that some verticals are more cyclical than others. For example, in my portfolio in Spain, InfoJobs is some more cyclical, it's more dependent from the cycle than real estate or cars. But this is what it is, and we keep working to then find new revenue streams to be able to compensate in case some -- the revenue coming from the traditional business goes down. -------------------------------------------------------------------------------- Rolv Erik Ryssdal, Adevinta ASA - CEO [51] -------------------------------------------------------------------------------- I think Spain is a very good example of continuous improvement. When you have a strong platform, and then you continue to improve it all the time with all the product developments that Gianpa demonstrated. And so the teams are doing a good job on product development, then you can charge more. And we have a long list of other things we want to do. -------------------------------------------------------------------------------- Gianpaolo Santorsola, Adevinta ASA - CEO of Spain & Brazil [52] -------------------------------------------------------------------------------- Yes. -------------------------------------------------------------------------------- Marie de Scorbiac, Adevinta ASA - Head of IR [53] -------------------------------------------------------------------------------- Thank you. Maybe one last question because it's been a quite a long conversation. -------------------------------------------------------------------------------- Rolv Erik Ryssdal, Adevinta ASA - CEO [54] -------------------------------------------------------------------------------- Sure. It's been a bit overtime. That's right, yes. -------------------------------------------------------------------------------- Marie de Scorbiac, Adevinta ASA - Head of IR [55] -------------------------------------------------------------------------------- On this advertising outlook, overall for the group and more specifically, if we expect an impact of the Google change in third-party cookie policy. -------------------------------------------------------------------------------- Rolv Erik Ryssdal, Adevinta ASA - CEO [56] -------------------------------------------------------------------------------- Yes, I think that -- I think on the general thing, but then we're hoping to see a more positive trend. We're seeing a somewhat more positive trend. We are improving our products, and we reorganized some sales forces. And we're, I would say, cautious optimists to that market that hopefully, it will be a better trend this year than last year. Then, there are many things happening in the market and the third-party cookies that Chrome, will do the same thing as Apple already has done. That's, of course, something we relate to. I think that's mostly -- you will still be able to do targeted advertising. This will mostly affect probably programmatic advertising, which is limited part of our exposure. I would say, 20%, 30% or something in France. And what we could do there is then to kind of -- we have to compensate and get data in other ways. So we have to increase our log in rate. We have to have users give more data on the user accounts. And of course, if many advertisers also see contextual advertising as a good alternative, that's also interesting. So those are things that are -- could happen in 2 years' time. But I mean, this is part of the world we're living in and we're doing a number of steps to mitigate and improve our products. -------------------------------------------------------------------------------- Gianpaolo Santorsola, Adevinta ASA - CEO of Spain & Brazil [57] -------------------------------------------------------------------------------- And it's also fair to say that, that as we've seen at the beginning of the presentation, our dependence on advertising is reducing over time. -------------------------------------------------------------------------------- Rolv Erik Ryssdal, Adevinta ASA - CEO [58] -------------------------------------------------------------------------------- Yes. Right, okay. Then we're actually well overtime, but I hope you enjoyed it. So thanks a lot for coming. And we'll actually have a conference call also at 2:00 today. -------------------------------------------------------------------------------- Gianpaolo Santorsola, Adevinta ASA - CEO of Spain & Brazil [59] -------------------------------------------------------------------------------- Thanks a lot. -------------------------------------------------------------------------------- Uvashni Raman, Adevinta ASA - CFO [60] -------------------------------------------------------------------------------- Thanks. -------------------------------------------------------------------------------- Rolv Erik Ryssdal, Adevinta ASA - CEO [61] -------------------------------------------------------------------------------- Bye.