Adevinta — Earnings Release 2023

Aug 31, 2023

Q2 2023 Results

Antoine Jouteau, CEO Uvashni Raman, CFO

31 august 2023

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Highlights of the quarter Antoine Jouteau, CEO

Key highlights of the quarter Further successful execution of our Growing at Scale strategy

Strong Q2 2023 financial performance in soft market environment

Strong double digit revenue growth of Core markets: +14% yoy, driven by continued outstanding performance of mobile.de and sustained growth in other core markets

Total consolidated EBITDA of €177m, up 21% yoy

EBITDA margin of 38%, up 3pp yoy, despite business mix evolution, French DST impact and higher SBC

Strong cash flow generation and improved debt profile

2023 targets improved

Progress on optimised organisation driving scale benefit

Business integration on track, with further roll out of new operating models for support functions (France finance) and synergy targets confirmed

Verticalisation¹ of Adevinta's operations ongoing, with finalisation of org. design and progress on structuring future ways of working

Towards convergence for generalist platforms, starting with leboncoin and Kleinanzeigen

Operational excellence to generate profitable growth

Successful rebranding of Kleinanzeigen

Increased monetisation in Mobility and Real Estate with higher client penetration and successful price increases along with product improvements and increased added-value for customers

Strong ramp-up of transactional

services, with transactions up +41%, with strong traction in all Core markets

Continued product development across all of our platforms

Continued financial discipline

Adevinta is well positioned to capture significant business opportunities

Leading platforms

Resilient business model

Large untapped potential

Strong purpose

Committed and experienced teams

Strong team willingness

Our vertical strategy and our organisational transformation, together with a common generalist platform, will enable us to fully unlock Adevinta's potential

Our ambition is to get the best from all generalist platforms to build the world-class marketplace

+

Global generalist platform leveraging best capabilities from existing platforms

Continued innovation with added-value products across all markets To reinforce our leadership positions

Mobility

Cash Purchase for C2B

for private sellers

Real Estate

Borrowing capacity Shop2Shop simulator with redirection to a broker Digital payments "Buy now" opted in

Ability to translate descriptions into multiple languages

Transactional services

Three months into Rebranding to Kleinanzeigen, all metrics are on track

Over-performance versus traffic targets, with communications efforts driving 60m monthly active users in launch month of May*

Smooth migration to kleinanzeigen.de, with the new domain already ranking #6 for SEO visibility in Germany** (and climbing)

Overwhelmingly positive response from users to our new brand and strong performance against brand metrics

Positive traffic growth in all Core platforms Despite soft macro and car markets, and domain change for Kleinanzeigen

Growth in car PRO listings driven by slight recovery in new car supply coupled with slowing demand Strong value proposition reflected in successful commercial activity

	Q2 qoq
leboncoin	+2%
mobile.de	+3%

Listings: Average number of dealer live listings - internal data

Price and client base evolution
	Price	Dealers
leboncoin	ARPD: 465€ +12% yoy	24k -3% yoy
mobile.de	ARPL: 25€ +14% yoy	40k 0% yoy

ARPA: Average Revenue per Account (formula for a given month: paying professional accounts revenue / # of paying professional accounts) ARPL: Average Revenue per Listing (formula for a given month: revenue generated from dealer subscriptions, features and insertions / average monthly live listings) Dealers: based on internal data

Real Estate PRO listings driven by lower demand for properties While our strong value proposition drives ARPA and client penetration up

	Q2 qoq
leboncoin	+5%
Kleinanzeigen	+23%

ARPA and customer evolution
	ARPA	Customers
leboncoin	650€ +19% yoy	22k -4% yoy
Kleinanzeigen	130€ +20% yoy	10k +15% yoy

ARPA: Average Revenue per Account (formula for a given month: paying professional accounts revenue / # of paying professional accounts) Customers: based on internal data

Continued rapid scaling of our transactional services Supported by recent product launches and promotional activities

Increasing traction in all Core markets, with strong double-digit growth in all markets, and even triple-digit growth at Kleinanzeigen

Successful promotional activities in Q2, with positive impact on # of transactions and adoption

Continued strong development of transactional business model in France, with positive impact on the margin

New products and innovation in all markets

Transactions
Number of payouts (evolution in %)
	Q2 2023	June 2023 LTM vs June 2022 LTM
leboncoin	+35% yoy	+36% yoy
Kleinanzeigen	+108% yoy	+133% yoy

Payouts: payments made to sellers following a successful transaction

Q2 2023 financial performance

Uvashni Raman, CFO

Group | Another strong quarter for Core markets, with strong double-digit revenue growth

+12% Core markets revenues up 14% yoy

Classifieds revenues up 17%

• Mobility up 23% yoy, driven by mobile.de
• Real Estate up +11%, driven by France and Kleinanzeigen
• Jobs up 2% yoy

Transactional revenues up 53% yoy

● Strong revenue growth in all markets

Advertising revenues down 6%

• Overall weaker advertising market
• Rebranding and domain switch at Kleinanzeigen
• Strong performance in Italy despite challenging market

Group | Improved EBITDA margin benefiting from topline development and cost discipline, despite business mix evolution and DST impact

Reported EBITDA up 21% year-on-year to €177m

EBITDA margin of 38.0%, up 3pp vs Q2 2022

Lower marketing spend across markets, partly offset by higher spending at Kleinanzeigen and mobile.de.

Higher personnel costs, driven by :

• Continued build-up of global capabilities with the implementation of new operating models for support functions and Product and Technology teams
• Annualisation of investment in product enhancements and in sales and customer support operations, particularly in legacy eCG markets, to support revenue growth
• Partly offset by slightly higher capitalisation related to convergence project and harmonisation of capex policy

Higher cost of share-based compensation (SBC)

Direct transaction costs increase reflecting adoption of the service and revenue growth

Impact of French DST provision

One-off benefits of hosting cost credits (€2m)

EBITDA margin, excluding DST of 38.6% ( up 3.7 pp yoy)

France Continued solid revenue growth

Margin impacted by business mix evolution, DST and increase in personal costs

Revenues

Solid revenue growth, up 9% yoy

Classifieds revenues up 8% yoy driven by Real Estate and Mobility, despite limited supply, demonstrating the strength of our market positions:

• Positive ARPA evolution (+19% yoy) in Real Estate
• Positive development in ARPD (+12% yoy) in Mobility

Strong growth in transactional revenues, up 40% yoy, driven by transaction volume growth

Advertising revenues down 11% yoy, impacted by reduced activity from media agencies and programmatic

EBITDA margin

Margin softening year-on-year (down 4.5pp) but sequentially improving (up 4.3pp qoq)

Topline evolution partly offset by:

• French DST provision (€3m)
• Business mix evolution: increasing share of transactional services (-0.6pp dilutive impact from direct transactional costs) and decreasing share of highly profitable of advertising revenue
• Slight increase in personnel, due to investments in product and technology development

Reported EBITDA at €64m, down €1m (-1%) yoy

EBITDA, excluding DST, up 4% yoy

mobile.de Outstanding revenue growth and profitability improvement

Revenues

Outstanding revenue growth, up 29%

Classified revenues up 33% yoy:

• Continued recovery in dealer listings (+14% yoy)
• Increase in ARPL, up 14% yoy, driven by the successful price increase in April, in combination with increasing value for customers, and strong performance in upselling
• Strong performance of revenues from private sellers

Advertising revenues down 13% yoy due to market headwind and lower OEM spend

EBITDA margin

Margin improvement (up 6.7pp yoy) mainly driven by:

• Topline evolution
• Operating leverage

Partly offset by:

• Higher personnel expenses, as a result of the annualisation of our investments in product enhancements and in sales and customers support operations
• Slight increase in marketing expense

Reported EBITDA at €62m, up €19m (+46%) yoy

European Markets Double-digit revenue growth and improved margin despite higher personnel expenses and unfavorable business mix evolution

Revenues

Up 11%* yoy

Strong performance of Classifieds, up 15%* yoy, driven by double-digit growth in all three verticals

Continued strong momentum from transactions, with revenues almost doubling

Advertising revenues, down 3%* yoy, driven by weak economic context and by rebranding and domain switch at Kleinanzeigen

Double-digit revenue growth at Kleinanzeigen (+11% yoy), in Benelux (+13% yoy) and Italy (+20% yoy). Solid performance in Spain (+7% yoy)

EBITDA margin

Slight margin improvement, with positive topline evolution partly offset by:

• Investment in product development and sales and customer support
• Higher marketing investment in Kleinanzeigen to support rebranding
• Increase in transactional costs, led by higher volumes and by shipping promotional campaigns at Kleinanzeigen to drive adoption of the service

Reported EBITDA at €83m, up €9m yoy (+13%)

Solid revenue performance with double-digit growth in Kleinanzeigen, Benelux and Italy European Markets

Revenue split by market (Q2 2023)

Double-digit revenue growth (+11% yoy) - strong momentum in Real Estate, with further market share gains, in Consumer Goods, with strong SMBs performance, and Mobility. Advertising revenues down due to the rebranding and domain switch. Strong performance from Transactional revenues

Revenues up (+7% yoy) - solid performance of online classifieds, benefitting from price increases in all verticals, along with product innovation, and strong performance in Mobility and Jobs. Advertising revenues down, driven by lower vibrancy

Back to double-digit revenue growth (+13% yoy) - strong growth in online classifieds, driven by Mobility and Consumer Goods, and in transactional services, pushed by recent product launches. Advertising revenues down

Double-digit revenue growth (+20% yoy) - strong performance in Mobility, Real-Estate and Consumer Goods. Continued strong momentum of transactional services. Advertising revenues up 9% yoy

International Markets Performance impacted by vibrancy contraction, offset by lower marketing spending and other cost optimisations

Down 16%* yoy

Canada revenues down 16% yoy, driven by currency impact (-6 pts) and contraction in vibrancy impacting both online classifieds and Advertising performance.

Short-term mitigation plan under implementation, structured around (i) driving vibrancy and sustainable revenue growth through user engagement and reactivation, (ii) implementing pricing initiatives, and (iii) improving the ways of working, together with defined P&T priorities and resource allocation

EBITDA margin

Margin improvement (up 10.8pp yoy), mainly driven by:

• Lower marketing expenses
• Exit of non-core operations
• Other cost optimisations to absorb revenue decline

Reported EBITDA at €12m, stable yoy

Revenue growth impacted by economic environment Improved profitability due to one-off on ESOP, lower marketing spend and cost reduction plan

Revenues

Up 4% in local currency

Growth in Mobility and Consumer Goods, partly offset by soft performance in Real-Estate, impacted by market headwinds

Solid growth from transactional revenues, driven by higher volumes

Advertising revenues down impacted by weaker macro-environment

EBITDA margin

Strong margin improvement (at 56%, vs negative margin in Q2 2022) mainly driven by:

• Specific reversal of OLX Brazil management long-term incentive expense (ESOP) for c. €9m
• Strong reduction in marketing spending, mainly on ZAP+ branding and performance
• Lower personnel expenses, due to the implementation of a cost reduction plan without compromising operations
• Other OPEX optimisations

EBITDA at €23m, up €29m yoy Excluding ESOP, EBITDA at €14m (34% margin)

EBITDA up €3m yoy

Continued build-up of global capabilities due to the implementation of new operating models for support functions and Product and Technology teams to drive operational efficiencies and accelerate value creation

More than offset by larger share of cost allocations to the markets to reflect global teams support and one-off benefit of hosting costs credits (c.€2m)

Central P&T & HQ costs down yoy as % of revenues, at 10%

Other P&L items

	Second quarter
€ million	2023	2022
Gross operating profit (loss) = EBITDA	177	146
Depreciation and amortisation	(74)	(71)
Share of profit (loss) of joint ventures and associates	(1)	(12)
Other income and expenses	(27)	(16)
Operating profit (loss)	75	47
Net financial items	(11)	(22)
Profit (loss) before taxes	63	25
Taxes	(16)	(13)
Profit (loss)	47	(12)
Profit (loss) from continuing operations	47	12
Profit (loss) from discontinued operations	(0)	(24)

Depreciation and amortisation costs up €(3)m yoy, driven by the reassessment of useful lives of certain trademarks in Q2 2022. Breakdown disclosed in appendix

Share of loss of joint ventures and associates down €11m yoy, due to improved results of OLX Brazil

Other expenses mainly includes expenses related to the eCG integration, to the verticalisation project and to the rebranding of Kleinanzeigen

Net financial costs down €11m yoy, mainly due to the exchange gain on the loan in BRL granted by Adevinta to OLX Brazil (appreciation of BRL against EUR)

Tax expense up €(3)m yoy

Strong cash flow generation profile

Slight negative change in working capital, non cash items and provisions

Capex

• Essentially capitalised development costs (€29m)
• c. 7% of sales
• Slightly up due to:
  • ○ Integration projects (eg cloud and ERP migration)
  • Convergence project
  • ○ Harmonisation of capex policy across the group

Cash flow generation up €6m yoy

* Net cash flow from operating activities adjusted for CAPEX and IFRS 16 lease payments

Deleveraging continues to be a priority

Q2 2023 Net interest-bearing debt build-up

* Net cash flow from operating activities adjusted for CAPEX and IFRS 16 lease payments Senior Secured Net Leverage Ratio of 3.0x as of Q2 20231 , ahead of time vs YE 2023 leverage target

Medium term target: towards 2x net debt/EBITDA

Credit Rating Upgrades during H1 to BB+ (stable outlook) and Ba2 (stable outlook), from Fitch and Moody's respectively

€202m² debt repayments in H1 2023:

• €80m debt repayment in Q1 (EUR TLB)
• €120m debt repayment in Q2 (€100m on USD TLB and €20m on EUR TLB)

Leverage development and long-term debt maturity

Deleveraging progressing well in line with management's commitment

€450m undrawn revolving credit facility maturing in 2026

Measures in place to mitigate Interest Rate & FX Exposures

Interest expense remains broadly flat

• Exposure to rising interest rates mitigated by:
  • Deleveraging
  • USD TLB swapped to Euro Fixed until mid 2024
• Fixed debt profile of c. 70%
• Floating debt exposed to EURIBOR

Deleveraging and hedging has resulted in interest savings of €21m in HY23

Manageable FX exposures

• Material transactional exposures are hedged
• Balance sheet exposures are assessed on a regular basis
• FX cash kept at operational minimum
• Substantial M&A proceeds are hedged where possible

Development of Interest Expense¹

Conclusion & outlook

Antoine Jouteau, CEO

2023 outlook improved

Double digit revenue growth in core Markets despite soft macro environment

EBITDA at the top end of the previously announced €620m to €650m range

Further deleveraging expected, towards 2x net debt/EBITDA in the medium term

• Further room for price adjustments based on product improvements and increased value for our customers
• Continued strong traction of transactional services
• Advertising markets to remain under pressure
• ● Operating leverage & synergies realisation
• Financial discipline
• Business mix evolution
• ● Continued focus on deleveraging and further optimisation of debt structure

Value creation opportunity ahead of us Long-term ambition remains strong for Core markets

Sustainable profitable growth underpinned by

• Resilient business models and strong market positions
• Optimised organisational structure: towards verticalisation
• Strict cost management programme
• Efficient operating model to leverage scale and drive efficiencies

Long-term ambition

• 2023-2026 annual revenue growth between 11% and 15%
• ● 2026 EBITDA margin between 40% and 45%

Thank you!

Appendices

D&A breakdown

Nature	Q2 2023	Comment
D&A	22
D&A related to the reassessment of useful lives of certain trademarks	6	€25m in FY2023 and FY2024 and €10m in FY2025
PPA	46	€185m in FY2023, €117m in FY2024 and €49m the following years
Total	74

Basic information

Ticker
Oslo Stock Exchange	ADE
Reuters	ADE.OL
Bloomberg	ADE:NO
Number of shares	1,224,942,981
Of which:
Class A shares	1,165,686,913
Class B shares (non-voting, not listed shares)	59,256,068
Treasury shares (Aug 30, 2023)	7,294,304
Number of shares outstanding	1,217,648,677
Free float*	27.1%
Share price (Aug 30, 2023)	NOK 79.2
Average daily trading volume (shares)**	400,575
Market Cap total (Aug 30, 2023)	NOK 96.4bn (USD 9.1bn)

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Adevinta ASA, Akersgata 55, P.O. Box 490 Sentrum