€1.7 Billion Impairment Loss Dampens Adevinta's Q4 Results

The online marketplaces operator Adevinta has released its results for Q4 of the 2022 financial year. Relevant highlights from the company's performance include:

• Hit revenue targets (10% growth in core markets) and reported revenue for the year of €1,644m—a year-on-year increase of 8%.
• Full-year EBITDA of €548m at a margin of 33.3%.
• Revenues from real estate activities were up 9% for Q4.

Adevinta's portfolio includes real estate verticals in Spain (Fotocasa and Habitaclia), Brazil (VivaReal, and Zap joint venture), France (A Vendre A Louer) and Ireland (Daft.ie joint venture) as well as many leading horizontal classifieds platforms and car and job verticals mainly in Europe.

According to recently promoted CEO Antoine Joteau, 2022 was a pivotal year for the company.

"After completing the acquisition of eCG in 2021, we focused on delivering a successful integration of the business and advancing our Growing at Scale strategy. We announced a new leadership team and structure with responsibilities aligned to execute and deliver on our strategy and to complete our integration roadmap with the implementation of new operating models for our global functions. We successfully developed and launched new features and products for the benefit of our users and clients, while maintaining our commitment to financial discipline."

The Schibsted spin-off reports three segments that include real estate or horizontal classified assets (the other being German autos vertical Mobile.de). The fourth quarter of 2022 saw the company's French assets grow revenue by 8.7% year-on-year while its European Markets segment saw revenue grow 7.8% in the period. Revenue from real estate assets grew 9% while auto vertical assets saw a 19% bump in revenues.

Adevinta's bottom line was severely impacted in Q4 by a €1.7 billion impairment loss to the book value of ebay Classifieds Group which was acquired for $9.2 billion back in 2020. Rising interest rates affecting WACC, a 48% increase in the book value at the closing of the eCG transaction and a more conservative expected growth trajectory in Adevinta's Canadian and Hungarian assets were blamed in the report.

The company continues to concentrate on its core European markets according to its 'growing at scale' strategy. As part of this strategy, Adevinta has been gradually selling off assets worldwide and confirmed on Thursday that it would be selling off its Hungarian assets, the autos portals Hasznaltauto, and Autonavigato and the jobs portal Jofogas.

Another key part of Adevinta's strategy is to grow what it calls 'transactional revenue'. Here there was marked success as transactional revenues were up 58% on a quarterly year-on-year basis (€21m for Q4) and 50% on a yearly basis (€69m for 2022).

2022 saw an operational switch-up at Adevinta with leaders appointed to different verticals and business areas to add value across the organization. In addition to the appointment of a Head of Re-Commerce and a Head of Mobility, the company's Q3 report announced that Adevinta Spain CEO, Román Campa was appointed Head of Real Estate and Emerging Markets.

"Our project to align our organisation with our strategy around Mobility, Re-Commerce and Real Estate & Emerging Verticals, will allow us to share even more our product and technology capability across our five core European markets," said Joteau.

For 2023 Adevinta's guidance is for low double-digit revenue growth in its core markets with EBITDA expected to be between €620m and €650m. The company also said that it expects to reduce leverage to below 3x net debt/EBITDA by the end of the year.