Hemnet Raises Long Term Profitability Guidance on Back of Year of Growth

Leading Swedish real estate portal operator Hemnet has released its interim report for Q4 of the 2022 financial year. Highlights of the company's performance over the period include:

• Net sales were up 13% quarterly (SEK 201m) year-on-year and 22% on a yearly basis (SEK 889m).
• Adjusted EBITDA increased 5% on a quarterly basis to SEK 88.8m while on a yearly basis it grew 26% (SEK 448m)
• Operating profit increased 10.2% quarterly to SEK 71.3m while on a yearly basis, it grew 69% (SEK 377m)
• Average revenue per listing was up 33% on both a quarterly and yearly basis.

Sine floating on the stock market in April 2021, Hemnet has consistently grown sales on a quarterly year-on-year basis. The trend continued throughout FY22 despite what CEO Cecilia Beck-Friis referred to in comments as an atypical year.

"Over the year as a whole, the volume of listings on Hemnet was in line with 2021, but fluctuated more than in a typical year. The year began with a very active housing market and high volumes, which then declined in the autumn due to increased inflation and announced interest rate increases. In the fourth quarter, the number of listings decreased by 10% compared to the same period last year.

It is difficult to predict how the property market will develop in the near future and how this will impact listing volumes. In the past, however, the Swedish property market has been stable over time and driven by people’s real need to move rather than by speculation."

Hemnet's rise in sales has been driven by a push to steer consumers towards its more expensive premium packages with vendors in Sweden ultimately responsible for paying portal marketing fees rather than the agents.

The effort has been rewarded with significant gains in the revenue the company is able to generate from each listing. The figure increased from SEK 2,467 per listing in 2021 to SEK 3,275 ($317) in 2022.

Along with its interim results, Hemnet released a statement reiterating its target of 45-50% Adjusted EBITDA margin for 2023 and raised guidance for long-term profitability to 55%+ with Beck-Friis saying:

"the Company believes that the investments that are made into future growth, combined with the operating leverage of the business, creates good opportunities for margin expansion going forward."

Hemnet’s financial targets for net sales growth (15-20%), leverage (<2.0x net debt to adj. EBITDA), and dividend (minimum 1/3 of net income*) were reiterated.