Mixed Q3 for Adevinta as it Announces Renewed Investments and Divestments

Norwegian based marketplaces operator Adevinta has released the results of its Q3 operations. The company that spun off from Schibsted in 2019 is still integrating the assets of eBay's Classifieds division which it bought for $9.2 billion last year.

Adevinta's numbers, when compared to a strong Q3 of 2020, were a mixed bag as the company ramped back up its marketing spend and saw its car verticals affected by a shortage of stock.

Headline figures from Adevinta's Q3 2021 report include:

• Revenue up 6% y-o-y to €386 million
• EBITDA of €127 million at a margin of 33%, down 7% from Q3 of 2020
• Year to date revenues up 12% and EBITDA up 19%
• Display advertising down 3% y-o-y

Commenting on the figures, CEO Rolv Erik Ryssdal said:

“Our revenues continued to grow in the third quarter, with Core Markets up 6% year-on-year. The slower pace compared to the first half of the year reflects the combination of the post-pandemic recovery seen in Q3 2020 and lower activity levels this summer following the lifting of restrictions in most markets, as well as the current global slowdown we observe in the motors market."

Adevinta's France segment, which includes leading horizontal classifieds site LeBonCoin and real estate vertical A Venndre A Louer, continues to be the company's bell-cow, growing revenue by 6% over Q3 of 2020 and was the only segment to see improved EBITDA figures for the quarter.

In terms of individual portfolio performance, OLX Brazil, which includes leading real estate verticals ZAP and VivaReal as well as the popular horizontal OLX, was singled out for praise having grown revenue 31% organically.

Joint owners Adevinta and Prosus will be pleased that ZAP launched its ZAPway+ digital rental transaction product to compete with QuintoAndar over the quarter but perhaps not so pleased that a 'misaligned communication' from local management lead to accusations of 'back-stabbing' and disintermediation from Brazil's agent community.

The report highlighted the fact that 1% of the 6% revenue growth was attributable to transactional services growth. Transitioning its portfolio brands from classifieds to transactional platforms is a stated aim for Adevinta in the long run with CEO Rolv Erik Ryssdal confirming that the company will invest to push brands in Adevinta's core markets down this path after several quarters of Covid-related cost-cutting.

Quarterly EBITDA was down 7%. The company attributes this to "an anticipated increase in marketing investment, notably in Spain and Italy, and in personnel costs due to the ramp-up in product and technology resources to fuel product development and new business models."

Since the deal to acquire eBay Classifieds, the focus is now on five key markets: Germany, France, Spain, Benelux and Italy with the continued support of joint ventures in Ireland (Daft), Brazil (OLX Brazil) and Austria (Willhaben).

Adevinta confirmed that it will divest from its business in Australia (Gumtree, Autotrader and Carsguide) and South Africa (Gumtree) in early 2022 with other markets such as Mexico (where the company operates VivaAnuncios and Segundamano), Belarus (Kufar) and Canada (Kijiji) under strategic review. Assets here could well go the way of Fincaraíz, Avito and Tayara which Adevinta sold off last year.

Looking ahead, the company will very much be focussing on its lucrative European core markets and the mission to turn them into more transaction-oriented platforms with Ryssdal commenting:

“We expect our Core Markets to generate an average revenue growth per annum of approximately 15% in the mid-to-long term, driving EBITDA margins between 40% and 45%."

Adevinta is expected to outline more around this strategy in a Capital Markets Day next week.