Axel Springer’s StepStone grows 21% in Q3
08 Nov 2017
Axel Springer (Xetra: SPR) reported another strong quarter today, powered by its classifieds businesses once again. “The figures for the first nine months of FY2017 are the best in the history of the company,” said CEO Matthias Doepfner in an analyst/investor call today. So far this year, classifieds have contributed 58.1 percent of total group earnings, he said.
In the 9-month period, revenue of the classifieds segment (or division) swelled to €745 million ($864 million U.S.), up 16 percent from €645 million in the first nine months of FY2016. In Q3, revenue also grew 15 percent to €254 million. EBITDA for the division classifieds came to €307 million, an 18 percent increase over the first nine months of FY2016, and the EBITDA margin stood at a healthy 41 percent.
In the first nine months, the jobs segment (StepStone Group) grew revenue 15 percent to €342 million. But, the Q3 performance was even more memorable: revenue grew 21 percent from Q3 of FY2016 to €123 million.
The performance of StepStone Group relied mainly on the performance of StepStone in Germany, which had a stunning organic growth rate of 30 percent in the first nine months of the year, said Axel Springer CFO Julian Deutz on the call today. Doepfner added that 50 percent of German jobs classifieds are still print-based and that growth has come from gains from employers shifting to online ads and the use of customer data.
The sluggish U.K. jobs segment (Jobsite, Totaljobs) is also showing improvement, said Deutz, and showed positive organic growth rates in Q3. “We have been working on fixing these issues. This increase in organic growth was the first sign that we changed the right things. We don’t expect growth rates close to continental Europe, but we are not pessimistic about the market.”
The real estate segment (Immowelt, Immoweb, SeLoger) generated revenue of €216 million in the 9-month period, 6.8 percent more than in the first nine months of FY2016. Deutz explained that organic growth rates across all assets were “in the double digits.” In particular, Germany’s Immowelt Group grew 10 percent in the period as it works hard to close the gap to market-leading ImmobilienScout24. SeLoger grew “just above 10 percent,” said Deutz.
The general classifieds in the classifieds portfolio, which includes Israel’s horizontal Yad2 and French auto site LaCentrale, grew a strong 19 percent y-on-y to reach €59 million, mainly due to consolidation effects in the @Leisure Group.
In the first nine months of FY2017, Axel Springer group revenue came in just below €2.6 billion ($3 billion U.S.), an increase of seven percent over the first nine months of FY2016. The digital media share of that — which includes classifieds, news media and marketing media — was a hefty 70 percent, or €860 million ($997 million U.S.). (This share has been growing steadily. In FY2016, it was 67 percent; in FY2015 it stood at 61 percent.)
In the 9-month period, group EBITDA rose to €473 million ($548 million U.S.) from €419 million in the same period of FY2016. Digital media accounted for 77 percent of EBITDA.
Although y-on-y group net profit was down 55 percent due to non-recurring effects (eg. board remuneration, acquisitions) to €163 million from €363 million, adjusted net income rose 17 percent, to €244 million in the first nine months of FY2017.
Responding to a question about the threat of Facebook’s growing appetite for classifieds, Doepfner said: “One of our rules for success is to stay paranoid. We are paying attention to it, but we think its marketplace initiative is mainly a challenge for generalists, and we are strong as specialists. So far, it is not a threat. The same is true for Google for Jobs.”
He also said Ringier Axel Springer’s acquisition in Slovakia of auto and real estate sites was expected to be completed still in Q4.