Adevinta

Adevinta delivered a relatively solid set of results for the third quarter of 2020, considering the economic impact of Covid-19. Yet again, France was the stand-out performer, with impressive revenue growth of 17%, while all other markets were much more measured.

Adevinta managed to increase its EBITDA in Q3 to €57.1 million ($67 million U.S.), inclusive of its joint ventures. Margins were even up one percentage point to 31%. Revenue increased by 2% to €183.3 million.

The EBITDA margin from Q3 will, however, not be repeated in Q4 when Adevinta plans to increase its marketing and spend more money on recruiting specialists.

Negative bottom line due to acquisitions

Looking deeper into the accounts for Q3, the bottom line for Adevinta in Q3 is negative. Adevinta shows a loss of €12.7 million in Q3 before taxes. “Other income and expenses,” which is outside the EBITDA, reached €24.9 million, which is mainly related to the upcoming acquisition of the EBay Classifieds Group deal that was negotiated in Q3.

Adevinta also had a €23.9 million foreign exchange loss. Adevinta secured the Grupo Zap acquisition in euros and has done the same for parts of the anticipated EBay payment. Net financials landed at a negative €26.3 million compared to a negative of only €2.6 million in Q3 2019. However, this is to be expected as the company continues its global m-and-a spree.

The ongoing deal to acquire the EBay Classifieds Group (ECG) set the tone for the Adevinta Q3 presentation. Adevinta has an extra digital shareholder meeting on Thursday to clear the deal. Regulatory filings are in the pipeline for Germany and the U.K. Adevinta has just arranged finance by securing loans for €2.4 billion.

In the Q3 report, the company points to the synergy potential with ECG that may have a positive impact of €134 million to €165 million on EBITDA in Year 3. The integration cost is calculated at $125 million.

Alexandre Collinet

Alexandre Collinet will lead the integration process. He has been CFO at LeBonCoin for 10 years.

France is the stand-out performer

Adevinta has a well-established track record of increasing revenue. In past reporting, analysts were disappointed if revenue increase were below 15%. Cost cutting was not the most important goal. In this Q3 report, France and LeBonCoin managed to increase revenue by an impressive 17%, but with help from the acquisition of pricing and dealer software business L´Argus. Without L’Argus, the revenue increase is “only” 8%.

Spain lost 7% in revenue year-on-year. Brazil reported a loss of 27% in the quarter, but that is driven by the depreciation of the currency. Revenue actually grew in the quarter, with 5% counted in local currency. The recruitment JV in Brazil with RedArbor — InfoJobs.com.br — lost 10% even in local currency, but losses improved month-by-month in the quarter.

The Global Markets division saw a recovery in Italy, Austria, Ireland, and Hungary. All increased their EBITDA during the quarter despite revenue not catching last year’s numbers.

Cutting costs key

The Covid-19 pandemic has changed the game and cost control has become much more important. Adevinta has already shown some skill in cutting costs. HQ and other costs were cut by €2.7 million year-on-year to €15.1 million in in Q3.

Adevinta CEO Rolv Erik Ryssdal did give a clear indication that marketing spending and some other costs will go up in Q4 and that the EBITDA margin might shrink a little.

Display advertising is down 4% in the third quarter, but this is an improvement — it was down by 21% in Q1 2020. The exception is Spain, where display increased by 5% year-over-year driven by successful measures in programmatic  initiatives.

The Q3 2020 interim report is available here.

The Q3 2020 presentation is available here. 

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