Oslo-based marketplace operator Adevinta continues to record steady revenue growth as it gradually recovers from the pandemic impact. Revenue reached $240 million U.S. (€200 million) in Q1 2021, mild growth of 6% year-on-year.
There are two major takeaways from the latest quarterly results: strong growth in transactions-led revenue, and the hit on profit from two deals by the company.
Transactions-led revenue continues to rise
In Q1 2021, transactional revenues reached €10.1 million, a relatively modest sum but a major jump from the €3.0 million in Q1 2020. This segment represented 8% of overall revenue growth this quarter. Total transactions revenue in 2020 amounted to €22.4 million, and this number will almost certainly double in 2021, according to Adevinta CFO Uvashni Raman.
France-based horizontal LeBonCoin is the major transactions driver for Adevinta at present. The marketplace is betting big on holiday rentals, a segment that remains somewhat stymied by the current pandemic scenario. Adevinta is looking to make similar progress across other markets — in Q1 results, the company discussed a new b-to-c auto product in Spain and a new peer-to-peer payment service in Italy.
Profit hit by Yapo and Shpock deals
Two deals have negatively impacted profit. Adevinta’s sale of Chile-based horizontal to Frontier Digital Ventures has translated into a loss of €11 million, while the ongoing sale of marketplace app Shpock to Russmedia has resulted in impairment charges of €25 million. In all, this has translated to a loss of €30.1 million before taxes this quarter.
However, this is temporary and profit will rebound in the near term.
Roundup of results across Adevinta’s four divisions
Adevinta’s four primary divisions saw diverse financial results:
France continues to be the star performer for Adevinta. The division alone has an EBITDA of €55 million, while bringing in €112 million in revenue in Q1. Revenue growth was at 15% y-o-y in Q1.
Spain is slow to recover. Revenue this quarter declined by 6% y-o-y to €44 million. Adevinta’s marketplaces in the country, such as horizontal Milanuncios, have been slow to build transactions. The closure of horizontal Vibbo is also likely to have a negative revenue impact in the near term. However, Adevinta talked about a new auto product in Spain — a pilot for c-to-b car sales has just been introduced at auto vertical Coches.net.
Brazil, largely represented by OLX-Brazil, the JV with Prosus, saw an impressive surge in revenue of 38% y-o-y this quarter (87% in local currency). This amounted to €27 million.
The global markets division, which consists of eight markets including Italy, Ireland and Austria, saw a decline in revenue of 4% this quarter. In Italy, via leading horizontal Subito.it, Adevinta is introducing peer-to-peer payments with an escrow solution.
This is what Adevinta CEO Rolv Erik Ryssdal said in the results release:
“As we continue to navigate through the uncertainty of the Covid pandemic, our focus has remained on keeping our people safe and on supporting our communities, users and customers.
We had a solid start to 2021, with 7% organic revenue growth despite having to deal with the next wave of the virus and associated lockdown measures in our key markets.
Revenue from our online classifieds accelerated in the quarter, with an increased contribution from transactional services, primarily in France. Our EBITDA margin, up 5.8 points year-on-year, reflected the performance of the classifieds business and also benefited from lower administrative costs and favorable phasing of expenses, with marketing campaigns being delayed until later in the year.
We saw further enhancement of our product offering and user experience as well as strong acceleration in the deployment of transactional solutions across our portfolio.
We also made further progress on the regulatory front ahead of our expected acquisition of EBay Classifieds Group, and we continue to target closing the transaction during the second quarter.
We remain excited about the long term growth potential of our business, and we are approaching the short term uncertainty with even more confidence after a full year of successful managing through the crisis.”