Release Date: December 05, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Baltic Classifieds Group PLC (STU:983, Financial) reported a strong financial performance with revenue growth of over 17% and EBITDA growth of 18%.
- The company expanded its industry-leading EBITDA margin to 79% and maintained cash conversion close to 100%.
- Strategic pricing and packaging changes led to double-digit yield growth across all business units.
- The company successfully implemented pricing events in May and October, setting up strong momentum for the second half of the year.
- The board expects revenue growth of at least 15% for the second half of the year, with key segments projected to grow above this target.
Negative Points
- Inventory levels are expected to remain flat or grow only in low single digits, which may limit potential revenue growth.
- The company faces competition in the marketplace business, which could impact pricing power and market share.
- There is a risk of inventory volatility, which could affect business performance if not managed properly.
- The company did not win a recent M&A opportunity, indicating challenges in acquiring attractive assets at reasonable prices.
- Marketing costs increased by 2%, and while minimal, they still represent a cost factor that needs to be managed.
Q & A Highlights
Q: Could you help us think through the inventory assumptions underpinning your H2 guidance? Should we think, for example, you're assuming flat inventory?
A: We expect real estate to outperform in H2, with inventory levels assumed to be flat or growing low single digits. Inventory had minimal impact in H1, and we expect growth to align with macroeconomic trends.
Q: How do you think about derisking the business from a reversal or weakness in inventory?
A: The marketplace business is well-positioned to handle inventory fluctuations. In strong markets, we can leverage pricing, and in weaker markets, inventory growth supports business growth. We can perform well in various macroeconomic conditions.
Q: Is it fair to observe that you're stepping away from doing deals due to high competition for assets?
A: We remain interested in M&A but maintain discipline in pricing and asset quality. We participated in a recent competition but did not win. We continue to evaluate opportunities while valuing our own assets highly.
Q: Could you run through the outlook for key markets like auto, real estate, and job services in FY26 and onwards?
A: We anticipate stabilized inventory levels with low single-digit growth. Growth will be driven by pricing events from May and October, impacting the second half of the year.
Q: Regarding pricing, where does your pricing sit next to competitors, and do they adjust their pricing in response?
A: Our prices are higher in absolute terms but often cheaper per lead. Competitors typically cannot leverage our pricing events to their advantage, as the marketplace business favors the leader.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
