Welcome to the CDON Q3 2023 conference call. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answer session, participants are able to ask questions by dialing star five on their telephone keypad. Now, I will hand the conference over to the speakers, CEO Fredrik Norberg and CFO Thomas Pehrsson. Please go ahead. Welcome to this earnings call for the third quarter for CDON. Presenting today, as usual, is myself, CEO of CDON, and Thomas Pehrsson, CFO and Deputy CEO of CDON. The agenda for today is starting with the Q3 results from my perspective, then we have a short update on the integration status, and then, Thomas will deep dive into the financial performance. And then, as usual, we'll end with a Q&A. So moving over to the Q3 results, Thomas will guide you later on. We have aligned our revenue recognition, so we can compare apples to apples between CDON and Fyndiq segments. But this doesn't really change how we see upon the main KPIs for our business. We still believe that the GMV is the way that we can define the attractiveness of our proposition for the consumers, how willing they are to open up the wallet for us. The GPAM, the gross profit after marketing, which is our main KPI, is a measure of the operational efficiency of our business. Do we have enough margins on the products that we are selling, and do we have high enough efficiency on acquiring the customers? And last but not least, we have the EBITDA, which represents the operational efficiency of the company, that we are lean enough in our operations and are actually making profits. To summarize, this continues to look good for the company. Looking at the right, we have for the GMV, plus 1% versus last year. We are now comparing CDON Group, which includes Fyndiq for this year, comparing to CDON segment last year. If we're looking at gross profit after marketing, it's +115% versus last year. And the EBITDA, we have +SEK 3 million versus -SEK 20 million last year. So we are doing an improvement of almost SEK 23 million just for this year. Drilling down on each and every KPI, we start with the GMV, and we can see that we have opposite effects of the weak economy, with positive effect on Fyndiq, but continued negative effect on CDON. Looking at on the left side, we can see the +1% for the group, but looking into the segments, and the segment is this year compared to last year, we have -25% for CDON and +17% for Fyndiq. The reason for this is twofold for both segments, but with different reasons. For CDON, we have a continued focus on profitability at the expense of low-margin sales. This in combination with lower demand for high-priced products in general. For Fyndiq, on the other hand, we see that we have a continued strong top-line sales, partly because as a result of our massively increase of supply during the summer, but also in combination with the macroeconomic effects. Just recently, the Swedish Trade Federation released the industry figures for September, and we can see that the Swedish e-commerce is down 19% only in September. If we inflation adjust it, it's -24%. It's a clear headwind for the whole industry at the moment. Moving over to our main KPI, the gross profit after marketing, it shows a continuous strong growth. Plus 115% versus last year for the group, but the main reason there is the addition of Fyndiq, but also each segment are really performing strong versus last year. CDON is +16%, and Fyndiq is +42%. And in CDON's case, it's especially impressive, given that we have -25% on top line. So we have a delta of almost +41% improvement going down to gross profit after marketing. The reason for that, this is this refocused on marketing efficiency in both segments, but with a main effect on the CDON segment. We also have improvements in increased take rates, with increased selling and category fees for CDON segment, and also increased shipping fee for Fyndiq compared to last year. Ending with the EBITDA, we have also here very impressive improvement, almost SEK 23 million compared to last year for the group. For the segment, we see -SEK 1.6 million for CDON segment, compared to -SEK 19.5 million last year. And Fyndiq has +SEK 4.8 million SEK for this year, compared to +SEK 2.3 million last year. And in addition to this, we also have some extraordinary costs that are of temporary character due to the integration. We have continued salary payments to personnel who departed prior to summer, and we also have additional consultants that are essential for some various tasks at the moment, such as platform and data migration. So the running business is even looking a little bit better than this. And on top of this, we see that additional synergy effects will contribute further during next year for the EBITDA, which I will come back to in a couple of slides. So all in all, our continued focus on profitability shows a good progress, and we continue to see this for the rest of the year. Here you have the chart that I showed last quarter as well. I think this is interesting to show just the seasonality in the business. I think 2019 is a very good representative year for the seasonality for the business. The coming years after that was really affected by the corona pandemic. And as you can see, in 2019, we are really backloaded into Q4. And given this, we are very confident in being full year EBITDA positive. Moving into the integration, we are fully committed to realize the SEK 40 million potential by end of 2024, with additional margin potential anticipated. If we're looking at on the left side, we see the OpEx cost reduction that mainly comes from technology platform costs, consultant reduction, and overhead overlap. And we still believe and are confident that we will be able to achieve a SEK 40 million run rate reduction by January 2025 versus March this year. We have already realized a lot of cost reductions. Some parts, derived from the CDON platform. We had 10 employees departed in June. We have multiple marketing consultants terminated, and the remaining consultants focused on migration. And then we have some other OpEx reduced by 20%, mainly, fueled by us halving the Malmö office. But the platform migration is still the major unlock for realizing the full cost synergies, and this, we will see the full effect by the end of next year. If we look into the right side, we see some additional value creation, and we have three categories of it. We have the merchant offering and acquisition, we have the take rate optimization, and the traffic acquisition optimization. Here we have top four. We have realized and implemented a lot of stuff during these months, but these are just a couple of them. The first one is that we have onboarded a lot of new supply through our partnerships, and we have seen quite good effect on the Fyndiq platform, and we have a good lineup now for introducing a lot of new supply to the CDON segment, as well. We have implemented new category fee on CDON, and we have launched a fee-based campaigns on Google Shopping, which is quite a big difference on how to optimize the Google traffic to the site, and this is on the CDON segment. And then last but not least, we have several technical SEO implementations that have been implemented, but that we know have some delayed effect. But when that effect comes, it stays and really contributes with high return of investment. With that said, I'm handing over to Thomas for some deep dive into the financial performance. Thank you, and hi, everyone. As a backdrop for our third quarter report, I will give a quick introduction to what the financial results contain. That is important for you listeners to have in mind. CDON Group's third quarter of 2023 includes results from both CDON and Fyndiq. However, the group's financials for the period January through September only include results from Fyndiq from the twelfth of April, when the acquisition was finalized. CDON is accounted for the entire period, as usual. Since Fyndiq was not part of the CDON group in 2022, comparable numbers for the periods last year does not include Fyndiq. At the end of the presentation, I will present, for reference, financials for the entire periods and comparative periods for the group, CDON and Fyndiq, respectively, which you can also find at the end of the quarterly report. During the quarter, we have performed an extensive analysis in regard to alignment of revenue recognition principles between CDON and Fyndiq. During the acquisition of Fyndiq in April this year, we saw slight differences between Fyndiq and CDON's free business models, which use different accounting principles regarding revenue recognition. After assessing the possibilities of aligning the revenue recognitions, we have come to the conclusion that aligning accounting principles for the revenue recognition is the most correct decision, given that Fyndiq and CDON is part of the same group. Therefore, in this Q3 report and onward, there are no difference in terms of revenue recognition between Fyndiq and CDON's 3P business that you might have familiarized yourself with in our previous quarterly report. The table illustrates how the previously communicated Q2 financials would have appeared given the new alignment of revenue recognition principles. On the left side, you see that the net sales for the group in Q2 amounted to SEK 170.4 million. The restated net sales for Q2 would have amounted to SEK 104.2 million, a mere principle-based change of SEK 66.2 million. Furthermore, cost of goods sold in Q2 for the group amounted to SEK 93.1 million. The restated cost of goods would have amounted to SEK 26.9 million, with a corresponding change of SEK 66.2 million. Gross profit remains unchanged. Simply put, Fyndiq's revenue is now recognized in the amount of commission and other fees for Fyndiq we expect to receive, rather than the previous full gross revenue and cost of goods sold. Group income statement. Total GMV for the group increased by 1% to SEK 486 million. The slight increase in GMV is due to the combination with Fyndiq and the absence of a comparative period for Fyndiq. Net sales increased by 15%. Gross profit after marketing increased by 115% due to the combination with Fyndiq and enhanced focus on profitable marketing spend. We achieved, yet again, a positive EBITDA amounting to SEK 3.2 million, a large achievement compared to last year of -SEK 19.7 million. Goodwill depreciation due to the acquisition of Fyndiq amounted to SEK 16.7 million for the quarter and SEK 30.5 million for the year. Group balance sheet statement. Total assets increased due to the goodwill of Fyndiq. The increase in equity is due to the newly issued shares related to the acquisition of Fyndiq. Total cash and cash equivalents amounted to SEK 99 million. Cash flow statement. Cash flow from operating activities amounted to a - SEK 7.7 million. Total cash flow for the period amounted to a - SEK 10.7 million. Total cash at the end of the period, as mentioned, amount to SEK 99 million. Group income statement for reference. The last financial slide for today provides you with an overview of the financial comparable period for Fyndiq, with the results for the entire comparable period for the group. Total GMV declined by 17%, largely driven by lower sales from the CDON segment due to weak macro environment and a substantial focus on profitable traffic acquisition. Net sales declined by 11%, while gross profit increased by 6%, which is an effect of higher margins. Gross profit after marketing increased by 27% for the group as a result of continued efficient marketing spend and a higher take rates. And lastly, a positive EBITDA of SEK 3.2 million, a large achievement compared to the - SEK 17.2 million on, same quarter last year. Thank you, and over to you, Fredrik. Thank you, Thomas. I would just like to inform and remind you all that we have a Capital Markets Day on November 16. Don't miss that out. It's going to be very interesting. We're gonna do some deep dives into our business, but also deep dive into the whole marketplace industry in general, also. And we will have some really exciting guests also showcasing the exciting industry that marketplaces actually represents. So, you can sign up, we have in the report and in the CEO letter, you have links to both online participation and also physical participation in Stockholm. With that said, we are moving over to the last part, and that is the Q&A. If you wish to ask a question, please dial star five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star five again on your telephone keypad. The next question comes from Nicklas Fhärm from SEB Equities. Please go ahead. Thanks, operator, and good afternoon, everybody. This is Nicklas Fhärm with SEB Equities in Stockholm. My first question is, if you could, given that we don't necessarily have all the sort of KPI details by, you know, CDON on the one hand and Fyndiq on the other hand, it would be very interesting, if you could have some sort of discussion on how traffic, average order values, and the number of orders have actually combined to produce 3P GMV in the development in CDON isolated, in the period, please. Hello? Can you hear me? Oh, now I can hear you. Yes. Uh, perfect. Did you hear my question? Yes, I heard your question, and hello, Nicklas. Okay. I think we had Hi, Fredrik. Yeah, I think we had a muting problem here. So, your question... I think we have the slide in this presentation drilling down in the GMV answers your question. It's very much correlated. The traffic now is, I would say, one to one correlated to the GMV development, as you can see. The AOV is quite intact for both CDON and Fyndiq. The commercial rate is also quite intact for both sides, but what we can see is that the demand is lower when it comes to especially the CDON segment, and higher when it comes to the Fyndiq segment. We can see some signals that the average order value is going a little bit down on the CDON segment, and that pretty much aligns with the whole macro perspective on the economy. So I would say the GMV represents the demand quite good in combination with our efforts to produce more efficient marketing. Mm. Excellent. Thanks for that. And follow-up, I mean, you have been churning some of your merchants now on the platform, focusing obviously on more profitable sales or commissions, which I think is widely understood and appreciated, if you ask me. But my question is, now, your 3P GMV in the development in Q3 is quite significantly below sort of the reported market in the same Q3 period. How should we view the outlook now for this current trading quarter and perhaps in Q1 next year? Is there any reason to expect that the negative contribution from churned merchants impacting would be more or less in these periods going forward, or the same for that matter? Mm. You see, my question is, Yeah. Probably you have, by now, been able to churn everyone that you don't necessarily think is contributing to value. I would assume. But how would this actually impact? Will there be an easing negative impact from this in Q4 and Q1 next year, perhaps? Or will it be the same magnitude, would you say, as a base case? Without going into too, too detailed guidance, if, if we keep it at, at some high-level view, I would say one factor is the macroeconomic environment. Of course, the whole demand in the consumer market affects both segments, and as it seems now, we have a positive effect on that for Fyndiq and a negative for CDON, given the type of supply that we're selling on each site. But if we set that aside, then definitely it should be a more negative effect, as you're saying, coming into next year. We are, as I, I, I think I said last quarter, doing some spring cleaning now, both when it comes to marketing mix and also merchant and supply that we are marketing. Spring cleaning, usually you don't have to do for six months or so. We think we are close to being done with that spring cleaning and can then focus on growth, but still with high profitability. Mm. So, so are you saying that, because, I mean, the, the market was down, like, say, 5% in, in Q3, and you were down 23. So, are you saying that that relationship should actually, increase or decrease going forward, all else equal, macro and consumer confidence and what have you? Sorry, did you say - 5%? I think the market is down 5% in the full period of Q3, including the - 19 in September, right? I'm not sure if that's right. The Swedish Trade Federation had around zero for both July, August, and then we had -19 in September, and inflation adjusted -24, and September is much higher volumes than July, at least. So I'm not sure if that is the correct number, to be honest. But anyways, we are... The spring cleaning is costing by itself. Then we also, CDON is operating in a niche in the e-commerce industry that are focused on higher priced items, and we can see from our peers also that this specific area in the e-commerce market now are suffering harder. People aren't spending money now as we did last year on PlayStation 5 and new iPhones and so on, and we and many peers see the same as we speak. Mm. Final question, if I may. Yeah. Very briefly, what would you say would be a fair representation of sort of the temporary cost increase relating to leaving pay and perhaps a few consultancy costs in Q3 that you do not expect to incur in Q4 onwards? Yeah, we anticipated that you would ask that specific question. We also said that we will not give any more specific guidance on more specific numbers around that. We can, though, refer to our Capital Markets Day, where we will be a little bit more specific on these details. Interesting. Thank you so much. That's all from me for now. Thank you, Nicklas. The next question comes from Adam Wyden from ADW Capital. Please go ahead. Hey, hey, guys, can you hear me all right? Yes, we hear you perfectly. All right. Thank you. Okay, so a couple questions. I think Nicklas covered a few of those things. But you know, thank you for adjusting the accounting. I noticed that you put out a press release, and I think that will help people understand that this is more of a transactional SaaS business model, as opposed to a hard goods business model. I know, Fredrik, you made a comment, I think it was one quarter or two quarters ago, that you know that you have all the products in the world and very little inventory, and so now the accounting lines up with that. So I appreciate that. So couple questions. You know, building on sort of what Nicklas was asking, I mean, can... You know, I know you're doing spring cleaning, and, you know, I know what number he's referring to, that Svensk Handel number, which I think, you know, might have food and some other items we don't include in our TAM, and, you know, obviously, those numbers are a little bit wonky. But is there any way you can try and quantify how much, you know, GMV you think is related to purging? Because I think in your comments, you mentioned, you know, we anticipate GMV and EBITDA growth next year. So you clearly have a view towards, you know, the end of the purging. So, you know, obviously, you know, you're trying to do as much purging as you can right now, so you don't have to do it anymore in 2024. You know, I'm just curious if you could sort of attempt to quantify how much of this is purging versus sort of, you know, you know, consumer electronics. I mean, is there any way we can sort of attempt, like, order of magnitude, quantify how much of this is related to purging? Hi, Adam, and, Yes. Thank you for this complex question. I think it's one part, it's quite hard for us, even internally, to be 100% confident in what this macro aspect and what is driven by us focusing on profit and marketing. We can, though, see that we have a positive effect on Fyndiq, and there we have a combination of a massive increase of supply, which we will present more in depth on the Capital Markets Day. But we see that we have a positive effect on that. And talking about synergies, this is an area that we have moved a little bit faster than we thought on the Fyndiq segments, but we have moved a little bit slower than we thought on the CDON segment. So we actually have a really good lineup with new supply merchants for the CDON segment that we haven't seen effect on yet. I would say after that, we can be a little bit more confident in of all of these different aspects of the macroeconomic perspective, additional supply and focus on profitable marketing, which has the highest effect and what is actually the quantified effect from each and every part. For now, I cannot be more clearer than that, and sorry for not being able to quantify more than that. Yeah. No, I understand, and it's moving parts. And I expect- I suspect there's probably some seasonality elements to it. Q3 is maybe more back to school, and maybe that lends more to Fyndiq, and maybe you have more consumer electronics and PlayStations, and people are gonna do that for Christmas. I mean, is it fair to assume that there's probably also some seasonal stuff that goes on as it relates to Fyndiq versus CDON and stuff? I mean, I'm sure there's different types of seasonality patterns for both of those businesses as well, no? I would say, we neutralize that by comparing with the same period last year. Right. Right, right. I got that. Okay, what else? There was one other thing I wanted to ask. So you've got the one-offs you won't answer on the, and we don't know. Yeah, I guess the only other question is, so you mentioned that you're less laying the necessary groundwork for solid GMV and EBITDA growth. Now, obviously, you know, you have a highly, you know, sort of flexible, you know, operating structure, and you'll have the platform savings next year. Probably haven't realized those yet. I mean, when you think about the drivers of GMV, and I know you'll talk about this at the Capital Markets Day, but do you anticipate the comparables for the end markets to get a lot better? Because when I think about the sequencing of last year, at least as it relates to the total market, the total market, you know, I think in the first half of 2022 was still pretty okay, and I think that, you know, fourth quarter of 2022 was very, very weak. I mean, is part of sort of this framework, you know, yes, you're getting more merchants, you're securing more supply, but, I mean, do you anticipate the year-over-year comparisons from e-commerce to sort of get easier or perhaps be positive? I mean, I know it's hard to be a macroeconomist, but, you know, you're seeing how people's consumer, you know, spending patterns have changed a little bit. I mean, I would think that, you know, in a secularly growing end market, which is e-commerce, that, you know, we would think that at some point, you know, adjusting for inflation, we would see the sort of the market comparisons actually turn easier positive. I mean, do you have any sort of thought process around that at all? I'm just curious. Yeah, good question, and I would say this is a big question that we have thought a lot around. And what we could see is that there is quite a consensus in Sweden that this Christmas will be a tough Christmas for the whole retail industry. Sweden is a little bit of an anomaly both in the Nordic region but also in the European region. We have so much tougher macroeconomy as we speak. We also see that we maybe will have even higher interest rates ahead of us. At the same time, we can see that we have negative effect on CDON with the higher-priced items, but on the other hand, we have positive effects. We can really see that. We have positive effects, more traffic, more demand on Fyndiq side. People want to bargain more, and we believe that this will continue into the Christmas sales. So we need to be really smart. We have... the industry I've been talking about, that the whole refurbished segment will be really hitting the roof this Christmas sales. I believe that too, and, and both CDON and Fyndiq have refurbished segments and categories, and we will focus on that as well. But here we have the strength of having two different marketplaces focused on totally different value propositions. One focused on the bargain hunters and low-priced items, which now we can see it becoming stronger in tougher economic times. In general, I would say the consensus is that this will be a tough Christmas sale, but I think we will adjust our offering to do the best we can from these settings. Yeah, I, I guess in-- if you look back in 2008 and 2009, though, at some point, you know, people... I mean, intuitively, if you're online, you, you should be able to offer goods and services, and clearly, you're seeing on Fyndiq, but you should be able to offer goods and services at a lower price than a, than a, a guy that has sort of a, a retail footprint. If you're, you know, let's say a guy with a store who has lots of people working in it, and they've got higher employment costs and inflation, and this and that, I mean, presumably, and we saw this in, in sort of 2008, 2009 a little bit, right? In the United States, at least. You can see, and this is sort of the beauty of the marketplace, which is, you know, those, those guys who are stuck with inventory have to basically put it out at lower prices so they don't, you know, so they don't get stuck with hung inventory, especially in consumer electronics. And I would think that, like, you as a marketplace have the advantage of being able to move that merchant—move that merchandise for sort of, you know, sort of terrestrial-based- Correct - retailers. And then on top of that, like, you know, the consumer is looking for those lower prices. So I would think that, like, you guys would be advantaged relative to sort of normal commerce. And I think we saw that in 2008, 2009, that like, e-commerce did better because lower prices, people were bargain hunting across the board, and, you know, that there were sort of people that were in doing bankruptcies and stuff. I mean, I saw just recently, Decathlon is reducing their sporting goods, you know, you know, sort of retail footprint. I mean, they're a big customer of ours. I mean, I would think that they would be moving merchandise over to us. I mean, there's got to be some sort of positive developments from this thing, you know, that's going on with the economy and whatnot. I mean, there are certainly opportunities for you guys to thrive in that environment now. No, I think you're right. And in retail, you're talking about this lipstick effect, that even in tough economic times, you spend money on lipsticks because that gives you the feel of that you're still good looking and so on. And I think it's the same analogy when it comes to Christmas gifts. Parents will never stop giving Christmas gifts to their kids, but they maybe will change the type of Christmas gifts that they are buying and maybe buying less expensive products, but maybe more of them even. So that's going to be interesting to follow for this Christmas. Yeah. I think probably people are also planning a little bit more and instead of just doing impulse buying. I mean, I think that's the beauty of online shopping, and we saw this in United States, where instead of someone just showing up at the shopping mall and doing impulse buying, people are planning their lists, and they're being price conscious. So, you know, I, I'm sort of a firm believer that e-commerce is a secular share grower, and I think that in downturns, it should continue to be a secular share grower. My last question is: did you guys have not—I mean, I know you talked about sort of the one-off costs in the third quarter that you wouldn't quantify. Is that related to like, restructuring for personnel that you know, are like, you know, sort of people, like you mentioned, people... Is any of that related to the platform savings yet, or is that... I mean, would we expect to see more of that, I mean, I, you know, more of that next year? Are we getting the platform savings now? I mean, I'm just trying to understand, like, what it is, and, you know, should it continue at the same rate, you know, and, and, you know, are we seeing any benefit from it yet? Okay. You mean the extraordinary cost I was talking about, on the synergy part, the temporary cost? Yes. Yeah. Okay, perfect. Yeah. So yeah. So one part is continued payment for people departing in June. So we have some double cost there. We also have people that have left and we have consultants instead in the short term until we have replacement recruitments in place. Okay. We also have one aspect that I didn't mention in my presentation, and that is, customer service. We have managed to, pretty fast, faster than we planned, to get all the customer service in-house. We have hired a lot of people, but this means that we have new customer service agents that aren't as effective as the previous outsourced solution. We also have some overlap during this, you know, educational state that we are at, as we speak. So now we are having some double costs when it comes to the customer service. We will see, though, that pretty fast that will come down, and over time, we will have much lower CPOs when it comes to the customer service than both CDON and Fyndiq have had previously. So that's also one part of it. Yeah, I think that's pretty much it. It doesn't include the combination of the platforms. I guess the major cost savings is the sort of combination of the technical platform. So we don't really have any of that in the quarter yet. Is that fair? Not yet in this quarter. No, you can have some. Okay ... A few consultancy costs you can have, say, that we have related to the platform, but not much. Instead, we will see the benefit of it, during next year. Okay, got it. So we wouldn't expect, like, a large restructuring associated with the combination of the technical platforms, that there would be some huge restructuring charge or, like, huge expense to sort of realize that SEK 40 million of platform costs? No, and it's, it's maybe a little bit more of the opposite side. As we speak now, we have just for one small example, we have double the size of Slack accounts than we should have. That takes a couple of months before that's realized, and so on. So there are some doubling effects when we are merging the two companies and two platforms as we're doing now. But then over time, already during mid next year, and especially by the end of next year, we will be able to realize lower costs than we had before. Got it. So, when you talk about the SEK 40 million of platform, you're talking about the customer service, you're talking about Slack, you're talking about, you know, IT. It's sort of all-encompassing. Is that fair? Correct. Okay. All right. Thank you, guys. I appreciate it. Thank you. There are no more phone questions at this time, so I hand the conference back to the speakers for any written questions and closing comments. Yes, so we have some written questions here. We have one from George. When will the Capital Markets Day start exactly on November sixteenth? It's 2:00 P.M. Central European Time. And then we have from Saman, how much was one-off OpEx costs in the quarter? I think Adam addressed this a little bit, and we cannot give you more information than what we just answered, Adam. Yep, I think that was it from all questions, right? All right. Thank you for your attention, everybody, and good questions, and I hand over to the operator.