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Hello, and welcome to the Adevinta Q3 2020 Results Presentation. My name is Molly, and I'll be your coordinator for today's event. Please note that this call is being recorded. [Operator Instructions]I would now like to hand the call over to your host, Rolv Erik Ryssdal, Chief Executive Officer, to begin today's conference.
Thank you, operator. Hello, everyone. Welcome, and thank you for joining today's presentation of our Q3 results.First of all, I hope that wherever you're located, you and your close ones are healthy and safe. We still have to comply with the strict travel and gambling policies. So the management team of Adevinta are connecting from different places: Uvashni, Ovidiu, Gianpa and Renaud out of Barcelona, Antoine out of Paris, Nicki out of London, while I am in the Oslo. Nevertheless, we continue to run the business in a very close and collaborative manner, and I'm pleased that we are all here today to discuss the latest quarter's development and performance. I will not go through the disclaimer, which I invite you to read, and I will start with our view of the key highlights of the quarter before going into the details of the business review and financials. The main development this quarter was the agreement [Audio Gap] We're getting close to completing the acquisition of Grupo's ZAP in Brazil as we received final approval from the antitrust authorities. We continue to optimize our Global Markets portfolio with the disposal of our assets in Morocco, Tunisia and Colombia.Our performance in the third quarter confirmed the recovery trends that we have seen throughout Q2 following the start of the COVID-19 crisis. We have continued to strictly control our cost base in the Q3, and we expect to catch up and accelerate investments in marketing and product and tech investments in the fourth quarter to support future growth despite the short-term uncertainty, especially in the context of recent developments in our large markets.Coming back to the ECG acquisition. I am truly excited about this coming together of 2 great classified companies. We are about to create the world's leading online classified company, the most diversified and complementary portfolio of marketplaces across the globe. Following the acquisition, we'll benefit from #1 market position across 17 countries, covering 1 billion people, and we will be uniquely positioned to accelerate the growth and development in our markets. It will allow us to create more value in the years to come through the combination of best-in-class assets and expertise and through the generation of substantial and sustainable synergies. Our aligned culture and DNA will facilitate the integration process and will contribute to building and executing an ambitious development strategy over the long run. We have already achieved significant milestones ahead of the completion of the deal. On the regulatory front, we are holding the EGM that will approve details of the transaction on October 29. We have full support of our largest shareholders and invite all shareholders to vote on that day. We are progressing with the antitrust approval processes in the U.K., Austria and Germany. Uvashni will come back later on the details on the financing that we raised approximately EUR 2.4 billion of that in the last couple of weeks. All books were 3x oversubscribed, and we reached very good financing conditions, demonstrating the trust of the financial community and our strategy and development opportunities. We have also progressed in our integration planning process. We now have a solid internal team headed by Alexandre Collinet, who is until now the Deputy CEO of leboncoin. [Third] governance has been established to plan and steer the integration process supported by external PMI advisers. Our priorities are to plan adequately for a smooth transition on legal day 1 to deliver on the synergies that we have collectively identified with minimum disruption to our growth objectives.While we are excited about and active ahead of the combination with ECG, we keep a strong focus on business as usual operations. In the quarter, our operational KPIs have continued to improve with traffic increases even to all-time high records in some markets. This has translated into improving revenues. We generated EUR 183 million of revenues, including our share of JVs, reflecting a 1.6% year-on-year increase. Revenue trends improved in all markets with France and Brazil, thanks to positive organic growth. Overall classified revenues were growing year-on-year. Advertising revenues were still decreasing year-on-year, but at a slower pace than in Q2. EBITDA margin was outstanding in Q3 and reached an exceptionally high level at 31%, driven by further strong cost-cutting measures and delayed expenses. As activity picked up, we restarted investment in marketing and product and tech at the very end of Q3 and will accelerate in Q4. We also benefited from reduced HQ and other costs and some positive one-offs in various markets. Due to our strategy, we actively managed our current portfolio in the quarter. We reached an agreement to dispose of our Moroccan, Tunisian and Colombian assets. Although they benefit from strong positions, we believe that better fits in the portfolio of frontier digital ventures to further accelerate their development.In Brazil, we received final approval from the antitrust authorities to acquire Grupo ZAP. Transaction should close in the coming days, and we believe it will create significant value through the combination of the leading players in the real estate online classifieds industry.Moving on to the business review now. Uvashni will come back to the financial performance in more detail later, but I would like to go through the operational development in each of our segments. In France, we saw improving market trends in the summer despite the worsening social and economic environment. Traffic increased in all segments with jobs beyond the exception. The used vehicle market reached historic peak levels, but we're now seeing a strong drop in stocks. There is also a rebound in the real estate market, but volumes remained weaker than last year. Adoption of transactional solution accelerated, driving new revenues for us whilst the advertising market remained pretty volatile over the quarter. We did not offer any more discounts in Q3, but continue to be supportive of our professional clients through attractive commercial offerings. We launched many new value-added products, among them smart pumps, and lead acquisition offerings in real estate and enhanced payment solutions experience in motor. In consumer goods, we now offer multi-delivery solutions and have improved safety features.In Spain, although there are further signs of recovery, the overall economy -- macro environment is still weak. The Spanish economy is actually the hardest hit in our main markets. Traffic is back to last year's level as well as the number of transactions in motor and real estate that picked up in the summer. Nevertheless, there is some level of uncertainty on how the [offer] will go. The job segment is most affected with increasing levels of unemployment and consequently, a low level of signed contracts. During the period, we remained very active with our professional clients to keep our strong relationships and build new products, such as hybrid listing views and a unique back office tool in real estate. We are progressively rolling out payment and delivery solutions in our consumer goods categories. In Brazil, the macroeconomic picture is improving. Transaction volumes are increasing in motor and real estate. We see a stronger impact of the crisis on smaller clients, but overall, the number of real estate agents is improving. We rolled out OLX Pay in Android and mobile sites on a national scale. This is the most practical, safest and easiest way to buy and sell on OLX, let's buyers post a payment for a product and then we notify the seller that it's time to ship. We integrated delivery with the national postal service to facilitate delivery speed and reach. On the payment front, we built a hybrid model with digital wallet functionality, so that buyers and sellers can receive payments and withdraw directly. We're offering additional value-added services through new partnership in real estate and C2C financing in motor. In the Global Market segment, we see encouraging developments across countries. In Italy, the transformation is progressing well with growth in traffic and content as well as market share gain in motor in both content and dealers. In Austria, traffic in content grew in the quarter. Delivery -- peer-to-peer payment and delivery service gained considerable traction. Jobs continued to be impacted by slow market recovery. In Ireland, we gained share in real estate and specific commercial measures ended in September. We saw good progress in motor, defending our position and recovering private content. In Hungary, we returned to traffic growth in motor and continued to improve transactional offering. In Shpock, growth accelerated in the transactional model. We introduced product development, such as fashion-specific filters. Marketing investment ramped up towards the end of the quarter and will increase throughout Q4.With the business section, I will now hand over to Uvashni for the financial section.
Thank you, Rolv Erik, and good morning, everyone. Proportionate revenues, including joint ventures, were up 1.6% in Q3 compared to Q3 last year. The recovery in performance noted throughout the second quarter has continued into the third quarter, achieving a positive growth in all months in the quarter. Classified revenues were up 4.6% in the quarter, while display advertising revenues decreased 4.3% year-on-year. The Argus acquisition added 4.2 points to total revenue growth. Changes in exchange rate had a negative 2.6 point impact. EBITDA, including JVs, increased by 6% year-on-year. The negative impact of COVID in our main market was mitigated by strong cost reduction initiatives implemented throughout the group as well as favorable phasing, especially in marketing. EBITDA grew in all operating segments, except Spain, where margins remained flat despite the drop in revenues. Headquarter costs were down EUR 3 million year-on-year due to lower travel, corporate events and third-party services. Overall, personnel expenses increased moderately compared to the same period last year. Other operating expenses retracted year-on-year due to further cost-saving initiatives in the quarter. This included marketing expenses, where they were canceled or postponed into Q4, as well as other savings in travel, meeting costs and successful renegotiation of third-party contracts. We've also benefited from a few one-off items, such as positive tax credits, which was around EUR 2 million. We expect operating costs in Q4 to be higher than Q3, with both seasonal impacts as well as a catch-up of Q3 underspend, especially in marketing. We have also reinitiated some hiring to support new product development and go to market, especially on transactional. We will, therefore, see EBITDA performance deteriorate in Q4.Now let me run you through the financial performance by segment. Revenues in France increased by 17% in the third quarter, or 8% including Argus, showing good resilience in the challenging business environment implied by COVID-19. Total classified revenue grew 34% compared to last year, driven by motors and real estate verticals and the ramp-up of transactional. Advertising revenues remained subdued below previous year levels due to a strong slowdown in September. EBITDA margins decreased 6 percentage points, impacted by the dilutive impact of acquisitions, further investment in marketing and in the transactional model ahead of revenue generation. Those were partially offset by strict cost control measures and limited year-on-year increase in personnel cost due to the slower-than-expected pace of hiring and ramp up.Revenues in Spain saw negative growth of minus 7% in Q3 compared to Q3 2019, although strongly recovering from Q2. Classifieds were down 10% compared to Q3 2019. The real estate market was gradually recovering after the hit in Q2, although still below pre-COVID levels. The jobs market were impacted by lower volumes, given the decrease in signed employment contracts and mostly to the recent expectations for the contraction in the economy.On the other hand, we saw motor market back to growth, led by higher ARPU, thanks to the successful migration of customers to new product offerings and benefiting from a good momentum in the used car sales. Display advertising increased by 5% year-on-year, driven by programmatic revenues, due to the successful initiatives to improve sold inventory and benefiting from traffic growth. The EBITDA margin in Q3 remained stable compared to last year, despite the decline in revenues due to solid cost control measures, such as reduction in marketing investment, admin costs and stable personnel costs. Operational revenues in Brazil was back to growth in the quarter and increased by 4% in local currency, driven by the good performance of OLX Brazil in indirect advertising and value-added services. This included a new partnership in real estate and C2C financing in motors. In addition, classified revenues benefited from successful initiatives to improve client satisfaction and enhance new sales. Cumulative EBITDA increased when compared to Q3 2019. It was positively impacted by one-off tax credits from previous years and the variation of marketing -- of management long-term incentives in OLX Brazil. Even excluding these, EBITDA margin would have improved compared to Q3 2019 as a result of revenue increase and favorable phasing of marketing expenses, whilst we continue to invest in product and tech resources. The Global Markets portfolio saw negative growth of minus 7% compared to Q3 2019 or minus 7% at constant currency, although negative, showing strong signs of recovery throughout the quarter amongst the challenging COVID context. This was led by Ireland and Willhaben. Classifieds revenues were minus 7% year-on-year, although improving throughout the quarter. Revenues in advertising were also down minus 7% despite strong signs of recovery in September.Q3 2020 EBITDA was flat year-on-year at EUR 6.4 million as overall cost reduction and a small positive one-off in Hungary offset the revenue decline and the further investment in Shpock as part of the transformation to a transactional model. Italy, Willhaben, Ireland and Hungary all increased EBITDA when compared to Q3 2019 as revenues recovered and investment in personnel and marketing remained conservative at the back of COVID-19.Moving onto other P&L items. Headquarter and other costs were down EUR 3 million year-on-year to EUR 15.1 million due to the reduction in administrative costs, travel and other. Below EBITDA, we saw a strong increase in other expenses due to the acquisition-related costs, both on Grupo ZAP and eBay Classifieds. Interest charges increased year-on-year mainly due to one-off cash hedging impact, of which EUR 30 million related to the acquisition of Grupo ZAP and $9 million to the acquisition of eBay Classifieds. On the DST front, a new bill was approved in Spain in October and will be in effect from January. There were no further developments in other regions. I would now like to conclude this section with our financial position. At the end of September, we had cash and cash equivalents of EUR 327 million and undrawn RCF amounting to EUR 400 million. We have, in the last couple of weeks, completed the full refinancing of our debt ahead of the closing of Grupo ZAP and the ECG acquisition. We raised circa EUR 2.4 million at very attractive conditions with maturities ranging from 2025 to 2028. This raise, which was oversubscribed, demonstrates the confidence of the investor community in our business model and perspectives. Of course, our leverage increased as a result of the acquisition, but given the high cash-generative profile of our business, our target is to get to 2 to 3x range in the medium term. In summary, overall, a solid financial performance for the quarter, supported by continued recovery in the underlying business and prudent cost control across the board.Now I'll hand back to Rolv Erik for the outlook.
Thank you very much, Uvashni. I will now conclude with the outlook. As a consequence of the current crisis, we see an acceleration of the trends that support the development of the digital economy. Strong secular shifts in online behavior and changing consumption patterns are driving expectations for more convenient user digital journeys. We see that the professionals are rethinking their operating models, and they expect more efficient and digital confidence advertising solutions. In that context, we believe online classified marketplaces will play a more important role going forward. Following the acquisition of eBay Classifieds Group, we will become the world's leading online classifieds pure player with unprecedented scale. We will benefit from #1 position in 17 countries, covering 1 billion people. As the largest player in the sector, we will be uniquely positioned to accelerate growth. We will leverage our complementary expertise and know-how across geographies and verticals to ensure best-in-class product offering and user experience for our customers. We remain confident in the resilience of our business and in our sustainable growth profile. Inherent operational leverage is strong in some geographies, while the group will continue to invest in product and tech. This supports our long-term objectives for current Adevinta portfolio. In addition, we expect eBay Classifieds acquisition to drive substantial and sustainable revenue and cost synergies.As expected, our performance has continued to improve in Q3, benefiting from positive market dynamics following the end of the lockdowns. Looking ahead, we remain cautious on the short-term perspectives in the context of growing restrictions in key markets, shrinking client stock and rising unemployment rate due to the macroeconomic uncertainty following from COVID. The advertising market remains weak and the impact on group revenues is typically higher in Q4 due to seasonality.In Q3, we have successfully managed our cost base to mitigate the adverse impact of the crisis through saving initiatives and phase out of expenses, leading to an exceptional level of EBITDA margin. We will catch up and accelerate investment in marketing and product and tech resources as from Q4 in order to drive future growth, secure our positions and seize opportunities that will arise from the crisis. This will lead to decrease in EBITDA margin in Q4.We intend to hold the Capital Markets Day in 2021 to present you the new Adevinta and our long-term perspectives. As we will need some time to regroup as a newly formed organization, this is likely to take place in the second half of 2021. In the meantime, we will continue to update you with developments and results as we have always done.I will now open the Q&A session. My colleagues from the Executive Committee and myself are available for -- to answer your questions. So operator, please go ahead.
[Operator Instructions] The first question comes from the line of William Packer calling from Exane BNP.
Three, please. Firstly, the kind of health care situation has been developing rapidly. Could you update us on -- within the French market, classified and display ad momentum at the end of Q3 and the beginning of Q4? Secondly, if the health care situation deteriorates and we do get lockdowns reinstituted in your key markets, could you help us think about how you will react to that? Perhaps a word on whether you'd consider discounting? How we should think about ad revenue? And whether you could use costs to mitigate some of those impacts? And then finally, I saw an interesting interview in the French press regarding leboncoin's new activities in payments and deliveries and how they're progressing. You talked to a EUR 20 billion GMV in France, I recollect, which I assume includes automotive as well. Could we get a GMV just for the generalist segment of the business? And any other kind of color on how those payments and delivery innovations are progressing would be very helpful.
Well, thank you, Will. I think most of the questions here were for you, Antoine. And well, of course, Will, on your second question, there on the -- of lockdowns, I think what you saw from -- in our last lockdown period in Q2, we chose to take a somewhat different approach than many other players because we actually worked on an individual basis with customers without giving general big discounts, and I think that was successful. So I think we'll look to do some of the same things. And then, of course, if the situation deteriorates, then, of course, we'll look at cost measures if necessary. But I think what the crisis proved that I mentioned in my presentation was that the digital development accelerates in such a crisis, and that several of the car dealers or even real estate brokers came to us and said that we are the only source of distribution for them now. This is kind of our exhibition room. So I think that you will see that in these situations, the classifieds platforms become even more important. That's on the general note, what happens if there is lockdown. And of course, we don't hope that will happen, but I think -- and it will affect us all, and especially, I think in Spain and France, there are some uncertainty around that now. But we seem to be better prepared than most other players and -- or in the most other industries to have such a situation.Now when it comes to the specific questions of France, I'll hand that over to Antoine, but I don't think that we have given out actually the GMV that we haven't been specific of that for some competitive reasons. But for the rest of it, I'll hand it over to you, Antoine.
Yes. Will, regarding the classified update in Q3, on real estate, on the car market, we are quite resilient during this quarter with some good resistance sign on the professional market. Even if at the same time, we have some concerns about the volume and the stocks on real estate and on the car market. Obviously, it's something we have to monitor during the next months. Regarding the display advertising market, we have some concern on this market, like the rest of the market, we are more or less at the same growth rate. The reason is that during the summer, we were in the good trends, but September with the new COVID announcement and the bad context about the economy in France, we are decelerating a little bit on this line. So let's see what will happen during Q4 with the next measure of that would be announced by the French government.Regarding the transactional switch. And so as you know, we have accelerated a lot during the last month in terms of product, we have launched transactional features and new shipping solution with, for example, La Poste in France. So we are investing a lot in terms of product and tech on these features, and it's -- the trend is positive. So we are not disclosing the GMV. The GMV we are communicating is about the study that has been done last year, and it's an estimation of the GMV of leboncoin. This is not the GMV of the transaction at this stage. So not -- we are not disclosing this, but the trend is positive, and now we are continuing to invest in terms of product and we will continue to invest in terms of marketing.
The next question comes from the line of Lisa Yang calling from Goldman Sachs.
The first one is on the cost savings and obviously, you have delivered another impressive EBITDA bit in the third quarter. I'm just wondering how much of the savings in Q3 were recurring, if any? And I guess, apart from the EUR 2 million one-off that you recorded, how much of the bit or the cost savings in Q2 will be reinvested into Q4? And I'm just wondering why do you feel the need to reinvest more aggressively given -- I mean, you still sound pretty cautious on the Q4 outlook. So I'm just wondering how much margin or headroom do you have in terms of this whether you really reinvest or not? The second question is on Brazil. I guess as you're preparing for the integration of Grupo ZAP and it looks like you've got the approval already, I'm just wondering how much integration costs we should expect for Q4? And do you think there's any other additional cost or investments do you expect in the near term as you're basically integrating that asset? And third question is on the DST. You mentioned it will be effective in Spain, but I think it's been also voted in other countries, like Italy, I think it was also in France and I think also in Germany. So I'm just wondering overall, like what's your assessment of the situation. How much of the potential revenue could be taxable? And have you made any provisions yet?
Right. Thank you, Lisa. I think most of the questions here were -- for you, Uvashni. You might also -- the cost savings is the first question. And then the second is around Brazil. Perhaps Gianpa will also participate here. And then the third question was on the DST. You start, Uvashni.
Yes, sure. Just in terms of the one-offs, so we did talk about the EUR 2 million one-off. In other elements, of course, there are recurring costs. So a large portion of that was marketing. And yes, you rightly point out the investment in marketing. There were 2 elements of why we retracted a bit of investment in Q3 is that we did see some momentum on traffic and felt that effectively, we could ride the wave of that traffic increase rather than invest on marketing. And that's what we saw come through quite nicely. The reason why we generally do invest more in Q4 and marketing is the high season, that is when our marketing spend is slightly higher. And the other element of it is the recovery in revenue is catching up relative to where we were, and we have to maintain and sustain that and a large part of that is included in the marketing. So therefore, we'll see a ramp-up in marketing. Of course, depending on how things play out, we may actually be able to be a little bit more sensitive around that. But recautioning now because we don't -- we expect a higher spend in marketing. When it comes to the integration cost on Grupo ZAP, remember, a lot of the integration costs will sit at the business level. Effectively, what we had is some transactional costs that had to be incurred at the shareholder level. So therefore, you see that cost. But from a Grupo ZAP perspective, most of that integration cost will happen at the group and it's already included in terms of the forecast. So I can't give you the exact number at this point in time, but there will be some cut. Most of it is already in train with the integration PMI already stood up.And then what was the last one? On DST, well, we do have a small provision that we put into place for Italy. It's very small. It's less than single -- it's around single digit. We don't disclose that at this point in time because we're still working through some of the forward-looking numbers. And then on Spain, the numbers, I mean, it's just been regulated. Again, we don't expect it to be -- we expect it to be single digit, but we're still working through the calculation of that now having gone through some analysis around what revenues are included within that scope or not. And as we've previously stated, in France, we have put in advanced ruling with the tax authorities there around our view of the definition of their revenue, and we don't believe we meet the EUR 750 million threshold on the global level. So we have not put in a provision for France yet, although we did say, on a run rate basis, we don't anticipate that cost being more than EUR 9 million per annum.
And what about Germany? I know you haven't integrated eBay Classifieds yet. But obviously, that's going to be a very big market. So I'm just wondering how you're assessing the risk there.
Yes. No, we had assessed the risk there and have taken it into consideration, as you said, we know that they have considered it within the numbers, although also not as material as you would anticipate. But the -- I can't disclose the number, but definitely has been assessed and has been taken into account in Germany.
The next question comes from the line of Adrien de Saint Hilaire calling from Bank of America.
So I've got a few questions, please. Rolv Erik, you mentioned that EBITDA margin would deteriorate in Q4, but are you in a position to say whether EBITDA in absolute would grow year-on-year? Secondly, perhaps for Antoine, in the information memorandum on the eBay Classifieds transaction, there is an indication that French real estate listings have been going down in 2019 and in the first half of 2020 and also that the number of customers in jobs has been very quickly diminishing. Can you give us some granularity around this? And then I'm not sure if Gianpa is on the line, but I would be interested to know if we should expect a deterioration in the Spanish job revenues in Q4 or 2021 as the annual contracts are lapsing?
Thank you for the questions, Adrien. I'm sorry to disappoint you, but we're not guiding that specifically on EBITDA level. Which we -- but we thought it was important to say that this quarter's margin level is exceptionally high. And so we expect it to be lower next -- in this quarter. And then I think this quarter will also -- would also, to some degree, depend on what's happening in our markets in the last couple of months in the -- with the COVID situation. But we remain, of course, optimistic, but it's important for us to signal that the margin here was exceptionally high. I think that's what we're doing in terms of guiding.And I think there was a question for you, Antoine, about the number of real estate listings, et cetera, in France?
Yes. So before COVID, the real estate market was very, very dense. Number of transactions was very high. Just remember last year, in 2019, we were above 1 million transaction on the market. So before COVID, the trend was very good. And after the COVID, what we can say is that probably the number of transaction in France will go down between minus 15% and minus 20% in comparison with last year. So globally, it will be a good year, not an exceptional year, but at the end a good year. But what we can notice on our market is that in terms of listing, there is still a strong pressure in some cities, like Paris, like Leon, like Marseille, where the number of goods are declining. So there's a strong pressure on the prices on these markets. So this is something we know and we are working on that, especially because we have just launched, in September, a lead generation offer to our real estate agent that will help them to find new goods to sell. So globally, we are for this year positive, even if there is some tension on the volume side.Regarding the job -- your job question, you're right. I think the market is impacted like the advertising market in France. So we have some negative trends. It's based on the COVID situation. We estimate that the number of people that will lose their job this year will be like between 800,000 and 1 million people losing their job this year. So it means that the volume is going down, volume of offer is going down, less recruiters. But what we can notice is that we are still resilient on this market. Our volumes are flat at this stage. It's based on what we have done after the COVID, putting some offer to our recruiters. And now we are for free below 10 employees. So if your company is below 10 employees, we are for free. And above, you have to pay international fees. And this helps us to keep our liquidity high.
Yes. Maybe I can jump in to comment the job part for Spain as well. I'm Gianpa. Thanks, Adrien, for the question. Good morning, everybody. So as we know and we've commented in the past, job is the most cyclical vertical in Adevinta Spain, and we are prepared to manage that. I think that it's fair not to comment on our forward-looking view on 2021. But out of transparency, we know that in jobs half or approximately half of our revenues come from yearly contracts. And that a good portion of those yearly contracts will be negotiated in the next weeks. So how the next weeks develop from a macroeconomic perspective and economic sentiment will be very relevant to guide our revenues for next year. Just out of transparency, until now, the renewal activity is proceeding well. For sure, some customers are not expecting the intention to renegotiate at the same levels because their need for hiring is lower as they see the market now. But we are happy with our commercial activity so far, and we believe that our leadership position in the job verticals in Spain is still very strong and is possible has strengthened after COVID.
The next question comes from the line of Adam Berlin calling from UBS.
Just 3 questions from me. Just first one, very quick one. Just your guidance on Q4 EBITDA margins. It's clear, it's down year-on-year -- sorry, down quarter-on-quarter, but is it also going to be down year-on-year? Is that what you mean or just quarter-on-quarter? The second question is, within France, you mentioned you grew classified revenues by 24% in the quarter. Can you help us a little bit understand the drivers of that 24% growth? Is it more customers, more listings? Is it more property or auto-weighted? And what's the impact of the acquisition? Just help us understand that 24% number in a bit more detail, if you can. And the third question is, you've given some helpful detail on the interest rates for each of the different bonds and loans that you've taken out. Is there anything more clever we need to do than just do the maths around the interest rate times the bond to work out the interest charges in the future? Or is there any kind of additional things we should be taking into account when estimating future interest charges?
Thank you, Adam. So let me take your first question and then the second is for Antoine and the third for you, Uvashni. So Adam, what we've said, yes, we've said that the margin in Q4 will be lower than in Q3. We have not specifically commented on whether it will be lower than last year's Q4. And I think, frankly, that's a bit early to say, it depends on the cover. So -- and we don't guide that specifically. The important point for us was really to say that this quarter was exceptionally high. And I think for the second question about the revenue growth in France, do you want to cover that, Antoine?
Sure. So revenue growth on classified during Q3 was very good. It's based on 2 phenomena. One is the volume recovery after COVID and the second is the increase of our ARPU on real estate and on the car market. Mainly based on our new offer we have launched during the last month and some pricing increase for 2 drivers, one is the volume, the second is the ARPU. So we are gaining market shares, and we are quite satisfied by that.
So -- and then the third question was on the financing cost on the interest rates, Uvashni.
Yes. We'll get back to you on the details of that because there are quite a few different rates and different agreements we have around the interest. So Marie and I will get back to you on that question.
Can I just ask one quick follow-up on France? You said that there's more volume in the market, which is helping grow the revenue. When you say more volume, do you mean just more transactions than you charge per transaction and more listings? Or do you mean that more customers have come to the site?
I'm talking about more volumes. So we are selling packages of ads and we are -- so we are selling packages of ads, and we have self-serve. So they can buy -- they can post their ads one-by-one. And on this line, we had some recovery phenomena after the COVID. So they were posting more ads than last year. So this is more listings. And in terms of number of customers, we are growing slightly on these 2 markets as well.
The next question comes from the line of Sarah Simon calling from Berenberg.
I've got a few. First one is, in Brazil, you refer to strengthened indirect advertising. Can you just remind us what indirect advertising is? The second one was on La Centrale is up for sale. And I wonder if you would comment on whether that's an asset that would be of interest to you? And then the final question was, can you give us an idea of how both marketing spend and advertising revenues vary as a percentage of the year? So how do they phase through the year so that we can get a sense for -- if advertising weakens as you've highlighted, it's a bigger quarter, but we don't really know how big it is. If you can give us any help on advertising revenue phasing and normal marketing spend phasing, so let's say, from 2019?
Yes ...
Okay. Let me ask with the -- Antoine, so you want to start with Brazil?
Yes. Sorry for jumping in too quickly. The question was about what we consider indirect advertising is mostly advertising that we sell through networks or through programmatic platforms without a direct connection with our advertiser or with our customers. So it's like programmatic revenues mostly.
So when it comes to La Centrale, that's not an asset -- it is not we know well, of course, and we're competing with them in France. It's not an asset that we would or could just pursue due to antitrust reasons. So I think that's a simple answer to that. Then on the third question that was about the phasing of marketing and advertising revenues. Well, I don't know if we can give an exact answer in terms of percentages there, but the marketing spend will typically vary and will be spread out through the year depending on the right campaign. So what we've said now is that many of the things that we were planning to do in Q2 and Q3 have now been delayed to Q4. And when it comes to advertising revenues, we have said that there is volatility in them, and that Q4 is normally somewhat weaker quarter. I don't know, Uvashni or Marie, if we have said anything more specifically about those topics?
No, Rolv Erik, we haven't at this stage.
Maybe Rolv Erik can help, if we describe a bit how do we handle marketing investments over time during the year, right? Usually, Q1 and Q4 are the ones that where we invest the most because we are close to seasonal moments in which people reflect and create new habits and new behaviors. Now this year, we like drastically stopped our investments, in particular, the brand-building investments in marketing during Q2 -- Q3 and also the final part of Q1. And you know that we aim at managing our businesses for the long term, and we don't want our brand power to deteriorate over time because we believe that the brand power of our marketplace is a key asset for future success. So that branding advertising, maybe, is the part that you would see ramping up during Q4, I would say to normal levels. But if we want to fuel our revenues to normal levels, we also have to sustain our commercial teams with branding and performance campaigns.
Yes. And of course, this year has been very special due to the COVID. That's why a lot of things have been delayed, all those investments also to the Q4 that otherwise would have been taken earlier. And is also proven the strength of the brand, and I think that there's a good investment to continue to do those marketing investments.
The next question comes from the line of Miriam Adisa calling from Morgan Stanley.
Just 2 questions from me. Firstly, we saw that you made a number of divestments in the quarter. Just wondering how you're thinking about the scope of the portfolio now and if there's any room for further disposals? And then secondly, if you could just give us a bit more color on the rollout of the payment and delivery solutions in Spain, perhaps how that compares to the initial traction that you saw in France and what your expectations are for that going forward?
Right. So let me take the first question before Gianpa takes the second question. So we were happy to continue to do our restructuring of the portfolio. And if you look at the history of Adevinta and then previously Schibsted, we've always been quite active in the portfolio management, and I think the thing here is that actually we deem them to be a better owner, specializing in these kind of markets than we were. So we were happy with that. And in general, I would say that we're always reviewing our portfolio without any further concrete plans right now, but we'll always keep an eye on that as to who is the best owner of some of our assets.And I think for the second question, Gianpa knows specifically about Spain and the rollout of payments.
Yes. So thanks for the question. The team, our product team in Milanuncios did an exceptional job to deliver this functionality during COVID, mostly to answer user needs and user requests. But I think it's fair to say that the level of maturity of our features and also the level of implementation of this functionality is still far from what we see in leboncoin. So most of our assets in our portfolio are moving in that direction, but they are all moving at different speeds. The good thing is that most of them are also leveraging functionality that we developed at central level. So it's a mix of local implementation to adapt to market conditions and leveraging as much as possible central components. Milanuncios will follow these steps but I think it's fair to say that our competitive position and the competitive landscape in the market is very different from what we see in leboncoin. So our level of expectation is lower in Spain versus France on this part of the business. But we will continue developing these functionalities and these features, mostly because it's good for users. And we see positive unit economics that requires some more volumes. And it will take some time for us to improve there.
[Operator Instructions] The next question comes from the line of Silvia Cuneo calling from Deutsche Bank.
The first one is on your plan to accelerate investments from Q4 in order to drive future growth. Can you please discuss what classifies that because you're looking to invest or whether this is mostly about the new transactional models? And should we expect this acceleration to drive future growth within the usual targeting revenue growth between 15% to 20%? And second question is a follow-up on Italy EBITDA, I think. The performance in Q3 was quite diverse market-by-market and also your commentary around September. For example, in France, you mentioned the strong slowdown in September, while you saw strong times of recovery in Global Markets and programmatic initiatives in Spain. So can you please share some color on why such variation? And can you say something on the advertising market in October so far? And then the final one is a quick one. Can you just confirm if the new debt raised has any covenants in terms of net debt to EBITDA as I think the previous loan had a 4x maximum leverage?
So I think I'm just trying to read back the questions because I didn't hear you actually that well. But I think the first question was about how we plan to spend our marketing money. Is that right? And the second was did you want the more in general color on the advertising market, display advertising markets. And the third was around the covenants around their debt. Is that right?
Yes, sure. And in the first one, I was just wondering if you could say anything about like in what classified verticals you want to reinvest or if this is directed to the new transactional models?
Right. Well, I think perhaps I can hand that first question to Antoine and Gianpa, how we spend our marketing money, then perhaps you also can cover what you see on the advertising market. And then I think the third question would be to Uvashni. But Antoine, you want to say something in general about marketing campaigns and also which -- how do you see this advertising market?
Yes. So in our strategy, we have -- as you know, in France, we have a strong brand. And leboncoin is a well-known brand in France. So we -- as we are now switching part of our business model and we are investing a lot on the transactional model, now we have to educate more our users on that. So we are spending much -- the bigger part of our marketing budget on that, explaining what are the features of transaction, what is the shipping on leboncoin. So this is most -- the most part of our investment for the next month, we are not supporting a lot of our verticals because they are quite well already in terms of brand awareness, and they are strong in terms of traffic. But we are focusing our marketing spend on the transactional part.Regarding the advertising market, as I said before, so Q3 was showing some softness in September. To be honest, the market is really moving and is really linked to the news on the COVID side, where the news are positive, the advertising is going up, where the news are negative, the market is much more present. So at this stage, there is no trend on October. It's exactly the same situation as Q3, and we expect that we will resist probably at the same level of the market or maybe better. But this is a tough market, and it's based mainly on what is happening on the local economy. So we are not expecting significant improvement during the next weeks. We are fighting, and we expect no specific thing for the next month.
Yes, maybe to -- first, if -- then you comment on Spain and then perhaps Ovidiu can comment on the Global Markets after that, Gianpa?
Yes, yes. So thanks, Silvia, for the question. In terms of -- starting from Brazil because the answer is much closer to what Antoine answered for France. One brand, pushing the new transactional model, and we need to educate users. So the marketing approach in Brazil will be pretty similar to what Antoine has -- is planning for leboncoin. In Spain, as you know, we have a different situation because we have several brands to sustain. Honestly, Silvia, I don't feel very comfortable to give details to my competitors on which brand I will push when. But I think that it's fair to say that we will have to do some education also on our transactional plan for Milanuncios. And if there is a brand where we will invest a bit less compared to normal levels will be in for jobs because we see that there's already a lot of demand and attention from candidates due to the high unemployment. So I don't need to ask people to visit InfoJobs in this period because there's a lot of people that is doing it naturally. So maybe on InfoJobs, the focus will be more on attracting companies to post their jobs on InfoJobs. So will be more B2B marketing than normal TV, et cetera, et cetera. For the rest, we'll sustain our brands, like Fotocasa and coches.net, as we believe it's important for the long term. Then you were asking also a question about advertising. I think that our the performance in Spain in advertising was pretty good. But to be fair, we were also comparing ourselves with the quarter, Q3 2019, that was not very good for us in terms of advertising. In general, I agree with Antoine that the market also in Spain is soft and is very volatile. This is happening in the same way also in Spain. And what we did was just facing the fact that unit CPM were going down, optimizing our marketing campaign, our load and our floor prices to cope with the situation in the best way possible, and I think that the team did a very good job. But no special secret from Spain. If we had, we would have already shared with the rest of our markets. And then...
Thank you, Gianpa. I think there's been a lot of talk about France and Spain today, but we also have a very exciting portfolio called Global Markets. So I think, Ovidiu, perhaps you should just comment a little bit in general of big countries there, but also on the specific question, what you're doing in marketing and also how you see the advertising market.
Yes. Thanks, Rolv Erik. [Foreign Language] On the Q4 investments, I think it's fair to say that across the Global Markets portfolio, it's actually mixed, right? So for instance, in Shpock, it's going obviously towards pushing the transactions. We're seeing really good pickup in the U.K., right? So GMV growing and number of transactions growing, and we're supporting that. We're also continuing to accelerate it across several other countries. So there was a question earlier on development in payment and delivery. We rolled it out in Willhaben and it's picking up really well, and we're supporting it with marketing. We're continuing to push it in Hungary, in Belarus, so there's a few countries where this is -- it has been happening. It's well received by the users, and we will invest in continuing to push it through Q4.Then in terms of verticals, I think, again, it's quite a selection, right? So we're choosing to push the ones where we see good momentum on the competitive side and where we believe that pushing either the brand or more liquidity on one side of the marketplace could be beneficial. So we're pushing -- in Italy, we're continuing to invest in motor because we like what we see there. We're continuing to invest in motor in Ireland. In Austria, we will see a good opportunity in jobs, and we're investing a bit there. So there is quite a bit of that type of investment going on in Q4.Then on advertising revenues, and I think you mentioned Global Markets, I think our case might be slightly different than France's and Spain's, right? Because, again, Q3 was soft but stable in terms of market. Therefore, what we managed to do in terms of improving our own proposition had a positive effect on CPMs, right? And I think that was most notable in Italy. So we changed ad stack. We moved to Google. We significantly improved page speed, implemented biddings and so on. And all of those, let's say, cumulated improvements and tweaks that we did on our own product and tech side managed to lift CPM.
Good. And then...
Thank you, Ovidiu. Yes. Sorry, go ahead. Sorry, go ahead, please.
No, no worries. I just want to just cover up on the leverage ratio. Yes, definitely, after -- on our current facility, which stays in place until closing, yes, we still have the covenants, but post closing, when the new debt kicks in, there will be no covenants multiple.
Right, Silvia. I hope that was answer to your questions. And then let me just remind everyone that there's a lot of talk about France and Spain, but we also have Ovidiu covering all the Global Markets, we have Renaud covering product and tech, and we have Nikki covering HR and comms, but they're also available to answer your questions. So please, operator, go ahead with the next question.
The next question comes from the line of Remi Grisard calling from Societe Generale.
Two questions, please, mainly on products. First one is about the digitation with the lockdowns and the current period. How should we think about it more precisely? Could you give us a few examples? Is it about new products? Is it about higher penetration? And how long will it last? And do you think you would be able to increase ARPUs because of this new phenomenon? Is it partly paid by the end customers? So can I ask for more details about this new trend? And my second question is about the lead engine. You are talking about it for France. Could it be launched in other countries? How material could it be? And how do you acquire the customers now do you have to pay for the customers or is it directly on the website that you can use this new functionality?
Right. So the first one is how we'll continue to handle the digital lockdown and how we'll continue to -- if there's lockdown, how we'll continue to handle that and how we develop products, the other was more specifically about lead engine product in France. I think perhaps it would be good if you -- because there is some analysts that haven't followed us previously. So I think it'd be good...
No, no, no. My question is more on the medium term. Do you see a ramp-up in your more digitalized products, I mean, including video, remote visits on real estate or on cars, that lead to higher ARPUs in the medium term?
Yes. And I think just to start to a very quick recap of how we handled it in spring. And then, Antoine, I think if you can start with that and also talk a little bit about the product development you're doing. And then I think also for the others, for Renaud, if you want to come in. But Antoine, please start. Well, Antoine might have fallen out there. But yes. I was...
Sorry, I was talking alone. Okay. So on your questions about the digitalization. So the first, on the private part, what we have done is we have accelerated our road map on the transaction path. So putting transactions, putting shipping, and it's not only in France but everywhere in Adevinta, we have reprioritized or not to be able to propose an e-commerce solution to our customers. On the professional side, the -- what we have done is we have done -- we have invested a lot in terms of tooling for our customers. That's a good question about video. I think maybe Gianpa, you can go on the -- on your initiative on real estate, maybe what you have done and what you are proposing to real estate agent on the 360, for example, I think you have this kind of format. Gianpa?
Yes, yes, yes. So in general, what we see from a user and customer perspective is that they are asking more and more for less friction. And friction, now we have a new source of friction that is moving around the city because it's less easy that it was before. So in general, our efforts in terms of credit environment continues to be removing friction from the experience of buying and selling, both for private users and our customers, and we will continue always looking at the backlog of our user and customer pains. In general, now it's fair to say that the fourth distance that COVID is imposing on our society is making digital tools and video interviews a higher request. So this is why, for example, in InfoJobs, we have developed a possibility to do interviews through video. And also in real estate, in Fotocasa, we are working on the possibility of visiting an apartment over video. Also in Brazil, we're doing something similar. So we have done an experiment now with car dealers. Many of them are really appreciating the possibility of displaying their car on a video, not only through pictures. So making the experience more immersive and digital I think will be important both for our users and for our customers. And then as Antoine was saying, there's also a lot of work we can still do to make our professional tooling for our customers more efficient because the crisis is imposing them -- on them, they need to pay much more attention to how they manage their inventory and they need our help, and they are seeking for our help, and we need to work on making our tools more and more efficient for our customers.
Renaud, do you want to comment on product development?
Sure. I think this we have seen this across the market. We have some technology enablement that is centralized that helps with this, for example, with the video and advanced formats that more professionals, both in real estate and cars, are asking about. In addition, I think you mentioned the lead engine. These types of professional products that we have spearheaded in France have been developed with rollout in mind. And in fact, we're starting to engage with other marketplaces to be able to roll out those products, like the smart pumps and the performance dashboard. This is ongoing and will continue in the next few quarters, but we see a great opportunity to apply those recipes that are successful in multiple markets, leveraging data, especially, and more advanced formats for the media.
So in general, we're moving towards removing friction, and that means more end-to-end and complete e-commerce-like transactions, whether it's for general list, and then we're also moving in the same direction for the verticals for cars and real estate. We mentioned some examples, and I also mentioned previously the payment solutions we're launching in France for cars. So we're moving generally in that direction, absolutely. Would that be the answer to your question, Remi?
Yes, just about the lead engine, did you expect it to be in the tens of million of euros revenues next year or would it be smaller?
I think it's very promising. I think it's a very promising product, but I don't really want to comment on the exact monetization. We'll get back to you next year.
And the profitability, do you buy some leads through search engines or is it only from your website that you generate?
No. No, we are not buying leads. We are using leboncoin traffic, and we are proposing to our private customers to have some good proposal from real estate agents. But we are using our private content and customer to do that. But we are not buying any leads outside of leboncoin and real estate. We have already strong traffic. We don't need.
All right. So we've been going on for 75 minutes now. So I know you guys are busy. So I think we're nearing the end, but are there any more questions, operator?
We have no further questions coming through on the phone lines.
Well, that's good timing then. Well, in that case, I would like to thank you all for your questions, and please also follow up with us directly. Thank you for the interest. And then in the closing, I just wanted to wish you all the best, stay well, and thanks for attending, and have a very good day. Thank you very much.
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