Transactional Shift And AI Demands Will Pressure Margins And Keep Outlook Cautious

Catalysts

About Vend Marketplaces

Vend operates digital marketplaces across Mobility, Real Estate, Jobs and Recommerce in the Nordics, with an increasing focus on transactional models alongside classifieds.

What are the underlying business or industry changes driving this perspective?

• The shift to transactional models in Real Estate and Recommerce, while promising, requires sustained marketing and platform investment. This is likely to keep segment EBITDA negative or subdued and weigh on group margins during the transition period.
• Ongoing portfolio simplification, including the phaseout of low-margin revenues in Recommerce, exit of Jobs in Sweden and Finland and the delivery divestment, reduces revenue diversification and creates a temporary earnings drag that could cap near term top line growth.
• The completion of TSA terminations with Schibsted Media and the resulting up to NOK 100 million EBITDA headwind in 2026, combined with continued pressure on advertising revenue, points to a near term squeeze on profitability before cost savings are fully realized in 2027.
• Heavy reliance on ARPA-driven monetization in Mobility, Real Estate and Jobs against flattish or declining volumes, in markets still exposed to weak macro and cyclical property and labor trends, increases the risk that further price optimization slows revenue growth and constrains earnings.
• Rising technology demands from AI driven search, integrated valuation tools and common platform consolidation may force Vend to reinvest part of its margin expansion to stay competitive. This may limit upside to net margins and earnings despite current cost reductions.

Assumptions

How have these above catalysts been quantified?

• Analysts are assuming Vend Marketplaces's revenue will decrease by 3.7% annually over the next 3 years.
• Analysts assume that profit margins will shrink from 86.8% today to 10.3% in 3 years time.
• Analysts expect earnings to reach NOK 762.2 million (and earnings per share of NOK 8.76) by about December 2028, down from NOK 7.2 billion today.
• In order for the above numbers to justify the price target of the analysts, the company would need to trade at a PE ratio of 105.0x on those 2028 earnings, up from 10.5x today. This future PE is greater than the current PE for the GB Interactive Media and Services industry at 39.5x.
• Analysts expect the number of shares outstanding to decline by 7.0% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.26%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• Execution of aggressive ARPA and pricing initiatives across Mobility, Real Estate and Jobs could drive structurally higher revenue growth than expected if customers continue to accept higher price points and value added packages without meaningful long term volume erosion. This would support faster top line growth and expanding earnings.
• The shift to scalable transactional models in Real Estate and Recommerce, which are already delivering strong GMV and revenue growth with improving unit economics, could move these segments from loss making to profitable sooner than anticipated. This would lift consolidated net margins and group earnings.
• Ongoing cost efficiency programs, including substantial FTE reductions, platform consolidation and HQ restructuring, may deliver more durable savings than modeled. This could push OpEx as a share of revenue closer to the medium term 40 percent target and materially increase EBITDA and net profit.
• AI adoption and common platform initiatives such as Aurora, integrated valuation tools and improved search could strengthen user experience and network effects, enhancing competitive positioning and enabling higher monetization. This would support sustained revenue growth and higher operating margins.
• Capital allocation actions including repeated share buybacks, potential value crystallization from stakes like Adevinta and maintaining an investment grade balance sheet with minimal net debt could increase earnings per share and investor confidence. This would support a higher valuation multiple and stronger share price performance relative to flat expectations.

Valuation

How have all the factors above been brought together to estimate a fair value?

• The analysts have a consensus price target of NOK380.8 for Vend Marketplaces based on their expectations of its future earnings growth, profit margins and other risk factors.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of NOK440.0, and the most bearish reporting a price target of just NOK325.0.
  
• In order for you to agree with the analysts, you'd need to believe that by 2028, revenues will be NOK7.4 billion, earnings will come to NOK762.2 million, and it would be trading on a PE ratio of 105.0x, assuming you use a discount rate of 7.3%.
  
• Given the current share price of NOK358.0, the analyst price target of NOK380.8 is 6.0% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.