schibsted.luke tashie.amici competition.2.6.15

(SCH: NO)

Luke Tashie 2.6.15

Schibsted is a misunderstood company in the early stages of a major value creating business transformation

• Schibsted (SCH: NO) is a 175 year old media company based in Oslo, Norway that is in the midst of a transformation into the premier online classifieds operator in 20+ countries

• Due to its history as an “old media” company, and despite its undisputed classifieds dominance in both Norway and Sweden, Schibsted is getting little credit for its long run potential for high margin (60%+), double digit revenue growth in its online classifieds businesses in the six countries in which it has already begun monetizing and another 20+ countries in which it is likely to attain similar outcomes

• Its property in France (Leboncoin, “LBC”) alone is expected to be worth >50% of the company’s current market cap by 2017

• With increased disclosure of the economic potential of its classified assets, visibility of Schibsted’s shift from “investment mode” to “monetization mode” and as the story simplifies to a pure play online classified business, I expect 40%+ annual EBITDA growth and shares to re-rate to trade in-line with its classified peers

• As this transition plays out, at 15x forward EBITDA, Schibsted shares will double over the next 2-3 years

Schibsted (SCH:NO) - Luke Tashie - 2.6.15 2

Summary financials & valuation at 2.6.15


Current Share Price 516 NOK 59.75 EUR

FD Shares (m) 107

Market Cap (bn) 55,396 NOK 6,414 EUR

Less: Cash (831) NOK (96) EUR

Add: Debt 2,508 NOK 290 EUR

Enterprise Value 57,073 NOK 6,608 EUR

LTM 2017E

EUR (m) 9/30/14 Base Upside Upside+

Revenue 1,728 2,313 2,892 3,525

EBITDA 225 684 1,001 1,255

EBITDA Margin 13% 30% 35% 36%

12/31/16 EV/EBITDA (1) 14x 15x 17x

Total Return to 12/31/16 77% 178% 289%

IRR through 12/31/16 35% 71% 105%

EV/EBITDA 29x 10x 7x 5x

(1) Assumes all FCF retained and held on balance sheet as cash

Screens expensive

Conservative multiple: 33%

discount to comps

Schibsted is extending its #1 position in print and online media in Norway and Sweden to also become the global leader in online classifieds


Online classifieds are among the world’s greatest businesses and Schibsted is the dominant operator in 20+ countries


• Online classifieds are a winner-takes all business with the leading site in any country or vertical typically generating 50-70% pre-tax margins, >100% of market profits due to significant barriers to entry and the ability to grow revenues 10%+ annually

– The key categories for online classifieds include Generalist (i.e. Craigslist), Auto, Real Estate and Jobs

• Once a site becomes the clear leader (2-3x its peers or 40-50% market share), network effects take over and the value of the network grows exponentially in line with Metcalf’s Law (i.e. the value of a network is the square of its users, or n^2)

• Schibsted was early to spot the future decline in traditional media and essentially pioneered the commercial online classifieds market when in 2000 it founded Finn.no, the leading online classifieds property in Norway

– Schibsted then purchased Blocket in 2003, which was then not much more than a “concept” but is now the leading online classifieds property in Sweden

The wonderful virtuous cycle of online classifieds


Publicly listed online classifieds command premium valuations


Market Ent. Revenue EBITDA EBITDA Margin EV/Revenue EV/EBITDA

(USD m) Cap. Value 2014 2015 2016 2014 2015 2016 2014 2015 2016 2014 2015 2016 2014 2015 2016

Company Ticker

Rightmove LSE: RMV 3,597 3,588 247 273 300 183 202 221 74% 74% 74% 14x 13x 12x 20x 18x 16x

REA Group ASX: REA 5,260 5,228 340 418 494 175 232 285 51% 55% 58% 15x 12x 11x 30x 23x 18x

Carsales.com ASX: CRZ 1,960 2,076 183 227 251 107 127 143 59% 56% 57% 11x 9x 8x 19x 16x 15x

Zilllow Z 4,177 3,811 324 445 574 51 87 138 16% 20% 24% 12x 9x 7x 75x 44x 28x

Trulia TRLA 1,718 1,736 254 334 416 19 50 85 8% 15% 20% 7x 5x 4x 90x 35x 20x

58.com WUBA 3,415 2,788 262 421 628 NA NA 82 NM NM 13% 11x 7x 4x NM NM 34x

Autohome ATHM 3,912 3,628 329 468 621 143 193 273 43% 41% 44% 11x 8x 6x 25x 19x 13x

Mean 42% 44% 41% 12x 9x 7x 43x 26x 21x

Median 47% 48% 44% 11x 9x 7x 28x 21x 18x

• Additionally, several private transactions in the online classifieds space have occurred at premium valuations: – General Atlantic sold its 15% stake in Axel Digital Classifieds on 12/8/14 for ~$500m (est.15x FTM EBITDA) – Hellman & Friedman acquired Scout24, a German Real Estate and Auto classifieds business on 11/21/13 for ~$2.6bn

(est. 20x TTM EBITDA)

Schibsted has three segments for its online classifieds: the “core” of Finn, Blocket and Leboncoin, “non-core established” and “investment mode”


Schibsted’s Mature Online Classifieds (Finn.no & Blocket.se)


Schibsted’s Finn.no (Norway) and Blocket.se (Sweden) are part of its core classifieds portfolio and are exemplary models for new sites


• Finn.no was founded in 2000 and is the 3rd most visited site in Norway

– Dominant #1 position in all four key verticals (generalist, real estate, autos, and jobs), generating ~€40/internet user

– Recently moved its generalist site to a “freemium” model, increasing daily active sellers by 112% and listings 150%

• This change has had a short term negative impact on both revenue growth and margins, which should reset in late 2015/2016, accelerating both revenue growth and margin expansion longer term

• Expect long term growth of mid-high single digit revenue growth and EBITDA margins >50%

Schibsted’s Finn.no (Norway) and Blocket.se (Sweden) are part of its core classifieds portfolio and are exemplary models for new sites


• Blocket.se was acquired in 2003 and is the 3rd most visited site in Sweden

– Strong #1 position in generalist and autos; #1/2 in real estate and #1-2 in jobs, generating ~€13/internet user

– Recently attained 51% share of Real Estate listings, evidence of its ability to leverage its immense generalist traffic to eventually win the verticals in which it is currently lagging

– Initiated material price increases in job listings in September 2014

– Seven out of ten Swedes have bought or sold something on Blocket

– 2012 value of advertised goods on Blocket = 9% of Swedish GDP

– Expect longer term high single digit revenue growth and EBITDA margins of >50%

51% in Q314

Finn.no and Blocket.se are estimated to comprise ~36% of Schibsted’s current value on FTM multiples 33% below-market at 12/31/16


LTM LTM

Norway 9/30/14 Sweden 9/30/14

Finn.no Revenues 170 Blocket.se Revenues 99

EBITDA 77 EBITDA 51

EBITDA Margin 46% EBITDA Margin 52%

Total Internet Users 4.4 Total Internet Users 7.9

Rev/Internet User (EUR) 38.6 Rev/Internet User (EUR) 12.5

GDP/Capital $97,801 GDP/Capital $54,603

Valuation 2017e Valuation 2017e

Internet Users (2017e, m) 4.6 Internet Users (2017e, m) 8.2

Revenue/Internet User (EUR) 44.5 Revenue/Internet User (EUR) 16.4

Revenue (EUR m) 204 Revenue (EUR m) 135

EBITDA Margin 51% EBITDA Margin 55%

EBITDA 103 EBITDA 74

FTM EV/EBITDA multiple 12x 14x 16x FTM EV/EBITDA multiple 12x 14x 16x

Schibsted ow nership 90% 90% 90% Sweden Enterprise Value (EUR m) 890 1,038 1,186

Norway Enterprise Value (EUR m) 1,113 1,298 1,484

Current Schibsted Enterprise Value 6,608 6,608 6,608 Current Schibsted Enterprise Value 6,608 6,608 6,608

Norway as % of Current SCH EV 17% 20% 22% Sweden as % of Current SCH EV 13% 16% 18%


The Opportunity in Online Classifieds: Building Blocket clones around the world

The opportunity: there is an extreme monetization gap between Schibsted’s Scandinavian properties and its other 20+ dominant sites


• There is a material range in revenues generated per internet user for Schibsted’s six most mature sites versus its mature Scandinavian sites

• Schibsted generated €131m in TTM EBITDA in Scandinavia; the population in the countries of the other six sites below is 14x that of Norway + Sweden

Norway + Sweden = 12m internet users; 145m additional internet

users in red box + >600m additional in 20+ countries with #1/2 positions

This gap is not a structural issue - we are at the very early stages of monetization for all of Schibsted’s core established sites


• A typical online classified site takes at least 3-5 years of investment in order to build enough traffic to begin monetizing its users

• Schibsted’s strategy has been to build significant traffic as a generalist classifieds property, use its massive user base to grow high value verticals (autos, real estate, jobs and services) and only once it has clearly “won” the market does it begin monetizing

• Ultimate monetization per country varies by degree of internet speed and usage, GDP/capita, consumer behavior, etc, but Schibsted’s Blocket.se should prove to be the standard to which each of their other dominant properties eventually converge, adjusted for GDP/capita

Gen / Cars / RE / Jobs

The majority of Schibsted’s sites are still in the “young established phase”, thus the lag in monetization outside of Norway/Sweden


• The chart below shows the life cycle of an online classified site - Schibsted has two sites in the “Large established” phase, six sites at the early stages of monetization and another 20+ that are early stage #1/#2’s that have the potential to enter stages 2 or 3, thus providing for significant optionality

Source: Artic Research & company data

Leboncoin (France): 24% of Base Case EBITDA Growth and the

Benchmark for the Future


As Leboncoin (France) approaches monetization levels 50% below Blocket, it alone will be worth >50% of Schibsted’s current value


LTM

Blocket.se 9/30/14

Revenue (EUR m) 99

Internet Users (m) 7.9

Revenue/Internet User (EUR) 12.5

Leboncoin 2017e

Internet Users (2017e, m) 52.5

Revenue/Internet User (EUR - Sw eden 2014) 12.5

GDP/Capita as % of Sw eden 73%

Revenue (EUR m) 341

Implied Rev/Internet User (Euros) 6.5

EBITDA Margin 60%

EBITDA (EUR m) 206

FTM EV/EBITDA multiple 14x 16x 18x

Leboncoin Enterprise Value (EUR m) 2,890 3,302 3,715

Current Schibsted Enterprise Value 6,608 6,608 6,608

Leboncoin as % of Current SCH EV 44% 50% 56%

Leboncoin is now the dominant site in France and will approach monetization levels similar to that of Blocket in the coming years


• Despite near 70% EBITDA margins and 50% revenue CAGR since 2010, Leboncoin has continued to focus on building traffic and is just now turning its focus to monetization

• LBC has the #1 position in all four key verticals and ranks third behind only GOOG and FB in terms of display advertising in France (note that Blocket only dominates 3 verticals)

• Schibsted has indicated now that Leboncoin is the clear winner in France, it will focus on significantly driving monetization, as evidenced by its recent real estate sales force build out, among other initiatives

Continued traffic growth, real estate, autos & increased display advertising will significantly drive Leboncoin’s revenues now that it has reached critical mass


Leboncoin Real Estate TAM: €500m – the largest and fastest upside to current run rates (est. LTM rev: €14m)


• TAM for France real estate alone is estimated at ~€400-500m: 26,000 agents x €1,300/month, with 60% spent online today (and migrating upwards a few % annually)

– We can also view TAM as a “take rate” potential from real estate commissions: 800k homes sold annually in France @ €220k average price and 0.3% take rate (which seems very low) gets us to a ~€530m TAM

– I have spoken with 10-15 real estate agents in France and have confirmed that agent spend is shifting online, LBC is gaining share from other forms of agent spend and LBC is a “must” spend from a seller’s perspective (i.e. if you are selling your house and the agent does not list on LBC, you fire them and hire an agent who will)

• Further, the real estate vertical has been under-earning in France and will accelerate rapidly in 2015/2016 due to the expiration of the legacy “Spir” agreement at the end of 2014

– Spir Communications was a 50/50 partner with Schibsted in LBC, and Schibsted bought out the remaining 50% in 2010 with the agreement to combine Spir’s real estate site (Logicimmo) and a small general site (TopAnnonces) and funnel agents to negotiate directly with Spir

– It is estimated that this venture generates ~€50m in revenue (versus #2 site Seloger’s €125m), of which LBC only receives €10-15m despite driving an estimated 80%+ of the traffic due to LBC’s small relative size in 2010 and thus the poor economics to LBC of the original deal

• Beginning early 2015 LBC should start to see an immediate lift of €40-50m as it negotiates directly with agents, with the added benefit of being able to then market, grow and monetize its real assets and gain 100% of the economics versus the 15-20% estimated today. Given LBC’s traffic is larger and growing faster than #2 Seloger, a similar €125m run rate in 2015 for real estate alone should prove to be an easy target

Leboncoin Automobiles TAM: €450m (est. LTM rev: €60m)


• TAM for France Auto is estimated to be ~€450m: 5.5mm used cars sold annually in France at an average price of ~$10k; $100/car (1% take-rate) = ~€450m TAM

– Schibsted estimates the current online auto market (for listings only) is only €120m, providing substantial room for growth as ads migrate to online

• Leboncoin transitioned from a free site to a paid listings site for car dealers in July 2011

– LBC’s revenue share of the professional car market is 33%

– Approximately 80% of French auto dealers use Leboncoin

• Additional revenue upside from private listings, display advertising and services

Leboncoin: detailed revenue & EBITDA build from today to 2017


• Schibsted does not break out details for any of its segments, so the assumptions for each are a triangulation of estimates from multiple sources

• Leboncoin is moving away from Google AdSense and is selling its own ads now that it is at scale, which is expected to generate significantly higher revenue and EBITDA margins

• Autos needs to be dissected into C2C and Professional listings but I would be guessing wildly; 65% of sales today are C2C and expected to increase, thus the crude use of take rate vs. subscription revenue

• Real Estate should benefit ~€80-100m from the expiration of the Spir agreement alone, implying ~40% share today

• Jobs are excluded as they are not monetizing today but are 2x the #2 site, conservatively allowing for pure upside

LTM 2017e

Revenue Build 2013 9/30/14 Base Upside

1) Display and Sponsor Ads 42 58 105 153

Grow th Y/Y 37% 20% 35% CAGR 9/30/14 to 12/31/17

2) General Merchandise (i.e.bolds, boxes and bumps)

Average Annual Listings 147 168 229 264

Grow th Y/Y 14% 10% 15% CAGR 9/30/14 to 12/31/17

Conversion Rate 10% 10% 10% 12%

Average visibility fee paid / listing (Euros) 0.80 0.85 1.23 1.34

Grow th Y/Y 6% 12% 15% CAGR 9/30/14 to 12/31/17

Revenue from General Goods 12 14 28 42

Grow th Y/Y 21% 23% 40% CAGR 9/30/14 to 12/31/17

3) Autos Revenue

Used Cars sold in France 5 5 6 6

Grow th Y/Y 0% 2% 4% CAGR 9/30/14 to 12/31/17

Average Value/Car 10,000 10,000 10,665 11,359

Grow th Y/Y 2% 4% CAGR 9/30/14 to 12/31/17

Total Transaction Value 53,496 53,496 60,845 69,030

Leboncoin Market Share 60% 60% 60% 75%

Average Take Rate/Car 0.18% 0.18% 0.20% 0.23%

Take Rate Grow th Y/Y 0% 3% 7% CAGR 9/30/14 to 12/31/17

Leboncoin Autos Revenue 58 59 73 117

Grow th Y/Y 0% 7% 24% CAGR 9/30/14 to 12/31/17

4) Real Estate Revenue

Total Real Estate Agents ('000's) 26.0 26.0 26.0 26.0

Average Monthly Budget ('000's) 1.3 1.3 1.3 1.3

Real Estate Advertising TAM ('000's) $406 $406 $406 $406

Online % of Total 62% 62% 66% 80%

Online TAM 251 251 268 324

Leboncoin Share 5% 6% 50% 75%

Leboncoin Real Estate Revenue 12 14 134 243

Grow th Y/Y 17% 100% 141% CAGR 9/30/14 to 12/31/17

Total Revenue 124 145 340 556

Grow th Y/Y 16% 30% 51% CAGR 9/30/14 to 12/31/17

Estimated EBITDA Margins

Advertising 70% 70% 68% 68%

General Merchandise 50% 50% 50% 50%

Real Estate 70% 70% 65% 65%

Autos 60% 60% 55% 55%

Total EBITDA 83 97 206 335

Total EBITDA Margin 67% 67% 61% 60%

EUR Rev/Internet User 2.5 3.0 6.5 10.6

Leboncoin summary financials


LTM 2017e

(in EUR, m) 2008 2009 2010 2011 2012 2013 9/30/14 Base Upside

Revenue 5 18 36 64 97 124 145 340 556

Grow th Y/Y* 260% 100% 78% 52% 28% 22% 30% 51%

EBITDA 2 8 22 45 67 84 97 206 335

Margin% 47% 47% 61% 70% 69% 67% 67% 61% 60%

Internet Users 47 48 49 50 51 52 52

EUR/Internet User 0.8 1.3 2.0 2.5 2.9 6.5 10.6

EUR/Internet User as % of Blocket 22% 40% 65%

*Growth rates for 2017 are the CAGR from LTM 9/30/14 through 12/31/17 Note: 2017e projections do not tie perfectly with slide 21 due to different methods of building out revenues and EBITDA

Very conservative even in upside case

Putting it Together


Norway + Sweden + France + Spain + Italy = €8-10bn, or ~20-50% greater than Schibsted’s valuation today at multiples 33% below comps


2017e EV/EBITDA Enterprise Value

Eur (m) EBITDA Low Mid High Low Mid High

Norw ay 103 12x 14x 16x 1,236 1,442 1,648

Sw eden 74 12x 14x 16x 890 1,038 1,186

France 206 14x 16x 18x 2,890 3,302 3,715

Spain 98 14x 16x 18x 1,370 1,566 1,761

Italy 95 14x 16x 18x 1,328 1,518 1,708

Total 576 13x 15x 17x 7,714 8,866 10,019


"Core 5" as % of Current Schibsted EV 117% 134% 152%

"Non-Core Established" 103 14x 16x 18x 1,445 1,651 1,858

as % of Current Schibsted EV 22% 25% 28%

***Non-Core Established: Brazil, Austria, Finland, Thailand, Indonesia, Bangladesh & M alaysia

…with an additional 20-30% upside from “Non-Core

Established” sites…

With dominant classified properties across the globe, there is substantial optionality in creating additional “core” markets


Schibsted is estimated to have >30 #1/#2

classified sites covering 770m internet users by

2017

Base case EBITDA bridge


Base case EBITDA bridge – with assumptions


Reflects core growth consistent with prior years

Growth in Rev/User: Finn: €39.2 €44.5

Blocket: €12.8 €16.4 Leboncoin (ex-RE): €2.7 €3.9

Including Real Estate, Leboncoin Rev/user €3.0 €6.5; ~100% of EBITDA growth “in the bag” due to Jan 2015 expiration of Spir

agreement

Reflects continued decline in both revenues (3% pa) and

EBITDA margins (3%)

Rev/user €2.4 €4.6 and 60%

EBITDA margin due to Milanuncious

acquisition

Rev/user <€1 €5.7 and 40% EBITDA margin as Subito.it begins

to monetize its #1 position

Investment spend reduction due to Naspers JV and less sites in investment mode

Appendix


Media Houses


Media Houses: Schibsted’s legacy, but no longer relevant to story


• Schibsted’s legacy business consists of the leading traditional (print) and online media houses in Norway and Sweden

• The company has the leading digital newspapers / tabloids in both Norway and Sweden with a long term target of 10-15% EBITDA margins

Media Houses: Transitioning online, but irrelevant to long term value of Schibsted


• Schibsted’s subscription newspapers are also #1 in Sweden and Norway and are in the transition phase to an online model

• The strong growth in online revenues are being offset by the stronger decline in print circulation and advertising revenues; 1-2 year target EBITDA margins of 0-10%

Spain: 21% of Base Case EBITDA Growth


Schibsted’s acquisition of Milanuncios.com has given it a clear #1 position in Spain


• Schibsted announced the acquisition of Milanuncios, the top generalist classifieds sites in Spain, in early 2014 but had been delayed due to regulatory issues. The acquisition finally closed on December 3, 2014 with minor concessions after significant regulatory review

• Post acquisition: #1 Market position in each of the key verticals; six of the top ten domestic websites

• More than 3bn Page Views per month across Schibsted sites in Spain (vs. Blocket’s 1bn)

• Monetization in early days; Revenue and EBITDA margins of Schibsted Spain to grow substantially in 2015 and beyond - Long-term EBITDA margins estimated at 60%+ (20% pre-deal)

• I expect Spain to mirror Avito’s ramp (see appendix) as the new Schibsted Spain has no competition

Spain, still in investment mode, is growing traffic 40%+ y/y, which should only accelerate post-Milanuncios acquisition


• New Schibsted Spain should accelerate the rapid growth of its user base and traffic in the foreseeable future as it has no competition and is no longer under regulator scrutiny, allowing it to dramatically raise prices in a price inelastic market

– ~40% LTM growth in Page Views across aggregated portfolio, currently reaching >25% of the Spanish population and only expected to increase

LTM

Blocket.se 9/30/14

Revenue (EUR m) 99



Spain 2017e


Revenue/Internet User (EUR - France 2017) 6.5

GDP/Capita as % of France 72%

Revenue (EUR m) 163


EBITDA Margin 60%

EBITDA (EUR m) 98


Schibsted ow nership 90% 90% 90%

Spain Enterprise Value (EUR m) 1,233 1,409 1,585


Spain as % of Current SCH EV 19% 21% 24%

At GDP adjusted monetization levels similar to expectations for Leboncoin, Spain is worth ~€1.4bn


TTM: €2.4/User and 20% EBITDA margin;

should ramp dramatically now that Milanuncios deal has closed (see Avito case

study in Appendix)

Italy: 21% of Base Case EBITDA Growth


Schibsted’s Subito.it is the clear winner in Italy in the generalist and auto categories and is growing rapidly


Subito.it is clearly pulling away from eBay (the #2 in generalist) in both desktop and mobile


Subito.it is distancing itself from the #2 player in Autos in unique visitors, # of ads and user engagement and is gaining ground in the dealer segment


Schibsted’s Subito.it is the clear winner in Italy, a property estimated to be worth €1.5bn+


LTM

Blocket.se 9/30/14

Revenue (EUR m) 99



Italy 2017e


Revenue/Internet User (EUR - France 2017) 6.5

GDP/Capita as % of France 88%

Revenue (EUR m) 237


EBITDA Margin 40%

EBITDA (EUR m) 95


Italy Enterprise Value (EUR m) 1,328 1,518 1,708


Italy as % of Current SCH EV 20% 23% 26%

“Other Non-Core Established” = Brazil, Ireland, Finland, Austria, Thailand, Indonesia,

Bangladesh and Malaysia: 740m people and 15% of Base Case EBITDA

Growth


Financials & Valuation


Summary Financials & Valuation


LTM 2017E

EURm 2011 2012 2013 9/30/2014 Downside Base Upside Upside+

Revenue

Total Classif ieds 412 494 506 546 835 1,236 1,816 2,449

Total Media Houses 1,306 1,358 1,199 1,188 906 1,076 1,076 1,076

Other 134 148 103 31 0 0 0 0

Total Revenues 1,852 2,001 1,808 1,765 1,741 2,313 2,892 3,525

Growth y/y CAGR 9/30/14 through 12/31/17

Classif ieds 20% 2% 14% 29% 45% 59%

Media Houses 4% (12%) (8%) (3%) (3%) (3%)

Total 5.1% 8% (10%) (1%) 15% 30% 44%

EBITDA

Total Classif ieds 135 149 102 156 321 641 958 1,211

Total Classifieds ex-Investments 221 221 229 371 666 983 1,236

Total Media House 186 163 147 133 0 94 94 94

Total Other/HQ/Eliim (39) (35) (51) (59) (66) (51) (51) (51)

Total EBITDA 281 277 198 230 255 684 1,001 1,255

CapEx (24) (25) (37) (78) (52) (69) (72) (88)

EBITDA Margins

Total Classif ieds 33% 30% 20% 29% 38% 52% 53% 49%

Total Classifieds ex-Investments 45% 44% 42% 44% 54% 54% 50%

Total Media House 14% 12% 12% 11% 0% 9% 9% 9%

Total EBITDA 15% 14% 11% 13% 15% 30% 35% 36%

Adj. EPS (Euros) 1.82 1.78 1.14 1.08 1.44 4.35 6.58 8.26

Current Valuation Multiples

EV/Revenue 3.6x 3.7x 2.8x 2.2x 1.8x

EV/EBITDA 27.7x 25.0x 9.3x 6.4x 5.1x

EV/(EBITDA plus non-capitalized investment spend) 21.1x 20.9x 9.0x 6.2x 5.0x

EV/(EBITDA-CapEx) 41.9x 31.4x 10.4x 6.9x 5.5x

P/E 53.4x 40.1x 13.2x 8.7x 7.0x

Consensus (EURm) 2017E Base Case vs. Cons

Revenue 2,069 1.1x

EBITDA 401 1.7x

Adj. EPS (Euros) 2.00 2.2x

Detailed Financials


• Schibsted has guided to 15-20% long term classifieds growth

• Due to the immediate and material benefit of the Spir agreement expiration at Leboncoin and the multitude of properties moving from losses to 60% margin EBITDA businesses, I estimate downside classifieds EBITDA CAGR through 2017 is 14%, Base is 29%, Upside 45% and upside+ 59%

• Due to a small reporting change in 2013 and estimates on currency conversion rates, 2013 revenue growth and EBITDA is understated

• CapEx is overstated in LTM due to one time expenditures – long term guided to 2-3% of revs

LTM 2017E

EURm 2011 2012 2013 9/30/2014 Downside Base Upside Upside +

Revenue

Core Classifieds

Finn Norw ay 172 167 173 191 197 197 197

Blocket Sw eden 87 93 99 116 128 128 128

Leboncoin France 64 98 124 145 262 340 556 556

Total Core Classif ieds 356 384 417 569 664 880 880

Non-Core Established 138 122 129 266 572 936 1,569

Total Classif ieds 412 494 506 546 835 1,236 1,816 2,449

Norge Media House 841 879 756 739 563 669 669 669

Sverige Media House 465 479 443 450 343 407 407 407

Total Media Houses 1,306 1,358 1,199 1,188 906 1,076 1,076 1,076

Other 134 148 103 31 0 0 0 0

Total Revenues 1,852 2,001 1,808 1,765 1,741 2,313 2,892 3,525

EOP EUR:NOK % Change (0.7%) (4.9%) 14.2% 0.4%

EBITDA 2017E

Core Classifieds 2011 2012 2013 LTM 9/30/14 Dow nside Base Upside Upside +

Finn Norw ay 71 84 82 79 87 91 91 91

Blocket Sw eden 44 47 48 52 61 73 73 73


Total Core Classif ieds 160 198 214 228 304 370 499 499

Non-Core Established 23 8 1 67 296 484 737

Investment Mode (72) (119) (73) (50) (25) (25) (25)







Total EBITDA 281 277 198 230 254 684 1,001 1,255

CapEx (79) (52) (69) (72) (88)

Growth rates and margins


LTM 2017E

2011 2012 2013 9/30/2014 Downside Base Upside Upside +

Revenue

Core Classifieds CAGR from LTM 9/30/14 to 12/31/17

Finn Norw ay 11% 4% 3% 4% 4% 4%

Blocket Sw eden 12% 7% 5% 8% 8% 8%

Leboncoin France 27% 16% 20% 30% 51% 51%

Total Core Classif ieds 12% 6% 10% 15% 26% 26%

Non-Core Established Classif ieds (11%) 5% 25% 58% 84% 116%

Total Classif ieds 14% 17% 8% 14% 58% 84% 116%

Norge Media House (1%) (2%) (2%) (8%) (3%) (3%) (3%)

Sverige Media House (2%) 5% 2% (8%) (3%) (3%) (3%)

Total Media Houses (1%) 1% (1%) (8%) (3%) (3%) (3%)

Total Revenues 4% 3% 3% (2%) (0%) 9% 16% 24%

EBITDA Margins

Core Classifieds

Finn Norw ay 49% 49% 46% 46% 46% 46% 46%

Blocket Sw eden 54% 52% 52% 52% 57% 57% 57%

Leboncoin France 68% 67% 67% 60% 61% 60% 60%

Total Core Classif ieds 55% 56% 55% 54% 56% 57% 57%

Non-Core Established Classif ieds (25%) (35%) (26%) 25% 52% 52% 47%

Total Classif ieds 33% 30% 20% 29% 38% 52% 53% 49%

Total Classifieds (ex-investment spend) 45% 44% 42% 44% 54% 54% 50%

Norge Media House 15% 12% 13% 10% 0% 8% 8% 8%

Sverige Media House 13% 12% 11% 13% 0% 10% 10% 10%

Total Media Houses 14% 12% 12% 11% 0% 9% 9% 9%

Total EBITDA Margin 15% 14% 11% 13% 15% 30% 35% 36%

Schibsted valuation: probability weighted 92% upside over next 2-3 years


EBITDA 2017E

Core Classifieds 2011 2012 2013 LTM 9/30/14 Dow nside Base Upside Upside +

Finn Norw ay 71 84 82 79 87 91 91 91

Blocket Sw eden 44 47 48 52 61 73 73 73


Total Core Classif ieds 160 198 214 228 304 370 499 499

Non-Core Established 23 8 1 67 296 484 737

Investment Mode (72) (119) (73) (50) (25) (25) (25)







Total EBITDA 281 277 198 230 254 684 1,001 1,255

CapEx (79) (52) (69) (72) (88)

Current Valuation Multiples

EV/Revenue 3.7x 3.8x 2.9x 2.3x 1.9x

EV/EBITDA 28.8x 26.0x 9.7x 6.6x 5.3x

EV/(EBITDA-CapEx) 43.7x 32.7x 10.7x 7.1x 5.7x

FTM Multiple @ 12/31/16

Classif ied EBITDA implied 27x 13x 15x 16x 18x

Media EBITDA 5x 5x 5x 5x 5x

Other 5x 7x 7x 7x 7x

Total Enterprise Value 6,608 3,705 9,733 15,442 21,919

Add: Net Cash (194) 558 1,615 2,365 3,006

Market Cap 6,414 4,263 11,349 17,808 24,925

Upside (Downside) From Current (34%) 77% 178% 289%

Probability 10% 70% 15% 5%

Attribution (3%) 54% 27% 14%

Expected Upside @ 12/31/16 92%

IRR through 12/31/16 41%

IRR through 12/31/17 25% ***assumes same monetization levels but takes 12 months longer to occur

Naspers JV


The Joint Venture with Naspers announced on 11.13.14 was a game changer


• Schibsted and Naspers are the leading players in online classifieds, with either consistently ranking #1 in most relevant countries with little geographic overlap, but both had been investing heavily to win the Brazilian market for the past several years

• To the market’s delight (+34% on day of announcement), Schibsted completed the formation of a global online classifieds Joint Venture with Naspers’ OLX

• Capital-intensive marketing wars across these markets, in particular Brazil, where Schibsted was investing more than €100mm per year in marketing and site development, will end immediately

• Most importantly, however, Schibsted has now ensured dominant competitive positions in what are huge and attractive markets. Brazil alone is a market of 200mm people, or 20x the size of Sweden, where Schibsted’s “Blocket” generates more than €100mm in annual revenue

Pro Forma for JV

As a result of the JV, Schibsted will cut its investment spend in half while immediately participating in the dominant classifieds sites for 830m people


Avito Case Study: Perfect Proxy for Naspers JV


Avito (Case Study for Naspers JV): We’ve seen this movie before and the ending is AWESOME


• Avito – the now dominant Russian online classified site – was crowned the winner in May 2013 when Naspers contributed $50m and merged its existing, smaller Russian classified sites slando.ru and olx.ru

• At the time of the transaction, Avito was generating revenue of ~€1/user at a negative EBITDA margin; now one year after the deal, Avito is generating 3x the revenue and has been able to dramatically reduce its investment spend, resulting in Q314 EBITDA margins of 65%

Immediate impact of combining top

sites: the “1+1=10” effect in online

classifieds mergers

Post merger, Avito has drastically reduced marketing spend, resulting in 65% Q314 EBITDA margins while continuing to grow traffic


Post JV, Brazil is on a Trajectory Similar to Avito (New Listings/Day)


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Avito.ru Bomnegocio (Red) Olx.com.br (Blue)

Brazil – Pro Forma

Further Evidence of Entrenchment and Pricing Power of Dominant #1 Sites


Examples of dominant incumbent sites vs. extremely well capitalized and capable new entrants


• Craigslist in the US is among the best examples of how entrenched a dominant online classifieds site can become – rarely has a company sustained such dominance in a huge, visible market despite a seeming utter disregard for user experience

– Craigslist spends nothing on marketing, has remained essentially unchanged since its inception ~20 years ago, yet has fended off highly publicized attempts from well capitalized companies (such as Facebook in 2012) and is estimated to generate ~$75m in EBITDA despite shunning monetization and ignoring key verticals such as jobs, autos and real estate

• Specifically within Schibsted, eBay very publicly pulled out of France once Leboncoin became the clear traffic leader:

Past examples of pricing increases for professional segments and illustrative upside for Blocket – and all other Schibsted properties


Blocket Pricing Power

Blocket Professional Pricing (Insertion Fees) FINN Professional Pricing

SEK EUR EUR Blocket

Prior 9/30/2013 Prior 9/30/2013 % Increase 9/30/2013 Pricing Upside

Car 135 225 15 26 67% 65 153%

Boat 125 175 14 20 40% 65 226%

Motorcycle 125 180 14 21 44% 65 217%

Real Estate 120 240 14 28 100% 274 896%

Commercial Business 140 280 16 32 100% 482 1399%

Avg Pricing Increase 70%

• Note that these price increases showed no evidence of traffic impacts

• Further, given Blocket is likely under-monetizing its assets, this gives further comfort in underwriting long term growth for Blocket as well as sites like Leboncoin’s ability to execute substantial price increases in the following years to approach GDP adjusted monetization levels at least to that seen by Blocket today

Avito has also raised prices substantially despite the Russian economic crisis – and continues to grow traffic 40%+


• Despite these substantial, persistent price increases, Avito’s relative market share in Autos has grown from 1.25x to 2.5x the #2 player in Russia (in aggregate)

% Incr. May '13 Dec '14

May '13 Dec '13 May '14 Dec '14 to Dec '14 in EUR

Used Car Listing - St. Petersburg - Private (RUB)

"Premium Placement" (Paper Airplane) 499 549 659 759 52% 11.2

"Make VIP Ad" (Star) 249 279 329 379 52% 5.6

"Get Your Ad Noticed" (Exclamation Point) 165 189 219 259 57% 3.8

"Raise Listing" (Green Arrow Up) 165 189 219 259 57% 3.8

"Apply Package" (Red Heart) 999 1099 1319 1519 52% 22.4

Year/Year % Increase

"Premium Placement" (Paper Airplane) 32% 38%

"Make VIP Ad" (Star) 32% 36%

"Get Your Ad Noticed" (Exclamation Point) 33% 37%

"Raise Listing" (Green Arrow Up) 33% 37%

"Apply Package" (Red Heart) 32% 38%

Miscellaneous


Key drivers to 2017e EBITDA


• LSD growth in mature sites (Finn.no and Blocket.se) in all cases • Continued revenue declines and margin compression in media houses in all cases • Growth in mature classified sites EBITDA is offset by media house decline

• Base case EBITDA is “in the bag” due to expiration on Jan 1, 2015 of the uneconomical agreement with Spir communications – Revenue/internet user of €6.5, or 61% below Blocke.se

• Upside and upside+ cases assume rev/user of €10.6, or 35% below Blocke.se

• All cases assume revenue/user monetization levels similar to Leboncoin, adjusted for GDP/capita by country

• Spain, Italy and Brazil are the largest individual drivers

• All cases assume investment spend is reduced due to recent JV with Naspers • Assume no EBITDA contribution from investment phase sites in base/upside cases • Upside+ case assumes base case Leboncoin rev/user (adj. for GDP/capita) and

EBITDA margins 33% below established businesses for all #1 investment phase sites

Leboncoin

(France)

Investment

Phase

Classifieds

Non-core

Established

Classifieds

Mature

Businesses

(Finn/Blocket &

Media Houses)

2017E Rev (EUR)

In EUR mm TTM In EUR '17 Rev/user to Schibsted 2017E EBITDA

Website Country

Current

Pop. (m)

Class.

Rank

Overall

Rank

GDP/

Capita

Int.

Pen.

Int.

Users

PV/

Visit

Daily

Time on

Site

'17 Int.

Pen.

'17 Int.

Users

TTM

Rev

TTM

EBITDA

%

Margin

Rev./

User

Annual

Rev/User

Grow th Base Upside

%

ow ned Base Upside

'17

Margin Base Upside

Core Established

Finn.no Norw ay 5 1 5 97,801 86% 4 17.8 13:21 87% 5 172 78 46% 39.2 4% 44.5 44.5 90% 184 184 51% 93 93

Blocket.se Sw eden 10 1 7 54,603 82% 8 15.2 12:20 83% 8 101 52 52% 12.8 8% 16.4 16.4 100% 135 135 55% 74 74

Leboncoin France 66 1 6 39,633 74% 49 22.5 18:00 77% 52 145 97 67% 3.0 29% 6.5 10.6 100% 340 556 60% 206 335

658 874 373 502

Tot Margin: 57% 57%

GDP vs. '17 Rev/user Base

Non-Core Established France Base Upside

Subito.it Italy 60 1 11 34,860 58% 35 17.8 14:34 68% 42 2.6 88% 5.7 9.3 100% 237 388 40% 95 155

Willhaben.at Austria 9 1 8 46,380 81% 7 19.2 13:35 83% 7 3.5 117% 7.6 12.4 50% 27 45 60% 16 27

DoneDeal.ie Ireland 5 1 11 45,861 79% 4 18.5 14:49 81% 4 3.4 116% 7.5 12.3 90% 26 42 60% 15 25

Tori.f i Finland 5 1 13 45,359 91% 5 16.4 11:10 93% 5 3.4 114% 7.4 12.1 100% 38 63 60% 23 38

Anuntis Spain 47 1 28,366 72% 34 74% 35 2.1 72% 4.6 7.6 100% 163 267 60% 98 160

InfoJobs.com Spain 47 1 28,366 72% 34 74% 35 72%

Bomnegocio Brazil 203 1 11,208 54% 110 60% 123 0.8 28% 1.8 3.0 25% 56 92 60% 34 55

Thailand 68 1 5,779 30% 20 43% 30 0.4 15% 0.9 1.5 19% 5 9 60% 3 5

Berniaga.com Indonesia 253 1 3,475 28% 71 43% 111 0.3 9% 0.6 0.9 12% 8 12 60% 5 7

Cellbazaar Bangladesh 166 2 829 25% 42 45% 76 0.1 2% 0.1 0.2 25% 3 4 60% 2 3

Mudah.my Malaysia 30 1 12 10,514 67% 20 17.5 13:42 52% 16 0.8 27% 1.7 2.8 33% 9 15 60% 5 9

572 936 296 484

Tot Margin: 52% 52%

Investment Phase

Yapo.cl Chile 17 1 16 15,732 67% 11 15.6 16:22 73% 13 1.2 40% 2.6 4.2 50% 16 27 40% 6 11

Haznaltauto Hungary 10 3 23 12,613 73% 7 20.4 15:50 83% 8 0.9 32% 2.1 3.4 100% 17 28 40% 7 11

Jofogas.hu Hungary 10 2 14 12,613 73% 7 9.22 8:31 83% 8 0.9 32% 2.1 3.4 100% 17 28 40% 7 11

Segundamano Mexico 120 1 44 9,887 45% 54 13.9 12:37 61% 75 0.7 25% 1.6 2.6 100% 121 197 40% 48 79

Ayosdito.ph Philippines 100 2 20 2,512 40% 40 17.8 13:04 57% 58 0.2 6% 0.4 0.7 33% 8 13 40% 3 5

Custojusto.pt Portugal 10 2 61 20,246 64% 7 10.5 7:13 74% 8 1.5 51% 3.3 5.4 100% 26 43 40% 10 17

Kapaza.be Belgium 11 1 17 43,196 82% 9 14.8 13:21 84% 10 3.2 109% 7.1 11.5 100% 68 111 40% 27 44

Kufar.by Belarus 9 2 42 6,682 47% 4 7.1 5:36 57% 5 0.5 17% 1.1 1.8 100% 6 10 40% 2 4

Tocmai.ro Romania 20 2 8 8,418 50% 10 14.7 10:42 60% 12 0.6 21% 1.4 2.3 100% 17 28 40% 7 11

Tutti.ch Sw itzerland 8 47 77,569 83% 7 14.3 11:24 87% 7 5.8 196% 12.7 20.7 100% 91 149 40% 36 60

ChoTot.vn Vietnam 93 1 53 1,911 44% 41 16.8 11:43 54% 51 0.1 5% 0.3 0.5 33% 5 9 40% 2 3

387 633 155 253

Tot Margin: 40% 40%

Additional detail on Schibsted’s online classifieds properties


Base Case

Upside Case

Upside+ Case

Base case EBITDA bridge – with assumptions


Reflects core growth consistent with prior years

Growth in Rev/User: Finn: €39.2 €44.5

Blocket: €12.8 €16.4 Leboncoin (ex-RE): €2.7 €3.9

Including Real Estate, Leboncoin Rev/user €3.0 €6.5; ~100% of EBITDA growth “in the bag” due to Jan 2015 expiration of Spir

agreement

Reflects continued decline in both revenues (3% pa) and

EBITDA margins (3%)

Rev/user €2.4 €4.6 and 60%

EBITDA margin due to Milanuncious

acquisition

Rev/user <€1 €5.7 and 40% EBITDA margin as Subito.it begins

to monetize its #1 position

Investment spend reduction due to Naspers JV and less sites in investment mode

Upside case EBITDA bridge – with assumptions (versus base case)


Leboncoin (ex-RE): €3.9 €6.0

Including Real Estate, Leboncoin Rev/user

€6.5 €10.6, or 65% of Blocket (which has little

to no RE revenue)

Rev/user €4.6 €7.6, reflecting 65% of Blocket,

adjusted for GDP/Capita

Rev/user €5.7 <€9.3, reflecting 65% of Blocket, adjusted for

GDP/Capita

Assumes all additional non-core established sites

monetizing similar to LBC, adjusted for GDP/capita

Upside+ case EBITDA bridge – with assumptions (versus upside case)


Assumes all current #1/#2 sites monetize at base case Leboncoin

levels (i.e. 39% of Blocket, adjusted for GDP/Capita) and

40% EBITDA margins

Schibsted 5-year stock chart: 4.4x total return, or 34.3% CAGR (excluding dividends)


Announcement of JV with Naspers

Top 25 shareholders as of 10/8/14 – still relatively unknown outside of the Nordic region (~65% Nordic + UK owned)


schibsted.luke tashie.amici competition.2.6.15

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