Tesla could be a $10,000 stock in a decade, says longtime bull Ron Baron
Introduction & Market Context
Hemnet Group AB (STO:HEM) released its third quarter 2025 results on October 23, revealing a mixed performance as the company navigates a challenging Swedish property market. The stock responded negatively to the earnings report, dropping 2.25% to SEK 225.4, significantly below its 52-week high of SEK 430.2.
The presentation highlighted persistent headwinds in the Swedish property market, characterized by extended sales cycles, high supply levels, and continued pressure on prices. These factors have created a market environment where buyer confidence remains low, directly impacting Hemnet’s core business of property listings.
"We continue to act decisively, strengthening Hemnet’s position for the benefit of buyers, sellers, and agents alike," stated CEO Jonas Gustafsson, emphasizing the company’s focus on innovation and market adaptation despite current challenges.
Quarterly Performance Highlights
Hemnet reported a 1.5% year-over-year decline in net sales to SEK 366.7 million for Q3 2025, falling short of analyst expectations. This decline was primarily driven by a significant 19.2% drop in published listings, reflecting the difficult property market conditions.
As shown in the following chart of key financials and highlights:
Despite the challenging market conditions, Hemnet achieved impressive growth in Average Revenue Per Listing (ARPL), which increased by 20.9% year-over-year to SEK 7,477. This growth was driven by continued increasing demand for the company’s value-added services and higher conversion rates to premium packages.
The following chart illustrates the strong ARPL growth trajectory:
However, the decline in listing volumes negatively impacted overall financial performance. EBITDA decreased by 5.9% to SEK 195.4 million, with the EBITDA margin contracting to 53.3% from 57.4% in the same period last year.
The following chart shows the decline in net sales and EBITDA over recent quarters:
Detailed Financial Analysis
The presentation provided a comprehensive breakdown of Hemnet’s financial performance across different revenue segments. B2B revenues showed growth, primarily driven by property developers (+14%), while property seller revenues declined by 2% due to lower listing volumes. Real estate agent revenues increased by 2%, but advertiser revenues fell by 8% amid a challenging market environment.
The following financial summary highlights key metrics for Q3 2025:
The EBITDA bridge analysis revealed several factors contributing to the 5.9% year-over-year decline:
Despite the pressure on sales and EBITDA, Hemnet maintained strong cash flow generation, with free cash flow increasing by 35.5% year-over-year to SEK 807.6 million on an LTM basis. The company’s leverage ratio improved to 0.5x, down 0.1x compared to Q3 2024.
The following chart illustrates the company’s cash flow and share buyback activity:
Strategic Initiatives
In response to market challenges, Hemnet announced several strategic initiatives aimed at strengthening its market position and driving future growth.
A key initiative is the launch of a pilot for a new success-based product offering, where sellers pay only when a property is sold. This pay-upon-sale model aims to lower the barrier for sellers to advertise on Hemnet and is being tested with 10 real estate agent offices from October to December 2025.
"Hemnet shares the risk with the seller to maximize the chances of a successful sale - because we know that Hemnet works," the company stated in its presentation.
Additionally, Hemnet is pursuing strategic partnerships with real estate agents, offering franchisors and brand owners enhanced visibility, brand exposure, traffic generation, and new product features. These partnerships are designed to help sellers and agents fully leverage Hemnet’s potential.
The company’s premium Hemnet Max service continues to show strong results despite relatively low penetration:
Hemnet is also investing in product innovation, including a new data tool called Hemnet Insights that provides agents with valuable market data, and an updated offering for property developers set to launch in early 2026.
Forward-Looking Statements
Despite current market challenges, Hemnet remains committed to its long-term growth ambition of 15-20%, a target that stands in contrast to the current negative sales growth. The company plans to focus on value-based pricing, increase marketing investments, and expand strategic partnerships to drive future growth.
The presentation emphasized Hemnet’s resilience in a difficult property market and highlighted the company’s ability to generate strong cash flow despite headwinds. Management expressed confidence that the new strategic initiatives, particularly the pay-upon-sale model and agent partnerships, would help strengthen Hemnet’s position in the market.
However, investors should note that the company faces continued risks from the challenging property market, with longer sales cycles and high supply levels potentially impacting transaction volumes in the coming quarters. The stock’s current price, which is significantly below its 52-week high, reflects these ongoing concerns despite the company’s strategic efforts to adapt to market conditions.
Full presentation:
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.