Earnings call transcript: VNV Global AB Q4 2024 sees positive stock movement

VNV Global AB’s earnings call for the fourth quarter of 2024 highlighted a mixed financial performance, with a notable market reaction. The company’s stock rose by 5.04% following the call, reflecting investor optimism about its strategic focus and portfolio achievements. Despite a 13% decline in net asset value (NAV) for the year, the firm reported significant progress in its portfolio companies, with 81% now EBITDA positive.

Key Takeaways

• VNV Global’s stock increased by 5.04% post-earnings call.
• 81% of portfolio companies are now EBITDA positive.
• The company anticipates a 25% revenue growth from major holdings.
• NAV declined by 13% for the year.
• Focus on achieving a net cash position and reducing debt.

Company Performance

VNV Global AB ended the quarter with a net asset value of SEK 580 million, a slight 1% increase in dollar terms. However, the annual performance showed a 13% decline in NAV, following a 5% drop in the previous year. The company reported $60 million in cash and $77 million in debt, with a strategic focus on reducing this debt and achieving a net cash position.

Financial Highlights

• Net Asset Value: SEK 580 million, up 1% in dollar terms.
• Cash: $60 million.
• Debt: $77 million.
• Portfolio EBITDA Positive: 81%.

Market Reaction

VNV Global AB’s stock rose by 5.04%, with the last closing value at 21.02. This increase reflects investor confidence in the company’s strategic direction and the positive performance of its portfolio companies, despite the annual decline in NAV.

Outlook & Guidance

The company expects a 25% revenue growth from its major portfolio holdings and significant margin improvements. The acquisition of GET is anticipated to close in Q1 2025, supporting the company’s focus on portfolio profitability and strategic expansion.

Executive Commentary

CEO Per Billot expressed optimism, stating, "We really see that there’s some good signs in the market pricing in our portfolio." Investment Manager Dennis Mohamad added, "We are very certain this growth will accelerate now in 2025," highlighting the company’s confidence in future performance.

Q&A

During the earnings call, analysts inquired about the company’s approach to listed investments and the regulatory environment for micromobility. Executives detailed growth strategies for key portfolio companies, emphasizing their focus on profitability and market expansion.

Risks and Challenges

• Continued NAV decline could impact investor confidence.
• The company’s debt level poses a financial risk.
• Emerging market exposure may introduce volatility.
• Regulatory challenges in the micromobility sector.
• Competition in ride-sharing and online health markets.

Full transcript - VNV Global AB (VNV) Q4 2024:

Bjorn von Silves, CFO, VINV: Welcome to Vire Global’s 4th Quarter and 12 Months 2024 Report Conference Call. On the call today, we have Per Billot, CEO Dennis Mohamad, Investment Manager and myself, Bjorn von Silves, CFO of VINV. As per usual, Per will start with a summary of the developments during the quarter, following by an overview of the more meaningful portfolio constituents. After that, we will open up for Q and A. And as a reminder, if you want to ask a question, please use the Q and A function here on the Zoom (NASDAQ:ZM), and we’ll try to address it towards the end.

With that, I’ll hand over to Per. Please go ahead.

Per Billot, CEO, VINV: Thanks, Bjorn. So we’ll kick off with this usual sort of you’ve seen this in the report. NAV is up like 1% in dollar terms to SEK580,000,000 which is Swedish krona is just under SEK 49, that’s up 10% of Swedish krona. For the year, we’re down like a bit over to like 13%, just under 13%, which follows down like 5% the year before. And that’s all sort of negative, but it sort of feels still like a consolidation period after that sort of monstrous drop in 2022, start of the Ukraine war and all of that.

So consolidation period and overall, I mean, we’ll talk more about it as we go through the report here, but we really see that there’s some good signs in the market pricing in our portfolio, but also elsewhere gets done at a premium to NAV rather than a discount. And the companies are doing well. So although there’s no dramatic sort of changes in the NAV as of this report. And still, it’s already in some consolidation period. It really feels like something’s starting to happen.

But as we’ve talked about at length, I think, and sorry for repeating ourselves, but over the course of this year, it’s really been the focus has really been sort of to, 1, get into a net cash state at our balance sheet and pay off the debt. We’ve sold stuff throughout the year. 1st sort of portfolio around Booksy and then GET yet to close, but we think we’ll close in the Q1 this year. And then a smaller portfolio in these last quarters and bringing that to $148,000,000 and we’ll come back to the but that’s very much been the focus. But now with GET moving into sort of its closing phase, then we’re really in net cash and then can start to focus on not selling assets and paying down debt, but instead investing.

And as we sort of talked about again and again, it’s really with our stock trading where it is, there’s nothing that sort of compares well to it. So that’s out there. And the other big sort of theme, if you will, during the course of 2024 is this trying to help the companies to get into profitability. And yes, the direction of travel is the right one, although there’s, of course, more work to be done. So 81% is now EBITDA positive.

We have we’ve sort of we’ve not broken out VOI now because VOI is actually EBIT positive. And then of course also EBITDA positive. But at the VOI level we need to talk about EBIT because they depreciate these scooters. So 80% of the portfolio positive in this manner and happy about the direction of travel, but not contempt because our ambition really is to sort of have one of our holdings and ideally several holdings get into that sort of profitable growth and profitable to the extent that cash also goes back to shareholders. We’re really we the ambition is really to have one of our entities here develop portfolio develop into a dividend payer that can give us a stream of cash flow in good times and also in bad times, so which decreases the volatility around the portfolio and can make you able to sort of to access liquidity also when times are tough.

Now I think we’re starting to get through that consolidation phase, but nevertheless really this direction of travel is of course very, very important. Yes, balance sheet. Bjorn, do you want to run us through these next couple of slides?

Bjorn von Silves, CFO, VINV: Sure. Happy to. Yes, and also quarter ended with, as Per mentioned, net asset value of just below SEK 49 per share or $4.44 per share, down 1% in dollar terms all quarter and up roughly 10% in S and T. Notably, we closed the quarter with approximately $60,000,000 in cash and cash equivalents, including small liquidity management investments. And the debt now stands at $77,000,000 and it’s the bond that we refinanced earlier this quarter.

If we move to the next slide, I thought I’ll just run through the main developments during the quarter in terms of fair value change and getting from the start, blah, blah, car, large holding was down 9% during the quarter. The valuation is, as a reminder, derived from some of the parts valuation that we further refined during the year. The fair value change during the quarter is driven by lower adjusted peer multiple as well as a weak euro relative to the USD. By year end, Galakor position represents approximately SEK 17.5 per share or 36% of the NAV. Moving down to GET, flat valuation as it’s still being based on the ongoing transaction, which we now expect to close during the Q1 of 2025.

And GET represents roughly SEK 7 per share. And moving on to VOI, which is the largest uplift during the quarter, up 26% driven as we move the valuation from last transaction based valuation based on transaction in early 2024 to a forward looking EBITDA based model here at year end. VOI now represents SEK 8.5 per share. And these 3 in aggregate represent roughly SEK 33 per share or just below 70% of the total NAV. Again, cash increased over the quarter to roughly SEK 60,000,000 And with that short introduction to the movers of the P and L, I’ll hand it back to Per to go through further down in the portfolio and then open up for Q and A.

Per Billot, CEO, VINV: Are you done with this slide? I think I guess this just illustrates we talked about, yeah, in a with some colors. Good, yeah. Okay. So the portfolio is something you will have seen before.

The change here is the void on the back of this new mark is a little bit higher than GET. And also in the portfolio, a company we may not have talked about before, but it’s Flow Palta that they show up sort of in these top 10 at around a percent. And that’s not because we bought or sold anything, but we’ve had them on 2 lines before and they’re really sort of the same company. Palta is the holding company for Flow. So Palta has a few different it’s like a little V and V and they have different portfolio holdings, but the bulk of the portfolio is really Flow.

So it’s really the same thing. So Flow, as you remember, is the world’s largest period tracker and women like a digital platform for women’s health, but with this with the base around the period tracker, which we were very excited about and very happy that we own at least a piece of it and shows up now. But anyway, that’s not a transaction. It’s just a rebooking or sort of putting 2 things that are really the same thing into one line instead of 2 lines. We’ll flick you through a couple of these different sort of portfolio holdings to give you an update.

I think the background of Blah Blah Carr, you all know, I think I mean, as Bjorn said, it’s marked down during this quarter, which was really sort of a reflection of that the political sort of volatility, for the lack of a better word, in France is having some effect because they need a law to be passed to get their income stream around energy saving certificates to come back on. So for technical reasons that law was taken out of service in the summer. And then of course there’s been a lack of a government to sort of process laws. And then there was a government and then now this new government is just taking time. We expect it to come back at a slightly lower level than before, but still good sort of income stream for the company.

And the uncertainty, if you will, around that is I think that’s the best way to describe that the market is coming off a bit. Apart from that, there’s many, many positives around Labarcar. Staying on this energy saving certificate point, as we’ve spoken about before, it’s now being launched. It has launched in Spain, so which is very encouraging. Spain is still smaller in terms aggregate terms than France, but still sort of a meaningful contributor cash wise.

And I’d also say that for us financial analysts, I think it’ll be very productive to sort of see these kind of income streams not being a single country sort of affair, but also in several countries to sort of make it into something that’s more diversified and hence stable. I think the good thing with this law being taken out of service and back on in France is that it’s been you could say that it’s been taken out in the backyard and kicked around and now it’s back in a more and more robust form. So we can also sort of put a fuller value on it when we look at it as a sort of a sum of the parts or however you sort of would approach to sort of value grab a car. So positive that Spain is coming on as well for multiple reasons. Other than that, the acquisition of the bus marketplace in Turkey was, of course, closed and is very positive.

That company is doing really, really well. It’s big, biggest in Turkey, 2nd biggest in the world and after likely red bus in India. So these bus marketplaces in emerging markets and the fragmented nature of them really gel well with the car business, the carpooling business that’s course the core of Blah Blah Car. And Turkey is a very interesting emerging market and it’s big there. Speaking of India, where there is an equivalent to Obilet in red bus is in market where the operations of Blah Blah Car really has taken off of late.

I mean, they’ve been active in India as long as we’ve been around the company, but it’s been small. And as with marketplaces, you can’t really force the growth on it. It takes the growth will sort of have to go on and on itself. But India has sort of compounded well over these years. It’s now starting to become a big thing, unmonetized, so adding to a GMV level, but not yet revenues or even less earnings, but getting to a very, very interesting size.

What else on blah, blah, car? Yeah, I mean, the company overall is doing well. I mean, packs, passengers is growing. That’s a good sort of good pointer for GMV, it’s growing by about 20%, 25%. And then revenue moves around a little bit country per country.

And these energy savings certificates in France are obviously sort of lowers revenue growth there, but will come back on at some point and then get them back on. But if you look at GMV overall, some of it’s monetized, some of it’s not. Passengers driving GMV, then you’re looking at like 20%, 25%. I, yeah, I think I think that’s a that’s sort of a quick update on blah blah car. Next (LON:NXT) out is Voy.

Dennis, could you run us through Voy?

Dennis Mohamad, Investment Manager, VINV: Happy to, thank you. VOI, as you all know, it’s a leading European microbrewery operator, operates e scooters, but also e bikes across several around 100 cities in Europe. If you go to the next slide pair, the big news Envoy, which happened at the very beginning of Q4, but before we actually released our Q3 report, so we already talked about it, is that they raised a bond, first of its kind in the micro mobility space. It’s a €50,000,000 bond, 6.75 percent spread over a year over year duration and part of a larger €125,000,000 framework. This will enable the company to invest into growth CapEx for the first time in quite a few years.

So we’re very excited about that. And if we go to the next slide again, the other big news which came out yesterday is that they closed 2024 with positive adjusted EBIT for the first time in the company’s history and also the 1st microbility company in this space to do so. They grew revenues roughly 13% on an annual basis at Voy. That growth accelerated during the Q4, which was up 33% versus Q4 of 2023. So growth accelerating during the year.

They closed the year with roughly 8 percentage points higher vehicle profit margin. The vehicle profit margin you could think of is a good proxy for gross margin in this industry reaching 57%, So that’s revenues less charging logistics and repair costs. So quite a big kind of movement there. This all resulted in roughly 17,000,000 euros of adjusted EBITDA and around €100,000 of adjusted EBIT. Obviously, a big milestone.

The company is now fully profitable. And what’s very exciting is that this growth, that that, you know, 13% isn’t maybe super high growth, if you look, you know, overall portfolio, but we are very certain this growth will accelerate now in 2025, given the proceeds from the bond. So as you can see on the far left graph here on this slide, the black bar sorry, the black line saying that the average fleet size has been roughly 93,000 vehicles will grow quite significantly. And as you can see historically, that is a good proxy for revenue growth. As we’re expecting the bond proceeds to really fuel growth at Voi and to in parallel with that continue to see margin expansion.

So a profitable year all the way to the last row, so to speak, in 2025. So it’s on the back of this that we wrote up VOI, 26% took it from the last transaction, which was an early Q1 ’twenty 4 event to a model that looks at EBITDA I think that’s it on voice our one final thing they you know they continue to win tenders they have the highest regulated market share in the industry still they won tenders in France Spain Germany and Sweden in Q4 as well so that’s also very encouraging to see that the the motes are getting are getting stronger and stronger as we go along.

Per Billot, CEO, VINV: Thanks, Dennis. Going on here then GET, we yeah, we it’s taken much longer than expected to get the antitrust in Israel to approve the acquisition of GET by Pango. Pango is one of several parking apps in the country and GET you know what it is. We have good reason to believe though that and what we understand is that our expectation is that this will close in this Q1. And there’s been some a lot of interaction with the authorities around this of late, which we think has been very productive.

And so when we talk next time, we think this will have closed. In the meantime, the company is doing very well. It’s I mean, it’s growing. It’s like $13,000,000 or so of EBITDA last year, 2024 and big, big cash generation. So cash and cash equivalents.

So at the balance sheet, it’s like $60 plus 1,000,000 no debt. So this is really sort of a solid company. And yeah, there’s the we don’t expect we’ll own it for very long, but but it’s still good to see the company performing well. Next up is Newman and Dennis, yeah, you take us through Newman?

Dennis Mohamad, Investment Manager, VINV: Happy to so Newman is an online health clinic focusing on men’s health historically been focused a lot on issues such as verticals such as erectile dysfunctions and hair loss but now a lot of the growth and a lot of the revenues are coming from the their weight loss vertical which was launched about a year or 2 ago they closed a very strong 2024 served more than 215,000 patients in the UK they grew revenues more than 130% year over year If you compare December of 2024 to December of 2023, it was 200 percent growth, so growth accelerating throughout the year there as well. And they are EBITDA profitable as well. A lot of this growth is obviously coming from GLP-one related treatments and we’re seeing this growth continuing well into 2025 as well and we expect quite significant growth also for 2025 alongside continued profitability on the EBITDA level. It’s on the back of a strong 2024, continued growth in 2025 and strong peer multiple trading that we wrote up Newman this quarter. So we carry it now our 17% stake at $45,000,000 as per Q4.

Per Billot, CEO, VINV: Great. Onwards to Housing Anywhere, not so much to report about there. The company is performing sort of as per expectation and takes a long time to build sort of these marketplaces, but the opportunity is large. And there’s not there’s just not that much sort of new that’s happened since we spoke last time. So we’ll press on here and go to Breadfest.

And Bjorn, could you walk us through the update on Breadfest?

Bjorn von Silves, CFO, VINV: Yes. No, as a reminder, Breadfest is Egypt’s leading online grocery brand and quick commerce business. Deliver groceries under 60 minutes from 39 different locations. And here, I mean, the company continues to have very strong momentum. They have 6,000 SKUs and deliver now close to 1,000,000 orders on a monthly basis to over 300 1,000 active users.

We own 9% of the company and value is on the basis of the transaction that happened mid last year. I think, I mean, company is doing well. Egyptian macro, a little bit more stable. And also, the vast majority of these 39 different fulfillment points are completely profitable. So very exciting prospects here in our view.

So that’s the short update on Breadfest. And then also Book and Direct, as a reminder, the leading beauty booking Marketplace and SaaS service for the beauty industry in Sweden, 13 ks merchants, 2,000,000 monthly users, strong market position, very, very dominant. The last year, mid last year, onboarded a new very experienced CEO, Niklas Grawie, who’s run Hitta previously, to come in to drive further growth and profitability and especially accelerated growth. We own 50% of the company and values based on the EV revenue multiple model. Over to you, Sverd.

Per Billot, CEO, VINV: Great. I think that sort of concludes the stuff that we wanted sort of to introduce to you. What I forgot to say on the overall sort of portfolio, when we look ahead, we wrote about this in the report, but just to mention it here too, When we look ahead to 2025, we see sort of the well, the bulk of the portfolio, the larger holdings here getting the portfolio to 25% revenue growth, but we really see margins profit margins increasing. So at sort of an earnings level, much, much higher growth than that. So good outlook over the year that we’re now in.

So with that, I thought we’d sort of organize ourselves to take any of any questions that you may have. Do you want to walk us through how that works again or?

Bjorn von Silves, CFO, VINV: Yes, sure. As a reminder, there is this Q and A function on the Zoom where you can type in your question or if you want to also raise this hand, I will try to give you open up your mic. But I mean, we have some questions here to start. The first maybe for Per question, if and when VOY or Blah Blah or any other of the more mature companies IPO, what will VNV’s general stance be? Do you retain the shares in the public market?

Or do you strictly avoid holding listed investments?

Per Billot, CEO, VINV: Yes. We’ve it’s we don’t have it like a strict thing that we can never hold listed things. We don’t there’s one aspect to it is that since we are listed and all of you guys who can own our stock are also able to own listed stocks. It’s sort of less of a point for us to sort of have listed portfolio holdings because you can invest into that yourself. In the past, we have done different things when our portfolio holdings have gone public.

Sometimes we’ve sort of given them out on a pro rata basis, but and sometimes we’ve sort of held on to them and then sold them over time. I think for that angle, you know, in that perspective, which I think is sort of relevant for also for when we sorry, when some of our existing portfolio holdings go public in the future, we’ve sort of taken approach that if we can if the sort of return profile of the holding is sort of similar to what we’re looking for, which is sort of well, really sort of 25% ish IRRs is what we’re expecting or that’s when we get paid in our sort of stock option like programs. If that’s present and also that we can sort of still play a role in the company that we if the situation has been, which is sort of typical that we’ve been present at the company for a long time and can be sort of a more active and value adding owner to the company, we may stick around. But of course, you’ve seen us over these past sort of decade, we’ve been very active in buying back our own stock and we’ve been very we can’t really stay away from our own stock when the trade’s at a discount.

So if you can can sell stuff at NAV and buy at a discount, that’s obviously something that’s very attractive and we’ve been known to do that. So, that’s also something. And finally, we really think it’s good for our type of companies to have portfolio holdings that mature to the that yeah, that grow and mature to the level where they pay dividend to us. So we in such a company, VoIP, for example, it becomes a dividend payer and lists and we think there’s an upside and we’re sort of obviously been very close to the company since day 0. That may be one that we keep and then

Dennis Mohamad, Investment Manager, VINV: hold on

Per Billot, CEO, VINV: to it and take the dividends and sort of reduce the volatility around our portfolio through that dividend stream. And a long winding answer, I hope it gives you some help.

Bjorn von Silves, CFO, VINV: Thank you. Another question on Blabla here. Could you provide some color on Blavacar’s performance outside this volatility around the energy certificates? How’s the core business been doing?

Per Billot, CEO, VINV: Yes. So the mature markets of Europe like France is not high growth, it’s sort of flattish growth, but very stable and earnings wise. It’s sort of like a very mature classified. In Sweden, we have Hemnett here, it doesn’t grow much, but it’s the market doesn’t grow, but the company’s profitability may grow and sort of very high barrier to entry, that sort of thing. So that, I think, would be a fair description of Europe overall.

Obviously, Spain is growing a lot now and energy certificates is being sort of introduced and that also has a marketing effect and it’s that’s exciting. But overall, sort of the mature markets growing less profitable. And then you got the emerging markets, which are just killing it in terms of growth. I really I talked about India before, this Brazil, Mexico that are showing strong growth and but are yet to be monetized or very, very early in the monetization. So it doesn’t really show up on the revenue side of things.

But that strong growth is very encouraging because it also gets you to a state the size states where you can where monetization becomes a very low hanging fruit, so important. And then bus on the bus side of things, yes, the emerging market ones, Obulet essentially are is doing very well.

Bjorn von Silves, CFO, VINV: Thank you. And then perhaps a question on Voi. For Dennis, what’s our latest take on the current regulatory environment? Have there been any new developments as of late? And how does voice roadmap for tenders in 2025 look?

Do they need to be in new markets? Or can they deploy more scooters in their existing markets? A bit more color on that fleet development.

Dennis Mohamad, Investment Manager, VINV: Happy to. On the first question on the regulatory environment, I think the trend that we’ve seen for the past couple of years is continuing, which is more and more cities across Europe going for tenders. This is very good for the users. It’s very good for the cities and it’s good for the operators because you get fewer players. The ones that are serious are the ones that have a chance at winning.

You get less competition as an operator And for the users is obviously better because because you don’t need to have 10 apps just to ride e scooters in any given city. So each operator also gets to more of a critical scale in order to be able to operate a profitably. So we’re seeing that, that that trend continuing we’re seeing quite a few cities going for retenders so cities such as Oslo I think is going for their 3rd or 4th retender this year and the good news there is that we’re seeing that the tender duration, the duration of the contracts are actually getting longer. We saw it in France and Le Havre, for instance, which I believe was a 4 year contract that VOY won in the last quarter. So a general trend of more cities tendering and that the contracts are getting longer, which is good.

In terms of growth or where you know fleet allocation for 25 and onwards in given that the competitive landscape is kind of weakened with some shakeout we saw We saw the dot tier deal about a year ago. And with companies such as Berg going out of business in Europe, etcetera, we are seeing more space, more white space in existing markets. So that would be one source. But from the 100 cities they are in today, I’m certain that the Voig management team I know they have identified at least 100 or maybe even 200 more cities in Europe that they want to enter. Some of them are in existing countries that they’re already operating in, and some of them are Eastern Europe, getting strong in Southern Europe and some regions in Central Europe as well.

Today, the stronghold is really in the DACH region, the Nordics and the UK and Ireland, I would say. So there’s quite a lot of land to grab still for Voi. So a combination of both is probably the short answer.

Bjorn von Silves, CFO, VINV: Thank you. And then I have another question here on could you add some color on the $10,000,000 of aggregate proceeds you highlighted some after the end of the period in the last Q3 report, did that take place after around NAV? So those exits will happen in the long tail. On aggregate, they got exited above NAV. And we also noted in the last report that our pro form a cash would be at around $20,000,000 at the end of Q3, including this cash.

The main reason why it’s not closer to $20,000,000 here at the year end, it’s in fact $16,000,000 is big movements in FX given the fact that our debt is SEK denominated. We bought SEK for those additional proceeds and that’s why we ended up with $60,000,000 in cash at year end. And with that, I think we have gone through all of the questions for now. And unless there’s anyone popping up in the next few seconds, I’ll hand over to Per again to finish off the call.

Per Billot, CEO, VINV: Great. Well, you know where to find us. So please just reach out if there’s anything that we haven’t covered that you want to talk about. The door is open or we’ll answer the phone or the email. But thanks for participating and we’ll speak to you all.

Will there be an annual report out before we speak again? Because we’ll do this exercise again for the Q1, which is going to be exciting. So thank you.

Bjorn von Silves, CFO, VINV: Thank you.

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