Baltic Classifieds Group PLC (BCG) Earnings Call Transcript & Summary

Good morning, everyone. Despite a challenging market environment, BCG once again demonstrated the resilience of its business model. We delivered a solid financial results with both revenue and EBITDA growing by 7%, while maintaining our industry-leading EBITDA margin of 78%. The significant headwind came from Auto24 business line, whereas the introduction of the new car tax in Estonia reduced listing volumes. Excluding this one-off impact, the rest of the group delivered double-digit growth. Looking across our verticals, Real Estate was our strongest performer, growing by impressive 17%. Jobs & Services also had an excellent year, accelerating from 7% growth in the first half of the year to 11% in the second half of the year, resulting 9% growth for the full year. Automotive remained stable despite significant volume headwinds. Meanwhile, our Generalist marketplace continued to deliver steady growth of 3%. Given our exceptionally strong balance sheet and attractive market valuations, we significantly accelerated our share buyback program. By mid-June 2026, the company has repurchased over 10% of its issued share capital. Finally, I am pleased to announce that the Board has proposed a final dividend of EUR 0.031 per share, representing a 19% increase compared to a year ago, subject to shareholder approval at AGM. One of the key indicators we closely monitor is our leadership position related to our nearest competitors. I'm pleased to report that our leadership remains exceptionally strong across all major marketplaces with traffic levels ranging from 5 to more than 60x those of our closest competitors. Overall, our traffic mix has remained very stable. The majority of the visitors continue to access our marketplace directly, which reflects the strength of our brands and loyalty of our users. The traffic from GenAI platforms remain neglectable. While this channel is growing, it has primarily shifted traffic away from traditional search engines, while the direct traffic continues to grow. I think this is a very important thing to highlight. Our people continue to be one of the BCG greatest strengths. In our latest employee engagement survey, more than 95% of employees said they are proud to be part of BCG. This level of engagement is reflected in our exceptional average employee tenure of 8 years, which is remarkable for a technology company. We also remain committed to diversity and inclusion. Our workforce is well balanced with almost equal gender split and women hold 50% of leadership positions. This places BCG among top performers within FTSE 250 of our gender diversity. Finally, we continue to make a good progress on sustainability. Since 2022, we have reduced our CO2 emissions by 75%, supported by our continued transition to renewable energy, which now accounts for 88% of our total energy consumption. Now I will hand over to Lina to speak about finance in more details.

Thank you, Justinas. Good morning, everyone. I will now take you through the financial results in detail, starting with the revenue performance. On the right side, you see total revenue information over the past 2 years by business line. On the left, the classified revenue accounted for 91% of group's revenue and by business line as well. The B2C revenue, that's business plan subscriptions and CPC customers using self-service, mainly individuals. The group delivered revenue of EUR 88.5 million for the year, a 7% increase on the prior year. Growth was driven by continued monetization progress across our 4 classified revenue streams. And last spring, we implemented C2C pricing changes across all our major platforms, and these have contributed to performance throughout the entire year. And as in previous years, we introduced D2C pricing and packaging changes from September and October. Arturas will cover the key drivers of growth in more detail later in the presentation. But in summary, real estate representing 29% of group revenue was again our strongest performing business line, with revenue growing 17% to EUR 26 million. D2C grew 20% of real estate and C2C grew 12% Auto is representing 36% of group revenue and was flat at EUR 31.5 million. Auto B2C grew 11%, but this was offset by a 9% decline in C2C revenue. Jobs & Services generating 1/5 of the group revenue grew 9% to EUR 17.4 million, with both B2C and C2C each growing 9%. Generalist being 15% from group revenue and predominantly C2C grew 3% to EUR 13.6 million. In total, B2C revenue representing 54% of group revenue grew 13% and C2C representing 37% of group revenue grew 1%. The remaining 9% comprises advertising and ancillary revenues, which together were broadly flat at EUR 8.1 million. I'm now turning to cost and profitability. People costs remain our largest operating expense, representing approximately 14% of group revenue and almost 65% of operating costs before depreciation and amortization at EUR 12.8 million. Programming development costs are within people costs and handled in-house. The 2% increase reflects 3 main factors: a growth in headcount. We ended the year with 163 full-time employees. That's 7 full-time employees more than a year ago. Annual salary reviews in line with Baltic wage inflation, approximately 10%. And these were significantly offset by performance share plan, PSP costs decrease 2026 has EUR 0.3 million cost in relation to PSP, down from EUR 1.9 million in the prior year. That's reflecting performance below the PSP targets. Marketing costs represent 1.5% of revenue and the majority of group's traffic is direct. The traffic is minimal. And this year, we had some targeting marketing expenditure, particularly across social media channels in the younger audiences. IT costs, which is third party services costs continue to be 1% of revenue and other costs, predominantly administrative and data acquisition costs, 5% of revenue. Our total operating costs, excluding depreciation and amortization were EUR 19.9 million, an increase of 8% on the prior year. Maybe back on previous slide, EBITDA grew in line with revenue, 7% to EUR 68.6 million. The EBITDA margin was maintained at 78%, unchanged from the prior year. Below EBITDA, depreciation and amortization decreased 24% to EUR 8.3 million, and the principal driver was a 26% reduction in amortization of acquired intangibles, reflecting the full amortization of customer relationship assets recognized on the 2019 and 2020 acquisitions. This reduction is the reason why operating profit of EUR 60.4 million grew faster than EBITDA at 13%. Operating profit adjusted for the acquired intangibles amortization grew in line with EBITDA. Now moving to our cash generation, debt and leverage. Cash generated from operating activities grew by 5% to EUR 69.9 million and maintaining our cash conversion ratio at 99%, consistent with recent years and demonstrating the quality of our earnings. After income tax and net interest payments, net cash inflow from operating activities was EUR 60.4 million. Looking at the net debt bridge, we started the year in a near net cash position with net debt of EUR 4.4 million. And over the course of the year, we drew on new debt facilities to fund accelerated share buyback program. I will expand on the capital allocation more on a later slide. In January 2026, we refinanced our existing debt facilities. The new arrangement with the bank comprises a EUR 125 million term loan facility, which may be drawn in tranches and a EUR 20 million revolving credit facility. At the same time, we repaid in full the EUR 15 million remaining under the previous facility. And by the end of financial year, EUR 73 million had been drawn under the new term loan. Our operating cash flows combined with partial drawings under the new debt facility funded share repurchases for cancellation totaling almost EUR 77 million. That's the payment amount and purchases of company shares to EBT for EUR 3.1 million alongside dividend payments of EUR 18.7 million during the year. We closed the year with net debt of EUR 46.2 million, representing leverage of 0.7x EBITDA, up from 0.1x at the prior year-end. And since April 2026, a further EUR 45 million has been drawn to continue the share buyback program, bringing the total dividend drawings under the new facility to EUR 118 million as of the date of this announcement. The remaining term loan capacity is EUR 7 million with the full EUR 20 million revolving credit facility remaining undrawn. In this slide, you see the consolidated profit and loss summary. The revenue, EBITDA, operating profit and adjusted operating profit has been explained earlier. And before I go to the rest of the lines, the only adjustment to our financial performance metrics is amortization of acquired intangibles with the deferred tax impact. Starting from net finance costs, it accounted to EUR 1.8 million, a reduction from EUR 2.4 million in prior year. And although interest expense increased in the second half of 2026 following drawings under the new debt facilities, this was more than offset by a lower average debt balance during the first half of the year and also interest income earned on the cash balances. Profit before tax grew by 15% to EUR 58.6 million and the effective tax rate increased from 12% to 13%, primarily as a result of corporate income tax rate in Lithuania rising from 15% to 16%. Income tax expense was EUR 7.7 million. From 2026, the Lithuanian corporate income tax rate increases from 16% to 17%. And following the repayment of historical intercompany funding, the group Estonian operations are now generating distributable profit. Now under the Estonian and Latvian tax regimes, profits are taxed only when distributed. The group continues to assess capital allocation opportunities, including reinvestments and M&A. And no decision has been made to distribute profit from Estonia or Latvian subsidiaries. But if we were to decide to do so in the foreseeable future, we would recognize an immediate one-off tax charge of around EUR 6 million on accumulated profits. And thereafter, profits generated in Estonia and Latvia would give rise to an annual deferred tax charge at the applicable rates of 22% and 20%, respectively, to the extent they are expected to be distributed. Accounting profit for the year grew 14% and adjusted net income, the reference metric used to our capital allocation policy grew 7% to EUR 68.1 million. It add back the post-tax impact of acquired intangible amortization and the associated deferred tax. And on a per share basis, adjusted basic EPS grew 9% to EUR 0.123 and basic EPS grew 16% to EUR 0.108. Both EPS measures grew faster than the net income growth, reflecting the reduction in the weighted average share count resulting from the share buyback and cancellation program. I will now turn to our capital allocation policy. Now since IPO in 2021, our capital efficient policy has been to return materially all adjusted net income to shareholders, historically through dividends of around 1/3 and the balance through share buybacks and debt repayment. And during the first half of 2026, we became net cash positive. In 2026, the Board concluded that the company's share price didn't reflect the underlying fundamentals or long-term prospects, and we considered market concerns regarding the long-term impact of AI to be materially more cautious than our own assessment and viewed recent trading headwinds as temporary. Accordingly, we introduced levers to fund an accelerated share buyback program. the EUR 145 million debt facility secured in January provided the capacity to execute the strategy. By year-end, we had repurchased and canceled 7.6% of company's issued share capital, increasing to 10% by mid-June. Now following shareholder approval in May, we intend to continue repurchasing shares subject to market conditions, available authority and the group's capital position. At the September AGM, we expect to seek authority to repurchase up to 15% of the company issued share capital. As always, these authorities represent maximum authority rather than intention to utilize it in full. Continuation of the accelerated share buyback program beyond the group's existing financing capacity would require additional debt financing. And the Board has not established fixed thresholds for either leverage or share price. Capital allocation decisions will continue to be based on information available at the time. Turning to dividends. The Board has also adopted a progressive ordinary dividend policy. And under this policy, the ordinary dividend will go broadly in line with adjusted net income while preserving flexibility in the group's broader capital allocation framework. Accordingly, we are recommending a final ordinary dividend of EUR 0.028 per share, together with a special dividend of EUR 0.003 per share. Together, this maintains our distributions for 2026 at approximately 1/3 of adjusted net income, consistent with our previous policy during this transition year. And in total, the dividends in respect of financial year 2026 would amount to EUR 0.044 per share, which represents a 16% increase on the total dividend paid versus last year. And finally, we will continue to evaluate value-creating investment opportunities, including M&A and share buybacks while maintaining flexibility in how those opportunities are financed. As announced today, this includes the acquisition of Cenubanka.lv, strengthening our data capabilities in the Latvian real estate market. This concludes the financial section of our presentation, and I will now hand over to Arturas.

Thank you, Lina. I will take over and will review our strategic progress across all business lines into the KPIs and provide an overview of key product development. Real estate was our clear growth champion this year. Revenue delivered a 17% increase to reach EUR 26 million. In the B2C segment, the monthly number of brokers grew by 3% and the number of clients reached a record high of 5,300. It was primarily driven by small brokers transitioning from C2C customers to become B2C customers. At the time, B2C ARPU increased by 16% to now EUR 252. The improvement was supported by pricing and packaging changes implemented in autumn. Besides ARPU growth, these updates were designed to encourage customers to use a wider scope and try out a wider scope of our services. They were also underpinned by a data product update from the previously acquired Untu platform. In the C2C segment, we achieved significant yield improvements. Revenue per listed ad grew by 26%, now EUR 80. These increases reflect the continued strategic shift towards premium longer duration packages. They are now chosen by more than half of our customers. This shift partly -- this shift partly affected an 11% decline in the number of listed ads. The market is hot and properties do sell faster. Concurrently, active ads declined by 6%. Consequentially, transactions required fewer listing extensions part of this listed metric. From a market perspective, activity strengthened across the region. This momentum was supported by lower interest rates and improving macro environment. Total transaction volumes increased by 5% over the past 12 months. Average apartment prices in both the capital cities also rose by 5% Lithuania was the main driver of this regional activity. Residential transactions here surged by 12%, and this surge was partly due to anticipated spending ahead of changes to the national pension system. And in April, individuals were allowed to redeem part of their pension savings freely. Our market leadership remains as strong as ever. KV and City24 combined had a 16x lead against the #2 in Estonia. While in Lithuania, Aruodas leads the next competitor by a record 62x. Our Automotive business delivered a resilient performance. Revenue remained flat at EUR 31.5 million. While total growth was muted, this headline figure marks a clear divergence between B2C and C2C segment. In the B2C segment, the average number of dealers declined slightly by 2% from record levels to 3,600 dealers. The decrease was primarily driven by weakened market conditions in Estonia, which accounts for now slightly more than 1/4 of all our auto business line. Conversely, B2C ARPU increased by 13%. This growth was driven by pricing packaging changes implemented in Lithuania during the autumn of '24 and '25. We strategically postponed B2C pricing adjustments in Estonia to support our customers during a challenging period. However, the package update was introduced there in May 2026 and is already in place. The C2C segment faced following headwinds during the period. Listed ads declined by 25%, active ads similarly by 26%. Despite this inventory pressure, yields improved substantially. Revenue per listed ads rose 22% to EUR 41. These gains were driven by our April 25 and March 26 price changes. Yield growth was supported by an increased consumer preference for premium longer duration listing packages that we intend to upsell that also include our car history check service, adding to an overall marketplace transparency. Overall, performance was impacted by 2 primary external factors. First, the Estonian car tax created a tough year-on-year comparable due to the transaction search prior to this introduction. And the transaction in the Estonian market dropped by 43% year-on-year. Second, the region experienced its coldest and longest winter in 30 years. The severe weather disrupted typical C2C activities during January and February. We provide a more detailed monthly chart to illustrate both of these effects in the appendices of this presentation. As a result of these factors, combined car transactions across both markets declined by 11%. Meanwhile, the average car price continues to grow at a moderate rate of 2%. Despite these challenges, we firmly maintain our leading market positions. Autoplius holds a 5x lead over its nearest competitor, while Auto24 holds 28x lead in their respective markets. Looking forward, it's encouraging to note that trading trends have improved since March 2026. Our Jobs & Services business line delivered strong growth. Revenue increased by 9% to reach EUR 17.4 million. Growth was closely mirrored in both B2C segment jobs and C2C segment services revenue streams. In the B2C segment, jobs RPU increased by 8% to EUR 496. This expansion was supported by targeted price changes. The total number of active employers grew by 1%. This increase reflects our continued ability to successfully penetrate the long-tail customer segment. The C2C for Jobs & Services segment achieved a 12% increase in active list. The momentum was driven by an expanding client base and robust user engagement. While overall volume was healthy, the yield per active ad and services declined slightly by 3% to EUR 26. This compression was primarily due to a shift in the mix of service providers on our platform. Specifically, a high yielding service provider segment experienced a very high demand for them reducing the need to advertise in this hot market, supported by a boom in real estate. The C2C service segment saw a 12% increase in active ads driven by a growing client base and strong engagement. While volume was healthy, the yield per active ad services declined. Underlying labor demand remains well supported by a resilient economy. The stability is reflected by strong average salary growth of 8%. Finally, CVbankas firmly maintains a 5x leadership position over its nearest competitor. This established market share ensures we remain the primary destination for job seekers and recruiters in Lithuania. Our Generalist business line, which serves as a defensive component of our portfolio, delivered revenue growth of 3% to reach EUR 13.6 million. We achieved a significant 23% yield improvement on Skelbiu, our largest Generalist platform. Consequentially, revenue per listed app increased to EUR 10. These gains were driven by strategic pricing changes of both value-added services and listing fees, and increased consumer uptake of premium packages also supported. These adjustments offset a 13% decline in volume of paid listed ads. The largest Share of revenue from Skelbiu originates from vertical categories, such as auto, property services and jobs. Because of the structure, our own specialized vertical platforms act as its main competitors. Strategically, we are entirely comfortable with users shifting from general listings to our dedicated verticals. Our specialized platforms to provide a superior user experience and unlock higher monetization opportunities. Total inventory, including paid and free remained highly resilient through the period. Active ads declined by minus 2%, remaining very close to last year record levels. Crucially, our active counts encompass both paid and free advertisements from customers. This blended approach ensures our platforms remain the primary destination for organic traffic. It also serves as a powerful competitive moat built on unique content. Our Generalist sport will firmly maintain market leadership across their respective regions. Skelbiu stands as the fifth website in Lithuania. It currently holds a commanding 24x lead of its nearest competitor. In the Estonian market, OSA maintained a clear 2x. Moving on KPIs to our product development, we continue to execute on our strategic aim of investing in fit-for-purpose technology. Our approach to AI focuses on practical tools that reduce user friction and enhance platform efficiency, ensuring our marketplaces remain a definitive starting point for the Baltic population. At the CVbankas, the job seeker onboarding experience was significantly streamlined through the integration of AI-powered CV creation tools. Candidates can now upload existing documents to the platform. The system automatically purchase and populate the profile, removing the friction of starting a job search. This feature has seen a rapid adoption across the user base. 51% of all new CVs are now generated using that. As a reminder, CVbankas operates strictly as a closed ecosystem. Candidates maintain internal profiles on the platform rather than relying on external documents, CV documents. This structure results in a highly organized database covering a significant portion of the labor market. Consequentially, this asset provides us with a highly defensible and future-proof data mode. We also meaningfully improved the job search functionality of CVbankas through AI-powered matching. So job seekers no longer need to know the exact wording of the specific role title they're seeking. The optimized search engine now actually automatically identifies and displays jobs with similar meaning. On Skelbiu, we launched AI-powered image moderation to enhance platform safety. The service automatically checks user uploaded images for prohibited content. Furthermore, it enabled our moderators to review and improve moderation patterns directly. On the Automotive segment, we introduced AI-driven automation to the listing process on both Auto and A24. The system analyzes vehicle images, external technical data and user descriptions to automatically generate listing details. It also automatically populates key technical attributes of the vehicle. The automation reduces manual input for sellers, increases data accuracy and improve search relevance. In Real Estate KV, we introduced new service packages specifically for real estate developers. This initiative marks the shift away from shared broker plans, improving monetization while offering more targeted marketing and analytical tools for them. The also groups related listings under their prospective real estate development. The structural change follows the path of our where we developed segment where developer segment led revenue growth in the past couple of years. On Aurodas, we launched a new lead generation feature called Request a Viewing. The tool allows potential buyers to submit content details and preferred viewing times directly through the platform. By removing this additional barrier of a phone call, this feature increases total lead volume. Furthermore, it provides the marketplaces with deeper insights into the user intent. Strategically, we are building a comprehensive data layer across our online marketplace. This goal was furthered by our June 2026 acquisition of CVbankas business in Latvia. It's a leading Latvian real estate data and market analysis platform. CVbankas aggregates property transaction data from registries, listing information and market reports. It serves as a key business tool for brokers, appraisers, developers and financial institutions to assess property values in Latvia. Following our acquisition of Untu in Lithuania last year, CVbanka strengthens our proprietary data set. It provides the technical foundation for advanced market intelligence features across our footprint. And finally, it provides a structured transactional data required to develop agent-based interfaces. And thank you, and I'm handing back to Justinas.

Thank you, Arturas. The Baltic economies have experienced a remarkable growth over the past 3 decades, driven by a strong export, healthy labor markets, increasing productivity and a vibrant technology sector. The region also have benefited from a strong public finance, solid credit profile, steadily rising purchasing power. These fundamentals continue to create attractive opportunities for both our customers and BCG. Looking ahead, we remain optimistic about the economic outlook. In particular, Lithuania, our largest market, where over 70% of the revenue is generated, continues to be one of the strongest performing economies in the European Union, providing a solid foundation for our future growth. The group expects revenue growth of around 10% in 2027 with growth anticipated to be slower in the first half and faster in second half of the year. Real estate, Auto and Jobs are expected to be primary growth contributors, while Generalist is expected to remain broadly flat. Revenue growth outlook reflects confidence in our product pipeline and pricing and packaging changes, but cautious on the inventory trend. We expect the full year margin to be in line with previous medium-term guidance of mid-70s. So thank you for listening, and now we are open for questions.

I'm Alastair Reid From Investec. Three for me. Firstly, can you just talk a little bit more about some of your assumptions for the guidance? I mean, particularly in the auto segment, obviously, some sort of easier comps given the tax situation and also the weather sort of how much the kind of sort of super normal growth that you might see there sort of contributing to the guidance this year? Secondly, can you just touch a bit more on sort of competition in both, I guess, Lithuanian autos and also in sort of generalists with vintage and the like. How do you think about sort of marketing spends potentially going forward? And then lastly, just on sort of data products. How are you sort of thinking in terms of base launches and rollout, how you manage the pace of that in the context of any sort of dilutive effect on margins?

So I will speak about the guidance and competition and Arturas can cover the data question. So on the guidance, we feel confident in what's within our own control. So it is a pricing and packaging. We already implemented the C2C pricing in spring, and we scheduled to implement the B2C pricing in. We feel that underlying markets, especially in real estate, but also increasingly in automotive and also in jobs is well supported for the pricing events. And we will target yield expansion here in line with our previous practices. So -- and we have a high expectations on the pricing events. That's why we are planning the second half growth to be higher than the first half because most of these pricing, B2C pricing event will contribute to the second half. Where we feel more cautious are on the inventory. And on the inventory, we need to speak separately automotive real estate. In automotive, we have 2 different directions. In Estonia, the recovery continues. And there, we have a positive inventory growth. So far, automotive business in Estonia recovered probably 70% to 80% of the expected recovery level. If we compare the number of transactions a year ago, so this number is around 40% month-over-month, but still around 30% below 2 years ago. We don't expect that to recover fully to 100% because we were -- we think that part of this market will not recover, especially cheap cards, but our expectation is that it should reach around 85% to 90% of the previous market. So in the Estonia market, we still have around 15 percentage points to go in terms of the recovery. In Lithuania, the dynamics is different. Lithuania and automotive market is performing very well. Last year, in terms of the transactions, it grew 8%. It's a big increase annually. So in Lithuania, we have a headwind, inventory headwinds because Lithuanian economy is doing well, purchasing power is increasing. The time to sell a car is decreasing. So that's resulting in the inventory headwinds. But as explained earlier, this is a good timing, good moment for the pricing events, which are scheduled. In the real estate, real estate market is doing very well, especially Lithuania, but also Latvia, Estonia. Lithuania in Lithuania, we had a record number of transactions last year. And this year, we expect to even have a higher number. In such a hot market, naturally, there is a headwind in terms of inventory because it's -- the transaction happens very quickly. But also, we implemented in C2C pricing changes, and we significantly increased the penetration of the most -- of the premium most expensive package from roughly 20%, 30% to half of the all choices. And this also leads to a lower number of expansions. So that's why we are expecting the headwind in terms of the inventory, but still a very positive environment for the B2C pricing event coming in autumn. And the jobs market has continued to do well. So this year, we expect in Lithuania, the salary growth around 8% average salary growth. So it's a good environment for the labor market. And the pricing changes are happening also in autumn beer, but it's being implemented gradually month over the month over the next 12 months. So we are feeling optimistic and confident in all the 3 verticals, especially taking into account the pricing events coming in autumn. But where we have a cautiousness is in inventory. So that explains our guidance. On the competition part, Arturas, would you like to cover the Autoplius, Autogidas? I can start, maybe you can give... Autoplius has currently a 5x lead compared to Autogidas. Historically, that's one of the highest lead we ever had. When we IPO-ed, our lead was 3x. And 10 years ago, our lead was less than 2x. So the highest lead we had ever was 6x a year ago. During the last year, Autogidas was much more active in marketing, including the TV advertising. And well, arithmetically, it reduced our lead from 6 to 5x. But we are not too concerned on that because it does not impact our business, our fundamentals. And considering that Autogidas is now owned by the private equity, local private equity, we also think that it will not -- this increased marketing expenditure will not continue forever. Arturas, would you like to add?

Talking more about the general competition there. And we still probably repeating ourselves that the segments that are competitive, so the homes and oriented to consumers makes up a small percentage of [ Skelbiu's ] overall revenue. What we're happy with is that we are maintaining the content on the platform that we have, which is a strategic aim and actually positions us well. The traffic numbers are healthy. We're not losing anything and actually meaning in that sense. But there is a natural, let's say, limitations in the consumer segment on these smaller segments in terms of pricing. However, it never were our revenue.

On data?

So on data and AI products, we're following the pathway, which is client needs based primarily. AI may be a means to get there rather than profit itself. That's how we view it. We're strengthening this data layer which happened before in our history and that data pool. We're progressing the same way in properties with Lithuania and Latvia and overall, we're happy with the tech stack we have. We don't see the limitation. There's incremental improvements that are required, but it's always been the case. And also the team setup seems good in terms of the know-how and the qualifications they have. So no major changes or not really much changes in the future that we would foresee apart from incremental improvements. We aim to make this knowledge more competence, so most likely we will not rely on a lot of third-party providers. I'm not talking here about the LLMs, but other service providers to fill the gaps. Now on the cost side, majority -- we see that in the very near term, these costs will reach probably about EUR 1 million per year. And majority of that are the people costs, of which the majority are already baked in, meaning that we already have that team in place that makes up the cost. There is naturally some probably token costs involved into that, but we are designing everything this way that it doesn't blow our token budget or anything like that in any meaningful way direct model.

I want just a few words also on data spend. So we feel that the data layer is really creating a strategic advantage of our platforms. To give you an example, the car study report we developed 2 years ago, 1.5 years ago. Now 30% of all the listings in Autoplius have the car history report. That's double the amount compared to a year ago. And it's really creating our competitive edge and competitive advantage and it's very hard to copy to replicate. And that's really a defensive mode for us. Same happening and same strategy we have for the real estate, where we invested in last year. This year, we acquired the CVbankas, but we feel that this is kind of the right track to go and it will improve our market. On the cost side about the data products, so we also build those to be profitable. probably not as high profitability as the marketplace products, but still probably 50% plus margin on the data products we sell.

I would add that most acquisition, it's a small business, but not [indiscernible].

Will, you were second.

It's Will Packer from BNP Paribas. A couple for me. Coming back on the outlook for the year. One thing that stands out is that you push C2C yield monetization by over 20% in the year gone, perhaps understandable in the context of some of the inventory headwinds. Should we start to worry about the sustainability of that kind of increase? There's some sort of cautionary tails from across your European peers about pushing yield too hard and having ramifications. So just how you think about that question? Secondly, could you help us think through what a realistic number for the buyback is this year? Is it a similar quantum to last year? Is it double? This is quite a long statement, but I have kind of no idea what buyback numbers assume. So just some color there. And then lastly, the guidance on sort of stands out for being quite weak, no growth. Could you just remind us what factors have impacted growth for the year ahead? And should they abate from FY '28?

Maybe I'll start about yields. will answer the share buybacks and then probably Arturas can cover the Generalist. On the yields, yes, yields for C2C grew around 20% last year. But even though kind of percentage-wise, it might look high. But basically, it was like adding some, I don't know, 5 years or 10 years to the listing. And when you are transacting such an expensive item as automotive or real estate, it doesn't really matters in that. So I think that whenever we think about the yields in C2C and the possible drop-off rates or possible, we think that we are here kind of looking more for working with the time because the price sensitivity on the digital products are declining over time, and people are more and more eager to spend and pay for the digital products. And it's not the price itself, what's the issue, but more like people's expectations or people's mentality. So I think that every year, is positive for us because people are more and more comfortable paying for digital products. And the fees they pay are really marginal to the asset value.

I could add maybe a couple of comments, the yield growth, it's probably the average of averages. So it's not a lot of details behind it. It doesn't mean that in every segment, in every micro segment, the change was like that. We apply value-based pricing. So we adjust for price sensitivity always in the, for example, the cheaper segment. We monitor drop-off rates, which are intact after the changes. And also this average yield growth is very much affected by the package mix. So it doesn't mean that all prices grew by 26%. It's that we optimized the pricing structure so that clients themselves chose to be more proving to the sustainability.

That's definitely important to flag that the penetration of our premium most expensive package increase almost doubled from 20% to 30%. And this actually also impact the yield. Lina, would you like to cover buybacks?

Yes. So the statement about capital allocation in the results statement, there is basically, let's say, 2 major messages. One is accelerated buyback. And the other is moving to dividends growing in line with adjusted net income and have the flexibility to use -- to allocate capital based on how we see most value -- and to answer simply, we don't have a target level of debt target level of leverage. We don't set the mechanical level as such. The pace and the scale of buybacks will depend on the market situation, also additional funding, whether -- and how much we can get alternative uses of capital as well. So currently, in the end of May, we asked shareholders for 10% authority to buy back ECG's issued share capital. And at the AGM, we intend to ask for 15% for the next year. So the Board is very much supportive of the share buybacks in an accelerated way. based on the market conditions and all the rest that I already listed, we'll see where we get. But maybe just to add that also one of -- very important for us is to keep the flexibility and also prudent leverage. So we'll be watching that as well.

And maybe should help us accelerating the buyback versus what H2 full year 3 months, 9 months, 1 month?

Not accelerating, just to clarify, not accelerating from this standpoint, but we accelerated already in 2026. So just to continue accelerated share buybacks because currently, we're in the market buying back based on the safe harbor limits. So this is already...

The last one was on the Generalist competition.

I was just talking about the competition between our own ecosystem. So the setup is, as mentioned, is the way that Generalist and customers to the vertical platforms, which are better monetized and the synergies work well in services, jobs and real estate. So we're comfortable generally with clients moving to the more expensive platforms will develop.

Probably the last thing on Generalist to mention that also generalists also compete in categories with the growth categories with -- and we are also addressing this issue. Currently, we are in the final stage of developing the buy now functionality and scalable. So that should strengthen the position. Jess, I saw that you were...

Jess Pok from Peel Hunt. I just got a couple, please. The first one on -- you've given lots of color on the different verticals. But when we think about the overall numbers outside of generalists, which segments or verticals can we think about in terms of higher growth than the group guidance versus lower? Second one is just on costs. If you look at the cost last year, one of the biggest drivers is added headcount. So is there anything baked in this year that we should think about? What kind of growth rates we should think about for the overall cost? And is there anything we should factor in? And just the final one, what you just said about Generalist. When you look at generalists, you compete also with the likes of Vinted or some of the. to my understanding, you only charge on the high-value items. So are there any initiatives to grow in terms of -- to support the growth? And actually, could you actually charge for some of the items which you don't charge for right now?

So I will answer about the verticals, Lina will cover the costs and about the Generalist's cover. So on the verticals, we think that real estate will be a growth champion again this year because of very supportive underlying market and the pricing actions we are taking -- we took and we are going to take in autumn. Also, we are optimistic on jobs because jobs are -- have accelerated last year from 7% in H1 to 11% in H2. But the market is also very supportive because this year, the salaries predicted to grow 8% average salary predicted to grow 8% again. The economy is doing well. So the labor market looks also very supportive for the job portal to grow. And automotive is also in a good position to grow, especially taking into account the lower comparables. -- and the recovery of the automotive market in Estonia. So kind of all the 3 verticals, but probably real estate should stand out. On the costs?

On the costs, reported operating expense fluctuate in the recent years because of PSP mainly, which is performance driven. So it's also prudent to look at the cost before this performance share cost line. Like this year, the cost was EUR 0.3 million, but the cost is expected to increase next year to normalize in line with normalizing the results. So if excluding the cost, the operating cost line is expected to grow in line with historic numbers and roughly in line with revenue.

Regarding the Generalist, maybe a bit more flavor of how the pricing works on. So we monetize the vertical categories for jobs, and property, that's one thing. For the remaining categories, we monetize business customers, including the semiprofessional business customers who are selling something as a means to do business rather than things. So it doesn't matter. It's more this type of structure. In order to reinitiate the growth in the general segment, however, we are well progressing on the transactional buy now functionality that should go live the next year, and it would serve as a nice addition on the current listing revenue we have rather than replacing it. This year already started there, yes.

Andrew Ross from Barclays. I've got 3, if that's okay. First one is coming back on AI, sorry, and to, I guess, put a bit more context in terms of how you're thinking about new products into next year, and I guess, particularly areas and things like conversational search, tools for your dealers or agents, some of the things that your peers are working on would be helpful to understand where you guys are at on those. Second one is to clarify where you're at on B2C pricing in Estonia auto. So you say in the prepared remarks that you put something through in May. Apologies if I misunderstood that. It would be helpful to understand what went through and then how it feeds into your thinking in the autumn and how much tolerance there is for pricing in the dealers in Estonia. And then third question is on M&A. I guess kind of curious if you've chosen to do a small deal in Latvia, which maybe hasn't been such a focus in the past. So how are you kind of thinking about M&A more broadly and also kind of views on the Latvian market within that?

So I start with the AI-related initiatives. So we approach the question from the client needs based way. We're just seeking for the places where there is friction and how AI can help solve it. So this there and there are already introduced that one of the big projects we're working on and also set to go in this year already started. there's many more for conversational AI assisted AI search, you name it in many different ways. But it's going to be a focus to get launched in the next year, and we are progressing there well. set up the data processing pipelines so we can basically search not only by what's provided by the seller, but also realize what's visible in the photos, what's visible from the third-party data sources we also have from our data platforms and combine that to deliver the better results for the customers. But the seeking is to firstly make this available within our systems. And if the situation changes somehow, we don't see right now from the GenAI platforms themselves. So let's say the absolute majority of work is having these products in place rather than connecting them.

The key guy and AI strategy so he's a very, very good person to talk about it. But mainly also like a general thinking our, let's say, about the user experience and about the conversational search. So currently, we are in the testing mode in real estate. But we are not rushing. We are not kind of pushing it to launch as quickly as possible. For us, it's important that it functions well and the users are not disappointed with it. So we probably will make the final testing only then we will launch that. But also the thinking is that the current solutions like filter-based search is just does a job very, very well. And we don't have a very high expectation that once after launching the conversational search, but suddenly everyone will start using it massively.

It's a spectrum. Basically, you have filter-based search in one end and full chat interface on the other. We're pretty sure the evidence from the initiatives here shows that fully conversational within chat experience is just not what works for customers, either on the platform or either in the LLM tool. However, the filter-based search naturally has some improvements to be made to solve the blind spots. And so we're setting to take best of both worlds try to improve what's working rather than be creative.

On the B2C in Estonia, so we delayed the pricing event a year ago, not a year ago in autumn because it was like a peak of the -- really the most difficult period for the dealers. And we did implement it in May this year. The scope of the pricing was quite minor in this time because we still see that the dealers are price sensitive, and they are emerging from this crisis, but they are still thinking how not to increase their expenditure too much. So it will have maybe less impact on the revenue growth for Estonia, but Estonia overall is recovering well. It's a same channel. It's growing double digit, and we are happy with the progress. On the M&A part. On the M&A part, so I think that there might be some other add-ons, let's say, like the one we had in Latvia. And because we think that actually with especially data products, we are strengthening our competitive moat. And when we do these acquisitions, we always think can we build internally, how long it will take and how long it will -- how much it would cost? Or is there an existing tool which we can plug in easily? So, so far, the last 2 acquisitions, which we did Untu and Cenubanka, which translates into price bank properties. So in our thinking it was a cheaper and definitely so much quicker to acquire a business and to plug in rather than to build from scratch. Just a reminder, in our history report business, we build it from scratch and led the project.

Can I just clarify on B2C autos in Estonia? Are you still planning to do an increase this autumn as well? Or was that in May and now we should not be expecting anything autumn '27?