VNV Global AB (publ) (VNV) Earnings Call Transcript & Summary

Good afternoon, everyone. Welcome to VNV Global's Second Quarter 2024 Conference Call. On the call today, we have Per Brilioth CEO; and Dennis Mohammad, member of the investment team; and myself, Bjorn Von Sivers, CFO of the company. As per usual, Per will start with a summary of the developments during the quarter and a few highlights out of its management letter, and then I'll follow with some NAV drivers and then we'll do Q&A. [Operator Instructions] With that, I'll hand over to you, Per. Please go ahead.

Thanks, Bjorn. So we just click through a couple of pages, highlighting what's been going on here. $600 million NAV, which is just under SEK 49 per share, which is down 10% on the quarter, which is basically a reflection of the multiples that we follow in the peer universe, in the public universe that we use as a -- if our valuation work has been falling in this manner. And then also, of course, we signed -- we sold Gett. I mean we have to close it, and we can talk more about that later, but we sold Gett and that was slightly below NAV. So that's also contributing to this NAV being a touch lower. If you flip to the next page. I think most of you are well aware of this transaction. We've spoken about it a lot. But we did -- in this quarter, we did announce that we had sold Gett -- all of Gett has been sold to a company called Pango, and our -- for a total of $83 million net to us, of which $70 million we get on closing and then another $13 million will come in installments over a few years. And that's not -- it's not an earn-out. It's an escrow. It's we -- as sellers provide the buyer with sort of a cash and security. So we've identified them for that the things like tax and legal stuff, et cetera, is like we've said it is. And we're very confident that it is, but it's a customer -- this part of the world sort of leave some money in escrow that is then released as it becomes clear also that the company is in the shape it is and sort of the long-winding explanation of that. But anyway, that's the difference between $83 million and $70 million. And yes, this is now waiting for Israeli Antitrust to study that this sort of acquisition or merger of Pango and Gett doesn't decrease competition. Now Pango is like a parking app -- parking product in Israel. We have one in Sweden called EasyPark, and I guess that's European. So it's that type of service. So it really doesn't sort of alter this sort of competitive nature of really the parking business or the taxi business. So I don't think anyone is really concerned that this will not go through. But both Pango and Gett are very large Israeli brand name. So it's very customary that the authorities, they take a good look and they ask for a lot of data, and they go through the data, and we're in the midst of that process now. But we've seen nothing that sort of gives rise to concern that it's not going to close. When it's going to close? It's difficult to say because they're going to sift through the data, it's somewhere -- it's all of that, but we have no reason to be concerned that it will close. So that's Gett. If we flick to the next page, you see our portfolio looked -- looks as of now before we've actually sold Gett. So close the sale Gett, and then on the right-hand side, you see how the portfolio looks as if Gett was sold by the end of June this year. So that renders a portfolio where BlaBlaCar increases and, well, Gett is gone essentially, and we've also paid back our debt and have a small cash balance to the order of like $5 million before we get the inflow of this escrow asset. That $13 million will be released over a couple of years, and that will eventually increase that, but it's a small cash net positive if we would have closed Gett on the end of June. See Gett, a picture of that. I think what we'll do now is have Bjorn go through the mechanics of this balance sheet and then maybe -- and then I'll come back and do some commentary on the actual underlying businesses.

Yes, sure. Thank you, Per. I'll walk through our balance sheet quickly and then the top 3 holdings and the movements during the quarter before handing back to Per. And if we start with this -- I mean, as Per mentioned, NAV is at SEK 48.6 per share or $4.58 per share at end of June, down 10% in both SEK and dollar terms over the quarter, primarily driven by BlaBlaCar, Gett and HousingAnywhere, leads us to an investment portfolio of some $670 million or SEK 54 per share. Cash and cash equivalents of $14.6 million following the redemption of the remaining '21, 2024 bond earlier this quarter in the order of SEK 306 million that we paid in June in addition to the $14.6 million in cash and cash equivalents. We also have $2 million in liquidity management investments. So all in all, $16.6 million in liquidity at the end of the quarter, which is some SEK 1.3 per share. So all in all, it's gross portfolio of SEK 55.5 per share and then the borrowings at the end of the quarter following the redemption of the June 24 bond is $81.2 million or minus SEK 6.6 per share, which leaves us with SEK 48.6 per share NAV at the end of the quarter, still trading at a significant discount trough that NAV. If we move to the next slide, Dennis. We have the portfolio companies. If we start with BlaBlaCar, the main driver over the quarter, down 14%, primarily driven by peer multiples in our EV sales valuation models. There's also some FX in that and more than 2/3 of the NAV down, awards adjustment this year of $42.6 million is BlaBlaCar. Second is Gett, which Per mentioned that we agreed to sell, not yet closed. But at this quarter ending with value on the basis of the ongoing transaction, which is down approximately 11% versus the valuation-based model we used at end of Q1. Volume here is completely flat over the quarter, still value on the basis of the transaction from earlier this year, company is performing well. And finally, as mentioned, one of the other key drivers of the NAV this quarter was HousingAnywhere which is similar to BlaBla and there's some overlap in that peer group is down 14% or $7 million over the quarter. All in all, par value change over quarter is some $61.7 million. If you just look at the top 3 names again, it's becoming an increasingly concentrated portfolio. BlaBlaCar represents approximately SEK 21 per share or 43.4 on the NAV. This is pre Gett being sold at June 30. Gett is still or soon to be cash, hopefully, 11% on the quarter or SEK 6.7 per share. And then if you look at Voi, it's approximately SEK 6.5 per share. So all in all, the top 3 largest holdings is just over SEK 34 per share or just above 70% of total NAV. I mentioned the cash and the large movement during the quarter is due to the repayment of the bond. And if you look at the net debt figure, it's down significantly from year-end 2023 and slightly up over the quarter given some OpEx as well. And with that, I think I'll pause and hand over back to Per before moving into the Q&A.

So a couple of points on the larger names in the portfolio. BlaBlaCar is doing well. I think you've all seen it closed last year with about EUR 250 million of revenue and a positive EBITDA, positive cash flow. And so company is doing well. I know there's a downtick in our NAV, which looks maybe funny as the company is doing well, but it's a factor of that peer group has fallen and there's some FX in there and we made some adjustments. But the underlying sort of business is doing super well. We're very excited that they have finally been able to close some M&A. So as we wrote in our report, they have acquired Obilet, which is the bus marketplace of Turkey. Now we've seen historically at BlaBlaCar that their car pooling business is very synergetic with bus marketplaces. We saw that when they acquired Busfor in Ukraine, which also had presence in Russia. Now that's a separate story with no value for us. But the experience of merging those type of assets was very, very strong. So Turkey is a little different because their car pooling penetration is not as deep as some other countries. But Obilet, on the other hand, is really sort of -- I mean they're a dominant in the bus marketplace side of things. So it's that's a very natural acquisition that is yet to close. We expect it to close during this quarter, the quarter we're in now, Q3, and hence, we'll update our model on BlaBlaCar after its close. So I think when we speak in the quarter, you'll see that in the figures, and you can get a sense of how large. But it's essentially profitable growth, which is very accretive. And yes, elsewhere, it's -- company is doing fine. So Gett, we've talked about a little bit business-wise, although we've sold it now, yet closed, but business is doing well. So it's really sort of recovered in Israel to very close to pre-crisis sort of levels. So that's encouraging to see. And again, I would really expect this to close in the not-too-distant future, although we can't really control how long it will take. Voi, I think there's nothing more to add apart from what we've written in the report, but full company EBITDA positive. And I mean, [indiscernible], we think that they have a very good possibility to be EBIT positive during this year. And that's, of course, very encouraging. I was discussing earlier today with someone about Voi. I really think there's sort of leverage in sort of how people look at our portfolio when we have, especially Voi, looking back at being EBIT positive. That sector has been sort of plagued with a lot of competition and then people have -- everyone has had an opinion about it, but now, as I think we've talked about before, the sector really sort of heading to 2 dominant players, Voi and Lime, all across Europe. And there's some others presence here and there, but those are really sort of more and more becoming the larger ones. And with that also, it makes -- it's easier from a distance to sort of understand how economics will look, I think, and that, combined with looking back at a year of EBIT, I think is -- I mean, we'll have a big effect on our Voi itself is -- I mean I know how we mark Voi but also how Voi is perceived as a part of sort of the valuation of our company. They've also won a couple of tenders, Solent in England and Antwerp, and the Antwerp one is a 5-year contract [indiscernible]. We haven't spoken much about HousingAnywhere of late, very excited about HousingAnywhere. I mean I really think there's an opportunity for one player to become a dominant sort of force in rentals at large in Europe. I mean you can do rentals on all the real estate classified verticals across Europe, but all those companies -- none of those companies really sort of give a lot of love and focus on the rental category. So this is -- there really is an opportunity to become a big European one. HousingAnywhere, they have their competition, they're the largest in Europe, but they have their competition, but some of that competition is struggling. So there is also an opportunity for, say, consolidation or to sort of gain presence and crucially liquidity in areas which -- where maybe competitors are becoming less strong, if at all present. But yes, and -- so it's about building some of liquidity growth. But whilst they're doing that, they are showing double-digit growth and are basically at EBITDA profitability. So good. Numan, the run rate of revenue is up 100% year-on-year, and they're EBITDA positive. So that company is really performing well, and this is very encouraging to see. For those of you who had the chance to look into the recording of our CMD, you -- I hope you have the chance. If not, then I'd encourage you to look at Breadfast's presentation. Breadfast is Egyptian quick commerce player which is at an ARR of $150 million in revenue now, which is an amazing 38x since we invested in 2021. And so [ cohort ] is just great and it's becoming a very, very well and broadly loved brand in Egypt. I really get the sense that this is like a Gojek who become a Gojek of Indonesia, the ride-hailing platform, which became a very large and loved brand in Indonesia and the same way Breadfast is really there in Egypt. But upon that, they're also building presence in finance -- in fintech with wallets, et cetera. So I really -- I get a sort of a Gojek kind of feeling around Breadfast and feel that -- let them perform over a couple of years, and our holding in Breadfast could well be maybe the largest position in our NAV depending on how all the other ones have develop. But yes, there we are. So that's a few comments that I hope are helpful to get out of some feeling around the portfolio. The portfolio, at large, which I think we have a final slide that we can look at is becoming increasingly EBITDA positive. So we have -- yes, it's up this quarter, 62% is EBITDA positive, another 12% if you if you add Voi, but Voi with the assets that they run, scooters, we should really talk about EBIT positive, but it's encouraging to see the portfolio performing [ at this ]. I think the big changes here is Numan. I think also HungryPanda becoming EBITDA positive, and that's contributing to the portfolio becoming increasingly sort of as a percentage EBITDA positive. I think we'll stop there and open up for questions. And we have some -- Dennis, are you going to organize this?

Yes, for sure. I'll moderate Q&A. So we've gotten 1 question to start us off with -- and I'll read it up in a second. [Operator Instructions] So the first one, maybe, Per you can comment on it is around, buying back within the stock. How should one think about that going forward now that we potentially enter a net cash position post sale of Gett.

Yes. That is a good question, and I reckon this is very close to heart. We're ready to buy back stock, we have the approvals, and yes, we're all set up to buy back stock. I think you should expect us to see the Gett transaction close in order for us to go into real net cash and then I would be very surprised if you don't see us getting involved in the market for our own stock. So -- but we essentially need to get the transaction to close, so we hope that will happen imminently. And then we can start looking at our own stock because sort of legally and formally, we're all set up to do it. And yes, it's very, very difficult to find something that stacks up better than our own stock at these type of levels. But we need sort of the liquidity to be in order and sort of the bond to be out, which essentially can be when we get cash from the Gett transaction.

Another question here is around portfolio company exits. So the question is essentially, which portfolio company do you think is closest to a sale or an IPO, I assume not only for VNV, but at large, it sounds like.

Yes. IPO, I think that would have to be BlaBlaCar. Now BlaBlaCar is not like it's going to IPO this year or -- and I think at best, maybe sometime during the latter part of next year, but that's -- that will be the big one. I think you've all heard the CEO and people around the company talk about an IPO. So that's clearly something that's being developed, although not sort of formally announced, and also the size of the company is -- and the maturity of the company is something that caters well to sort of an IPO. There are others that will IPO in time, but of the ones in the portfolio, I would probably say that BlaBla is still the one, so to be able to sort of to go down the IPO route the closest in time, even though sort of a year and a bit, maybe it's not close. And it's yet to be sort of announced publicly, of course. Voi, I think, will be very with EBIT positive behind you and growth in EBIT over the quarter '25, I think should leave the company in a good position to also look at public markets a little bit after BlaBlaCar maybe. HousingAnywhere is not really close and the others. I guess, Bokadirekt because it has so many sort of it rings of familiar to Hemnet in so many ways, and Hemnet has been such a success. Now Bokadirekt is much smaller, of course, but it still has the same sort of deep penetration in Sweden and has sort of the maturity level to go down an IPO route at some point. But all of those are probably a touch later. So I'll probably say that it will be BlaBlaCar first with all those caveats, et cetera, that it hasn't been decided. But you heard them talk about it.

Thank you for that. Another question this time from Ina Djupsund at SEB. Question on the cash balance, how do you view the liquidity situation? And are there any further exits on the agenda?

Yes. So yes, so if we would have sold Gett today or end of June, we would have $5 million plus. So -- but yes, so -- however, while we've been in this phase of executing exits in order to pay down the debt, we've obviously [ look-see ] and now we've sold Gett and that gets us to being net cash positive and pay back the debt that we also sort of have started a plan B and a plan C. So there is a handful of companies in the portfolio that we are entertaining or not entertaining that we're quite advanced on actually on getting some liquidity out of, and that will -- should all those fall into place, then we have a serious cash balance at the end of the year, but they're not done yet. I would say that our cash balance with everything else the same, sort of just putting everything else aside with coupons and some OpEx and new investment put in there, all that, that's sort of basically 0. Our cash balance towards the end of the year should be between $20 million, but possibly $22 million, yes, even $60 million, $70 million. But there's a lot of -- for us to end the year at that larger sort of level, it's going to be -- there's some -- there's a large transaction that has to happen and that's not done yet. So -- but we're definitely working on it. But I feel pretty good that everything else aside, we would have -- we will end the year with about $20 million, something like that.

Thank you. Moving on, another question is around, do we plan to keep any of our more mature companies as a cash generator that can be used to invest into new ventures? And if yes, in what time frame do you think we would have such a company in the portfolio?

Absolutely. I mean that's been a long-standing ambition. I think we've talked about it before, but we really like one of our holdings to develop into what Avito was in the last year where Avito -- I think in the last year, it got up like $13 million and the following year is going to get us $20 million, something like that. And that -- those kind of figures gives you an ability to not only pay all your OpEx, but also pay down or also do some new investments. I think with $20 million, we paid our OpEx and did sort of 3 new Vois at the time. We only did 1 Voi but Voi started as like a $5 million check. So yes, that's absolutely the ambition. I would say that -- well, Gett is already there. Now we're selling Gett, and I think that's the right thing to do, both in terms of their return profile, but mostly, of course, to pay down the debt because I think that's very -- all of us as shareholders want that to happen, to have that sort of the node of coupons in the past, not in the future. And -- but BlaBla and Voi really are the ones. BlaBlaCar, of course, already now. But I mean, as difficult it may be to sort of see because the history of Voi and with the competition in that space, I really think that company in a few years will be in the same sort of position. So -- but the ambition is absolutely there to have one of our holdings and then perhaps also to get them all the new holdings, which has a much shorter path to becoming a real cash flow generator. I think companies like ours and similar ones also listed around the world, but also in Stockholm, I think they do very well out of having a cash generator. I mean, you've seen us trying to rely on raising cash by exiting stuff. And we did IPO a couple of companies, right, with -- but both with quite disastrous outcomes. So it's very difficult to sort of rely upon the sort of exit markets always being open when you need new cash flow, hence, the sort of the quest to have a cash generator in the portfolio that you can sort of not only pay your bills but also do some investments even when times are tough. So sorry for long-winding answer, but yes is the short answer to that question.

Thank you. Another question, moving into some portfolio company-specific questions here. On Voi, it has been valued at transaction in this quarter. But what would the transaction -- what would the valuation have looked like in our books if we would have gone to model? Is there a view on how that has developed over the quarter? I'm happy to give you or give...

Yes, this is our Voi expert. So why don't you address that?

No, for sure. I think looking at -- we always obviously compare when we use the transaction input. We obviously always compare to our model to see that there's not any large deviations. In the case of Voi, we could even move over to an EBITDA-based model and get to valuation to -- get to a market that is in line with or actually even a bit of a premium to the transaction that we have carried out currently, looking at 24. And that peer group would be -- there isn't a perfect peer group for Voi, but there are definitely micro-mobility companies out there that we can look at and use at a quite conservative EBITDA multiples, even rich evaluation, in line with within a set of premium too to the last transaction mark that we have carried out currently. We typically hold our marks up to a year on transaction before moving over to model. But -- so that's why we -- this transaction happened in Q1. So it's still -- it's on the back of the transaction. Another question from [ Rahat ] at Cantor Fitzgerald. In terms of the primary and secondary transaction environment currently, what are you seeing in terms of valuations, more of down rounds or our valuation valuations going up? The reason he asks is that we've said that we are in advanced stages of exiting some portfolio companies. And the question is essentially, what type of pricing can we expect in a secondary transaction?

Yes. No, we're not in a -- now that we've sort of sold Gett, we're not in a situation where we need to sell -- we're not stressed to sell. I think both Booksy and Gett were executed in also a very orderly way. I don't want to give the impression that those were sold under any stress at all. And I mean they were both sold a touch below NAV, but really around NAV given the sort of the difficultness of pricing sort of liquid assets like the ones we have. I think those were sold in line with NAV and -- but -- and so I would not stress. But we -- but of course, they have given even a better situation. Those sales have given us an even better situation now that we really don't have to sell anything. So anything we sell now is really just if the price is fair. And if -- also portfolio-wise, we'd like to concentrate even further if we can on true sort of network effects really sort of in a take everything kind of models that you see in our portfolio, especially BlaBlaCar, I think. And so for portfolio reasons -- price and portfolio reasons, it would be the reason sort of to look at selling something going forward. And the handful of ones which are sort of advanced are all around NAV, maybe also one of them also above NAV. So really not in relation to NAV, I think, very constructive. So all of these things we haven't done yet. So there yet, if we would have done them, we would have told you. So if we haven't done them, then of course, there is risk that they don't happen. But as before, I think there's 2 smaller ones, I think, look pretty good. And I think those we'll be able to talk about in the next quarter and then large ones we'll see.

Thank you, Per. One final question at least for now. So please type in your questions if you have any. This question, I think, Bjorn you can answer. So equity investments under USD 10 million had a fair value change of around $12 million in this report. Can you provide any additional color on what drove that revaluation?

Yes, sure. And so this is for the 6-month period, if I understand the question. The fair value change of the line equity investments on the $10 million is down 12% during the first half year. Here, for this and as you can see on the investment disposal column also, which is $47 million, we have essentially the entire Verdane portfolio transaction moved on this line, hence the inflated numbers on this line for the full 6 months. So the primary drivers of that [ fair ] value change in 6 months is the fact that Verdane transaction was completed at a discount to the NAV at the time.

Perfect. Thank you. I think -- or we have a I think -- yes, I think that is it. I don't think we have any other additional questions. So handing back to you, Per, if you have any final remarks before we close the call.

Thank you, everyone, for listening in. I mean I feel very good about the portfolio. I feel very good about hopefully next quarter, talking about having closed Gett and becoming -- really putting the debt stuff behind us. And then I also sense apart from some other smaller exits, I really sense that there's some exciting stuff coming up in the autumn that will be interesting to follow around, yes, both maybe some disposal, but also new investments. Of course, we look at our own share price. But first and foremost, we need to close that Gett, and that should be done imminently, I hope. And yes, anyway, look forward to talking to you in 3 months. Have a good summer, everyone.