Verkkokauppa.com (Helsinki:VERK) Q3 2026 Earnings Call

0:00 Com Oyj Good morning, everyone, and welcome to Verkkokauppa.com's third quarter 2026 results presentation. My name is Elisa Forsman. I'm the head of investor relations, and I'm joined here by our CEO, Panu Porkka, and our CFO, Jesper Blomster. As usual, we'll start with the presentation by Panu, where he will go through the key highlights of our third quarter results and the drivers behind our numbers.

0:50 We'll then move on to the Q&A session with both Panu and Jesper. We have a few of our analysts joining us live in Helsinki, so we'll take their questions first before moving on to the online questions. And just a reminder, if you want to ask a question, please type them into the question box on your webcast panel. I will then address them during the Q&A session. But with that, I think it's time to get started. Panu, please go ahead.

1:35 Thank you, Elisa. Good morning also on my behalf and welcome to our interim report presentation. Like Elisa said there will be an open Q&A at the end of my presentation where Jesper will be joining with me and we are available for the questions at that point. As always I will start my presentation first of all with few words about the operating environment mainly here in the Finnish market. Then we will jump into the report published this morning, some highlights from financials and also strategy execution, then market outlook, guidance and key takeaways. The operating environment has stayed pretty much the same throughout the last couple of months. After the summer, we saw that there is some positive signs when looking at these leading indicators such as consumer confidence and consumers' confidence in own economics.

2:34 But we still don't see any positive impact of that in the consumption as such. There seems to be uncertainties, energy prices and inflation, interest rates. So this seems to be still burdening the consumption in the Finnish market. On the other hand, we see that the B2B market has been more stable and the demand is more of a natural kind. Despite the consumer consumption not still picking up, we saw that we were able to record growth and which was in line with the market development. So growth 2.1%, again, mainly driven by our online parts of the business, which is fueled by our strategic key cornerstone fast fulfillment.

3:34 Fast delivery is growing as much as 27% again. Besides the Finnish market, second growth area, international sales, international businesses grew by over 40%, mainly successful due to the Swedish market and some Central European partnerships as well. In the Finnish market, B2B was the key highlight, growing over 15%. while at the same time the consumer demand was muted and that part of the business decreased by 3%. One of the key focus areas throughout the last couple of years has been the margin, the underlying parts of the business.

4:25 For the first time now, since we have sold the consumer financing business, we were able to report actually an improvement in the gross margin, which yielded into the positive development in gross profit. We have been working rigorously on our category management with the profitability in mind. We have been optimizing our pricing. Dynamic pricing capabilities are on track. Also commercial parts of the business are yielding positive results. We have also been quite successful in certain well time purchasing throughout the year. So always trying to mitigate possible price increases to be able to sell the products through with a healthy margin.

5:15 And it's also good to mention at this point that already now we see the positive impact of our own brands, especially from the margin having a positive contribution in the company's overall margin development. From the P&L, growing volumes at the same times improving margins and tight cost discipline leading into a clear comparable operating result improvement, 4.7% compared to 3.9% from the previous years. So on a profitability level now 3.5%. So we are nicely on track towards our long-term targets.

6:07 Inventory, we're on a healthy level. At the beginning of the year, we made some decisions that we took an overstock in certain categories where we had the assumption that the prices will be increasing. Those decisions seem to be the right ones. We were able to sell those through. First of all, the inventory level is healthy. And secondly, we were able to sell them through to a nice healthy margin. So inventory is now back on track and we are looking ahead to the main part of the season coming in the fourth quarter. Com Oyj a strong financial position from cash wise equity ratio almost at 25% so the first target already met at this point the business continues to be investment light and there are ways of distributing positive shareholder return Today morning, the board resolved the third dividend installment of 0.049 euro cents. So thank you for all the investors. And also there's an ongoing share buyback program.

7:38 The total amount of 5 million at the end of the quarter, the amount was 3.9. So it's still ongoing as we speak. A few words about the strategy execution. We are successful taking our business abroad. We have been successful for many quarters now in a row. Again, growth over 40%, mainly due to the Sweden market growing by almost 100%. We are also quite proud that we have been developing the Swedish business further Com Oyj In all of those markets we are quite successfully already introducing our high qualitative own brands and this is a key growth and profitability component going forward the next couple of years.

8:55 Fast deliveries continuing to grow and outperform the market. 27% growth. Even more important for me is that the customer base is growing. The customer base grew by 50%. What it means, more and more customers are adapting to this new way of shopping. Our strategic mission, accelerate online shift, through fast delivery is really taking place and I think we can already say that we have created a new norm of buying in the Finnish market. Com Oyj Offering fast deliveries should be with fast deliveries and we have actually met that target already at half point.

10:12 So what do we expect out of the last quarter? Obviously, as every year, the fourth quarter is the main quarter for us. It has the most important time of the year, the most important season of the year. Throughout the year there have been early indicators that the consumer demand might be picking up because the confidence is starting to grow but we have not yet seen that to have a positive push to the consumption as such. We do believe that increasing interest rates and the inflation energy prices might be something that is still holding the consumption on a moderate level. We also see that our competitors are adding aggressivity into the pricing, but we are totally prepared for this to happen. As always, the last part of the season is also somewhat price driven. We know for certain that we have a scalable business model. We have an effective underlying business cost discipline in place.

11:19 And we also see that we are the ones who is transforming the market at the moment. So therefore no reason to revisit our guidance. We expect the year of 2026 be a growth year in a perspective of revenue and comparable EBIT as well. So what I would like you to remember from the third quarter, it was a solid performance from the company, somewhat subdued consumer consumption. Still, we have a clear number of growth initiatives and channels and segments where we can gain growth, even if the Finnish market is not in favor of consumption. Underlying business is really effective.

12:10 We have healthy margins, healthy inventory turned, cost discipline in place. So we are able to improve profitability despite market difficulties. Strategy is executed as follows as the previous quarters as well. We are transforming the Finnish market the way of consumer are behaving and we are the preferred channel now and we expect that to continue. We are distributing positive returns to our shareholders with our dividend and share buyback program and we are well prepared for the most important time of the year as always the fourth quarter. Thank you all and let's then start with the questions.

13:19 All right. We are ready for the Q&A now. And as I mentioned, we'll start with questions from the live audience. And Arttu, please go ahead.

13:27 Thank you. It's Arttu Heikura from Inderes. I have to double check how fast the Finnish consumer electronics market grew in Q3, because you said that your group revenue grew 2%, but the consumer revenue declined for 3%. So which one is it?

13:49 We don't have not yet all categories in for the last month, but the last time we checked the categories that we reported to that segment were pretty much the same from development, plus minus some decimals, so on the same level as the market.

14:08 All right. Continuing on this, in previous quarters you have outperformed the market, but this time the development was in line with the market growth. So is there any specific reasons for this kind of development?

14:25 Well, first of all, I'm not sure is it 17, 16 or 15 months in a row gaining market share, which is really unusual for a market leader such as us. So there's always a month or two or a time period where somebody is investing more in marketing or somebody is investing more in margins. Because they want to defend the position or make sure that the inventory turns. Because the market has not really been in favor of consumption this whole year. That's one of the reasons. And secondly, what we have said that we will always keep the profitability in mind. We will not do the craziest prices.

15:10 because it doesn't make any sense to have a short-term revenue boost, but then you lose on availability for the most important part of the year or you lose just profit. So we have always tried to balance and make the wise decisions.

15:26 Okay, when I look at the intra-year figures in perspective of your consumer sales, so there has been quite a negative trend. So what is your view on the trading outlook for the upcoming months? Do you still see negative momentum in consumer sales or have you seen any signs of demand picking up?

15:51 If you look on the general market and the general consumer activity, it seems to be somewhat cloudy to to prognose anything. There are positive signs, but we are still expecting those positive signs to turn into consumption. We have not seen this to happen. uh will it happen during the fourth quarter everybody is expecting or has expected that to happen we don't know for for certain if you look at the previous year we had in certain categories and and push first of all because of the hd transition and then also windows 10 end of life turning into windows 11 so those obviously impacting those categories quite heavily.

16:39 So it's not possible to have the same demand level or sales level in those categories. Those are both big categories. So that is also impacting. So sometimes you just need to look slightly behind the figures to understand what is the general consumer behavior as such.

16:56 um but we still are expecting at certain point the consumption should start to pick up because um the early indicators are are indicating that all right then about gross margin uh in q3 the gross margin was in line with the comparison period even though you faced some headwind from the divestment of financing services so I'm asking how significant would the increase be if we exclude the impact of the divestment? So kind of underlying performance of your gross margin.

17:39 We haven't disclosed the exact figure of the consumer finance divestment, but we are talking about a notable increase, roughly a percentage point on the underlying gross margin improvement.

17:55 and then continuing on gross margin so your peers have reported on on some gross margin pressures due to increased component prices so despite this your underlying gross margin improved in my view so how do you see your competitive position in the market from pricing point of view

18:19 I can take that and I tried to shortly comment it in the presentation as well. I will go back to the first quarter when we had the discussion about the first quarter inventory levels and there I think I said that you can cross-examine me during the third quarter. Was it a good decision or not a good decision? obviously we understood and we estimated that there will be price increases and we took in certain categories it was not a risk we didn't believe it's a risk we took overstock because we understood that the prices will increase 10% 20% in certain categories subcategories even 30% well now we can say that those were right decisions because we were able to have healthy margin despite The market intensifying price points going down and our competitors also investing more in marketing. So because of these well-timed purchases, which we try to do all the time, we are now negotiating certain stock lots at the moment. This is a way we operate the business, have a strong cash position where we can act when we see there's a good possibility.

19:38 And as a market leader, As the one that has been providing growth for our suppliers, we are also in the first position when starting to negotiate. So we are now basically utilizing our market position.

20:02 Just getting a little bit of color, how does this memory chip price increases impact on consumer demand? And I think probably the easiest way to analyze that is to look at the performance on the gaming sector specifically, because I guess they are products that you don't ultimately need, or maybe you do. But can you just give a little bit of color that how does different segments perform post the price increases?

20:28 Yeah. Yeah. I can give you color on that. Obviously, the subcategory with the deepest decline at the moment is components for us as well. Not because of availability, but because we have transported certain price increases that we have gotten from our suppliers in to the end prices as well. So the demand is going down. Luckily, it's a subcategory for us. It's not in the top 15 of our categories, so it doesn't impact us as much as it impacts maybe some other players. Secondly, our market share gets higher the higher the technologies or the higher the price point of the PC for example is. So what I want to explain is that the percentage or the part of the price of the component gets lower and lower.

21:28 The most cheap products obviously have increased the most, but we are the strongest in the high range and the mid range. So I think that's not impacting us as much as maybe those players who are really more into the low entry pieces, for example. And gaming, we are not that specifically strong in the gaming category. There are others who are also strong in that. So that is a part of business where you maybe then wait when to update your gaming PC because now the prices are somewhat up. They will go down at certain points. So those... understand that maybe I will wait until next year. So that category is impacted heavily. If I look at the PC as such, I think more impact comes from the Windows 10 out of life.

22:23 Com Oyj as such everybody understands that when Apple launches new products they are always more expensive than the last one so that is part of the business

22:57 During the quarter, Volt announced that they will establish their own electronics, I mean, shop for some electronic products. And Volt is, of course, one of your partners for fast deliveries. What is your view that if this is going to take away some of your business, them going directly head-to-head with their customer?

23:22 Yeah, well... Well, first of all, consumer electronics has been on that platform for almost three or four years. There have been operators who have been providing their products there. We have also tested that several times. We have tested that in the Baltics. We have tested that in the Turku area and Finnish market. We have tested that in Denmark also. So what is the underlying demand for certain categories? And we have seen that it is quite narrowly concentrated on really just a few items or short range of products. So the overlapping part is really, really small. And for us, it's not that competitive.

24:08 Like I said, it's one of the service providers which we have in our fulfillment.

24:15 Then I wanted a little bit more color on the very successful business to business growth. I mean, during the quarter, whether this came from higher average ticket, I mean, for existing clients, or did you manage to get, I mean, new clients in which would have driven the sales to over double digit growth?

24:39 Both. The biggest part still is SMB segment. So being just a better supplier and a better service operator to these small mid-sized businesses is one point. I think we have improved on that businesses. We have also gained some mid-size to bigger companies as well as we have. We are known to have really the best assortment and the best availability. We have warehouses here in the Finnish market. So we should be the number one supplier for midsize businesses going into the big businesses as well. So coming from both.

25:24 And fast delivery is also accelerating that most of the businesses start to utilize because then you get instant device that you need for a business trip or for starting new employee or something gets broken. You don't want to wait a day until you start working again.

25:44 And then finally, you have started this next day deliveries in Sweden as well. So can you a little bit give more color on the early adoption of this product in the Swedish market? And what kind of competition you have for next day deliveries in Sweden?

26:04 Well, I cannot count it in my fingers, but it's a small amount of deliveries that we have done towards the end of the quarter. The main point is that we are working to make it happen. So we want to be more present with our offering on the Swedish market. The Swedish market is heavily offline penetrated. All of the big players, I don't know if it's five or top ten, all of them are brick and mortar operated or heavily focused. So they're The competition is different. People are still going to the stores to get the items that they want. So we are now making our service levels better and better and better.

26:57 And we see now, hopefully during the fourth quarter, what is the impact on our total demand as we are offering something already next day, which is not typical for the Swedish market because you don't need to do it. You have the stores where you can pick it up. So we try to learn from that and let's see what is the next step.

27:22 Thank you. I had no further questions.

27:25 All right. And the previous questions came from Maria Wikström from SCB. And let's move on to the online questions. We have a couple from our analysts. Miika Iihamaki from DNB Carnegie had a similar question to Maria's about the component cost inflation. So we do not need to take that again. But then he has a second question on our sales growth last year. So sales growth was very strong last year in Q4, creating a tough comparable. What are the key drivers supporting growth for the remainder of this year? Is there still significant scope to expand penetration through international platforms?

28:04 Well, I can take that. We have several growth initiatives and growth potential. We have identified in a big picture that B2B is something that we believe we can do better. We can gain growth and momentum like during the third quarter. We do expect that to be one of the key growth drivers because that is not impacted by the consumer confidence. So obviously it makes also sense. to invest focus on that because it's more stable from the underlying demand secondly we are as we speak always taking our international business further we are trying to identify new interesting markets and new interesting platforms marketplaces where we can offer our products as we have built the business we have built the integration so that's quite fast as we now also understand more about the market fit market product fit for us Com Oyj We have made things that we can do invest in margin

29:42 and in marketing spend as well. So we have a good plan and we believe that that will be a solid to face the figures from previous year.

29:53 Very good. Then moving on to questions from Sanna Perala from Nordea Markets. Coming back to the question about our Swedish next day deliveries. How do you manage to deliver to Sweden within 24 hours? When would building an own warehouse in Sweden be realistic?

30:12 Well, to the first question, we are a listed company and our competitors don't give up their game plans for each market. So maybe I will not give away all the things that we have done. And we will also. That's one of the reasons that we don't want to in advance tell all the steps that we are taking, because our competitors might take advantage of that. Com Oyj Com Oyj that the return on investment is positive?

31:32 Or what is the point where we understand that that will be a growth accelerator, the physical presence in a market? So that's basically calculation. First we build the capabilities, then we try to understand the product market fit. And then we understand the end-to-end profitability, and then it's just driving the business. So we are looking at that as we speak, but it's not the time yet.

32:01 Very clear. Then continuing on international markets, maybe this one is for Jesper. Now that you are growing strongly in international markets, do you have any estimate for an FX-neutral growth?

32:16 No, we don't give market level or channel level revenue estimates. So from that point of view, that's something that we don't disclose.

32:26 Very clear. Then Sanna's next question is, can you walk us through the changes in working capital and operating cash flow? Where did the changes versus last year stem from?

32:38 The biggest item is the consumer finance divestment that we did in September 2025. The net impact was more than 30 million, 32 million on our Q3 cash flow. So that's the biggest single item. Another thing that we've done since that is discontinuing of the factoring arrangement that we had on our B2B receivables. So our account receivables have increased from that point of view. That happened in late Q1. So our accounts receivable have increased since then for natural reasons. So we have those B2B receivables now in our own balance sheet, not in our partner's balance sheet. Those are the two key items on the working capital side.

33:27 Very clear. Let me check. Yes, Sanna's last question is about As you are pushing higher costs to prices, do you think this had a negative impact on demand in Q3?

33:44 Well, it's to a 100% certainty impossible to answer as we cannot test the history, but we do believe that from a profitability point of view, I think we did the best we could.

34:03 Good. Thank you. Do we have any more questions from the live audience? No. All right. We do not have any questions from the online audience either. So this brings us to the end of today's webcast. As always, if you have any further questions, please contact us at Investor Relations. And just a reminder, we will publish the presentation and the recording of this webcast on our investor website shortly after. Thank you for attending.

34:35 Thank you. Thank you.