Equity research CDON AB, Q3 2025: On track for continued growth

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Following the positive preannouncement in September, the full Q3 2025 report confirmed the return to growth with increased EBITDA margin, as expected. Marketing expenses remain high, but a stronger e-commerce market, growth initiatives and improved OPEX efficiency are encouraging signs ahead of Q4 2025 and next year. We raise the base case valuation somewhat.

Profitable growth in line with preannouncement

In Q3 2025, Gross Merchandise Value (GMV) and net sales increased by eight and seven per cent, respectively. This outcome was broadly in line with our expectations and the growth level conveyed in the preannouncement on 18 September. The EBITDA margin improved markedly to 10.5 per cent (5.2) due to higher sales and lower OPEX, confirming the previously reported trend of profitable growth in July and August.

The focus for Q4 is on preparing for holiday demand and launching partnerships with new major European merchants. In Q3, CDON reported significant progress in onboarding these partnerships with a unified merchant API. However, they have not yet contributed to sales.

Market tailwind and increased supply likely to bolster sales

As previously reported, the strategic review initiated in April 2025 concluded in a directed SEK 45m share issue to help accelerate growth initiatives, with the aim of an EBITDA uplift of more than SEK 50m from 2027. The four highlighted areas include increased expansion/penetration in the Nordics outside Sweden, investment in engineering capacity, marketing of the group’s brand, and increasing ad revenue through retail media. Total size and distribution of the investments are yet to be determined, but CDON hints that the implementation is a priority for next year in order not to unduly interfere with the seasonally strong Q4. We have assumed a mix of increased marketing expense, OPEX and investments for 2026. All in all, we believe CDON may have to increase GMV by some 20+ per cent to achieve its 2027 EBITDA target. We think this is achievable through, e.g, increased supply. Already, this is ongoing with the mentioned onboarding of new major European home electronics merchants in H2 2025 and the relaunch of a snus vertical in Q4 (to address a market worth SEK 10.6bn in Sweden alone). Further, CDON recognises a market tailwind, as also reflected in the solid growth reported by several Swedish e-commerce retailers recently.

Encouraging development, pending more details on growth plans

We believe the Q3 outcome supports our view of returning growth based on macro trends, and the organisation having shifted to initiatives to increase supply and improve customer experience, after an extensive organisational and technological integration in 2024. For 2026, there are still limited details regarding expected costs/investments related to, e.g. marketing and further technology development. Hence, our earnings estimates for next year are somewhat uncertain at this stage. However, the recent capital raise provides leeway. We make minor adjustments to our estimates and raise the base case valuation slightly.

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