Equity research CDON Q2 2025: Back to growth sooner than expected

GMV and net sales surprised on the upside and increased year-over-year in Q2 2025. While some cost headwinds remain, the outcome supports the view that CDON Group has turned a corner to return to profitable growth. After completing the technical and organisational integration, onboarding new major merchants is a priority to drive growth. The realized growth momentum is a catalyst for higher valuation, we believe.  

Encouraging Q2 reinvigorates the case for a return to growth

Despite an uncertain market environment, weaker organic traffic than the company had hoped for and a somewhat unfavourable category mix due to cold weather, CDON returned to growth (+3 per cent) in net sales in Q2 2025, underpinned by an eight per cent increase in Gross Merchandise Value (GMV). This was clearly better than we had feared, and both CDON and Fyndiq segments performed better than our expectations. Admittedly, marketing spend was higher than our forecast, highlighting the reliance on paid traffic. This contributed to EBITDA lagging our expectations somewhat, and only just turn positive. However, initiatives to improve growth and organic traffic are in the works for the second half, including a pipeline of major European merchants for onboarding to CDON and Fyndiq sites through a unified API, and launching an online Snus vertical.

Potential to unlock productivity and value

There was no news in conjunction with the Q2 report on the strategic review initiated in April. On balance, the trading in the recent quarter is most likely a positive in this regard and could help turn the dial in strategic discussions. However, the likelihood and timing of a possible transaction are still unknown to us. Increasing organic traffic and conversion rate are key elements to unlocking growth potential. CDON says it continues to work with enabling tech partners, including an SEO (Search Engine Optimisation) recovery plan, emphasising AI-search. We believe this is a sound approach, even if Google Search will likely retain its dominant position in commercial search and shopping for some time. Increasing supply is another strategic priority. The expected onboarding of major European merchants, as mentioned above, highlights the opportunity to further leverage CDON’s position as a leading marketplace in the Nordic region to drive growth.

Growth momentum should underpin a gradual increase in profitability

The Q2 outcome supports our initial view of a return to GMV growth in the second half; the uptick has come earlier than we had anticipated. This is illustrated by a strong momentum in visits (+24 per cent) and a sequential improvement in the rate of conversion of visits to purchases in the recent quarter. The growth initiatives discussed above should also gradually bolster traffic and sales. We have increased our net sales expectations by some five per cent. At the same time, we raise our marketing and OPEX estimates as near-term growth may be somewhat costlier than we had previously assumed. Hence, we somewhat lower our earnings estimates for 2025-2027 (~-3 per cent). Nevertheless, we are optimistic that the improved growth momentum will translate into meaningful profitability (EBITDA) from the second half.

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