Brockhaus Technologies AG (BKHT) Earnings Call Transcript & Summary

Hello, ladies and gentlemen, and welcome to the Brockhaus Technologies Earnings Call Q2 2025. [Operator Instructions] Let me now turn the floor over to Marco Brockhaus.

Yes. Thank you, and good afternoon, everyone. Welcome to Brockhaus Technologies Earnings Call for the first half of the fiscal year 2025. Before we begin, I would like to point out that the slides we are presenting will afterwards be published in the Investor Relations section of our website, brockhaus-technologies.com. After our presentation, we will open the call to questions from your side. [Operator Instructions] Thank you very much in advance. Before we present our results, I encourage all listeners to review the legal notice on Page 2 of our presentation, which explains the understanding of forward-looking statements. Additionally, please refer to Note 6 of our annual report 2025 on Page -- 2024, excuse me, on Page 93 onwards and Page 14 onwards of our half year financial report 2025 for a discussion on alternative performance measures as well as the reconciliation of non-GAAP figures. For information on risk factors that could cause actual results to differ materially from forward-looking statements, we kindly refer you to the section on Risks and Opportunities in the Management Report 2024, starting on Page 64. Turning to Page 3. Let me briefly summarize what we have achieved in the first half of 2025. Despite the continued subdued economic and consumer climate, we were able to hold our ground. Bikeleasing is investing in its long-term growth strategy to transform from a single product provider of accompanied Bikeleasing into a multi-benefit platform. IHSE is driving the continuous development of its technology and increased its gross margin in the second quarter of 2025 through an improved product and customer mix, particularly resulting from the growing defense business. For the current fiscal year 2025, we expect organic revenue growth of plus 10% to plus 15% to -- between EUR 225 million to EUR 235 million, despite the persistently challenging economic environment. In light of the investments in Bikeleasing's long-term growth and the still very challenging bicycle market, we expect adjusted EBITDA for the fiscal year 2025 to be between EUR 50 million and EUR 55 million. Brockhaus Technologies generated revenue of EUR 112 million in the first half of the 2025 fiscal year, which represents organic growth of more than 2% compared to last year. Adjusted EBITDA and EBIT turned out 33% and 37% lower than last year, which was mainly driven by higher personnel and other operating expenses, and that is important to enable future growth of our technology group. Let me turn to the page to free cash flow and impacted by refinancing backlog. I think that's a very important chart to listen to. The next chart explains especially the development of our free cash flow before tax, which was significantly impacted by the refinancing backlog of Bikeleasing. In the first half of 2025, free cash flow before tax came in at minus EUR 22 million, which was significantly below the prior year level of EUR 2 million in the first half of 2024. And this is now important. This was primarily due to the deferred payout of a refinancing tranche at Bikeleasing of around EUR 23 million in early July. You see it was around the 30th of June this year. As of the reporting date, the refinancing backlog representing bikes already purchased by Bikeleasing, but still awaiting payments from various refinancing partners stood at EUR 34 million, well above the prior year level of EUR 20 million in the first half of 2024. The refinancing backlog is mainly driven by the number of newly brokered bikes, the average price per bicycle and the average possession time of refinancing partners. Due to the seasonality in the company bike leasing business and the resulting refinancing backlog, the majority of the group's operating cash flow typically falls in the second half of the fiscal year. You can see the development also on the right side of this chart in H1 2023, 2024 and respectively in 2025. Let's turn to the next page, revenue by quarter. Proceeding to this slide, let us look at how revenue developed on a quarterly basis. At IHSE on the bottom of the page, while the first quarter was below last year Q1, in the second quarter we saw a positive development and revenue exceeded prior year by 13%. Bikeleasing on top of the page in the first quarter was up by 11% compared to Q1 2024. In the second quarter, revenue was mostly on the same level as in the second quarter of 2024. I will now proceed to the next page for the regional sales split. First to Bikeleasing. No surprise here, the company does business in Germany and Austria and growth in revenue was 3%. Overall, IHSE revenue was broadly flat compared to the first half of fiscal year 2024. In EMEA, revenue was slightly up by 3%, in Americas revenue was down by 1% and in APAC, revenue was down by 5%. Let's turn to the segment P&L table. KPIs by segment. In the first 2 columns, we see that Bikeleasing's gross margin was slightly below last year's level at 60%. The main reason for this was the increased revenue share of resale proceeds, which generally have a significantly lower gross profit margin than the segment's other revenue components. EBITDA and EBIT margins were below prior year's level. In addition to the lower gross profit margin, this is due to the significant increase in personnel and other operating expenses to enable the anticipated strong long-term growth. These costs are mainly driven by the segments advancing transformation from a single benefit to a multi-benefit platform. Strictly prioritized growth initiatives in this regard manifested in higher marketing expenses. In addition, the rise in expenses primarily attributed to the acquisition of Probonio and the establishment of Bike2Future for marketing and brokerage of used bicycles via B2B and B2C channels and the associated growth measures. Proceeding to the next 2 columns to the right at IHSE at 82%, the gross margin -- profit margin was significantly above the comparative prior period's level of 71%. The rise in own work capitalized has a positive effect on the gross profit margin. This was primarily attributed to an increase in development investments in new matrix and extended generations of IHSE and kvm-tec. And also when excluding own capitalized, the segment's gross profit margin was 73%, up significantly on the level of the comparative period. Due to the increase in gross profit margin, while fixed costs in the area of personnel and other operating expenses were only slightly up on the comparative period, EBITDA margin and EBIT margin were above prior year. Moving to further columns to the right, central function expenses were more or less on the level of the first half of fiscal year 2024. In conclusion and summing up on the consolidated group level, revenue was EUR 112 million and gross profit margin was at 63%. Adjusted EBITDA margin was 22%, bringing our group to an adjusted EBITDA of EUR 25 million. The group's adjusted EBIT of EUR 22 million corresponds to a margin of 20%. Next page. Coming here to the next page, we come to our financial leverage structure, and I would like to run you briefly through this. End of June, the net debt loans amounted to EUR 77 million. When subtracting cash of EUR 26 million, we are left with a net debt from loans of EUR 51 million. Furthermore, adding EUR 19 million from other financial liabilities and subtracting EUR 17 million of net debt from lease refinancing brings us to EUR 53 million in total net debt. If you compare debt to EBITDA of the last 12 months, this corresponds to a leverage of 1. As our limit for this KPI is somewhat 2.5x EBITDA, we consider our current financial position as more than conservative. This concludes the first part of our presentation, and I now hand over to Paul, who is in charge of our acquisitions team. Paul?

Thank you, and hi, everyone. As usual, let me start the operational deep dive with a quick look at Bikeleasing. As already hinted at during our full year's earnings call last week, the growth of Bikeleasing's corporate customer base continued throughout Q2. The number of corporates now stand at around 78,000 with around 3.9 million employees behind them, representing a year-over-year growth of 17% and 8%, respectively. This also shows you that the onboarding was particularly strong within SMEs. With approximately 71,000 units, the number of brokered bicycle in H1 was below the previous year's level, primarily due to extreme discounts within retail and an increasing number of blocked customers due to deteriorating credit scores across Germany. You might ask now why should discounts actually have a -- discounts within retail actually have a negative effect on newly leased bicycles since we are only offering a financing solution. Irrationally, but it is how it is, a lot of retailers have started not discounting bicycles that go into leasing programs to counteract the commissions of leasing platforms. Hence, just as an example, if you get offered a 40% discount on a cash purchase compared to 30% savings on the nondiscounted price through leasing, it makes more sense to buy at least if you have the disposable income to do so. This is also underlined by the fact that the average price of a bike financed through bike leasing has not seen a large decrease over the last month, meaning heavily discounted bikes are not being leased. This being said, H1 last year was also unusually strong on a full year comparison, as you can see on the right-hand side of this page. In 2022 and 2023, H1 had a share of annual units of around 52%, 53%, respectively, meaning that you could say H1 and H2 were broadly speaking, balanced. Last year, however, H1 had a percentage share of 58%, mainly driven by the deteriorating consumer behavior in the second half of the year. Last but not least, the growth of corporate customers at Probonio is also continuing its positive development. Since acquiring the company in April last year, with upselling starting at the end of August, we have now grown the number of corporate customers by more than threefold from around 800 to around 2,500 by end of June. Nevertheless, just looking at the number of Bikeleasing customers, you can see that there is still some significant way ahead of us. Turning over to the next page for a more operational update. As already announced a couple of months ago, and you might have seen that, Bikeleasing decided to introduce a new partner participation model from August 1 this year onwards. Bikeleasing historically refrained from collecting a commission from its retailers in comparison to our competitors for the business coming through the Bikeleasing platform and even paid a premium for corporate customers recommended by retailers. Unfortunately, it became more and more obvious that only a select number of retailers understood this key advantage that Bikeleasing offered, while the majority of retailers did not differentiate between Bikeleasing and other providers. You can just, let's say, think about what I said 5 minutes ago about the not discounted bikes going into leasing. This is, of course, one example of exactly that. And this had to be fixed. That's an imbalance that needed fixing. Hence, Bikeleasing introduced its partner participation model as a fair system for all parties involved. The new model is based on a partner participation fee of 6% on every bike, however, with an absolute cap of EUR 300 net per bike. As Bikeleasing aims to continue a partnership approach with its retailers in relation to new customer acquisition as it always has been, retailers receive a reimbursement of 50% or even 100% of the upfront fees depending on their sales activity in that year. And as a step even further, not only a reimbursement, but also a 3% premium on top, starting from the 21st bike onwards that were ordered by customers recommended by those retailers. So to phrase it less technically, retailers that benefit from Bikeleasing's customer base and volume without providing reciprocal support pay a partnership fee going forward, which is only fair as Bikeleasing bears all the sales and marketing costs themselves otherwise. Retailers with limited or normal support are reimbursed 50% or 100%, respectively. This means every retailer can return to their status quo, meaning no fees at 100% reimbursement. And lastly, those retailers that actively support Bikeleasing and help us increase the customer base will earn even more than they did before, meaning the 3% on top. Not only is this a fairer system for Bikeleasing vis-a-vis its retailers, but also fairer among the retailers themselves. So far, if you think about it like this, a retailer who has actively waived our flag, did company events with us, et cetera, earned the same margin per bike as did their neighbor who did nothing but benefit from the volume generated by those activities. Now you are actively rewarded for the partnership work you do with us, Bikeleasing. With this, turning over to IHSE. As mentioned by Marco earlier, revenue at IHSE grew very slightly year-over-year. But more importantly, though, their H1 revenue was broadly in line with the average revenue levels over the last few years, as you can see on the right-hand side of this page. And this despite the turbulences in relation to the postponed annual report that naturally caused a lot of operational distraction. In addition, the revenue was not only stable on group level, but also across the regions, EMEA, Americas and Asia Pacific, even though within APAC, there was a shift away from China to other APAC. On a very positive note, we could see that H1 -- in H1 that our investments in various certifications and business development activities within the Defense segment are starting to pay off now. While the government and defense vertical already showed a 20% weight in fiscal year 2024, this increased to even 44% in H1 of this year. While those projects usually have a long lead time until they turn to revenue, they usually come hand-in-hand with even higher gross margins than the usual IHSE projects. This is also what you can observe in the gross margin development of IHSE in H1, which increased significantly. On the next page, also a less quantitative and operational update on what's going on at IHSE. In H1, IHSE achieved 2 new product-related milestones. Firstly, IHSE's Secure extenders were approved for the NATO Information Assurance Product Catalog or in short, NIAPC, meaning that the listed IHSE devices offer the highest level of protection for all NATO data classifications. This is another milestone in the ongoing expansion of our presence and relevance within the government and defense space. Secondly, IHSE announced the upcoming launch of its new Draco XStreme extender generation. This new device generation is based on a completely new hardware platform and implements IHSE's JPEX XS video compression algorithm for higher compression efficiency. What that means for less technical people like myself, you can have the same data transfer across the devices with less bandwidth in the customers' network behind that, which makes it cheaper and more efficient. This concludes my section and handing back over to Marco for the outlook.

Yes. Thank you, Paul. Flipping over to the last page of today's presentation, our outlook for the fiscal year 2025. As mentioned at the beginning, we expect revenue between EUR 225 million and EUR 235 million, corresponding to solid organic growth of 10% to plus 15% compared to fiscal year 2024. For adjusted EBITDA, the group plans a range of EUR 50 million to EUR 55 million, which represents a decline of minus EUR 15 million to minus EUR 23 million compared to the adjusted EBITDA for the 2024 reporting period. As part of the ongoing transformation of bike leasing from a single product provider to a multi-benefit platform, the 2025 fiscal year is expected to include significantly higher expenses for personnel and other operating costs. These increased expenses are primarily driven by the strategic growth initiatives, particularly the rollout of the digital multi-benefit platform, Probonio.de and the development of the used bike sales platform, bike2future.de, established in 2024. Despite initial signs of recovery in the German bicycle market, the overall environment remains challenging. High inventory levels among bicycle retailers continue to lead to significant discounts in retail, which impacts not only the resale prices of used bikes, but also the demand for new company bikes. The Executive Board expects this situation to persist into the second half of 2025, and this is reflected accordingly in the full year forecast of 2025. A significant portion of the higher expenses at Bikeleasing this year will be offset by the introduction of a bicycle dealer commission, as Paul just mentioned, which became effective on August 1 and is already common practice among other -- among most competitors. Please note that this forecast assumes that there will be no further change in the scope of consolidation within Brockhaus Technologies. The reason for this approach is the difficulty in predicting the nature and scope of future acquisitions. We do not believe that any estimates in this respect are sufficiently reliable, even though we are constantly working towards finding the next hidden gem in the market. That concludes our presentation, and we are now happy to answer your questions. For that, I would like to hand over to the operator.

Thank you. [Operator Instructions] and we have a question coming in from Lukas Spang, Tigris Capital.

I would be interested in the -- again, on the topic of Probonio, you showed now 2,500 customers, which is roughly 1,000 more than end of 2024. So first part of the question is, would you think that this could be a fair assumption or a fair run rate going forward for the next, let's say, 6 months and beyond? And -- now you have more than 1 year of the acquisition, and you mentioned that you have started with the cross-selling and upselling activities in August last year. What is your experience in terms of price per employee on the product side?

Yes. Maybe to take the first part regarding onboarding speed going forward. Of course, we won't give out a forward-looking statement on that. But just to maybe phrase it more generally, it would be a shame if we, let's say, gain traction and experience and do more work with Probonio just for the, let's say, curve to flatten down again. But what we see is after now a year or a bit more than a year of ownership and also sales conversations that the sales cycle is significantly longer than initially expected. You always win, let's say, especially in the SME segment, you win customers on a frequent basis without doing a lot of work. But on the enterprise side, we realize that the sales cycles are super long because it's multiple teams involved on the corporate side, budgetary questions involved. And they usually start if they decide for it with a small, let's say, pilot group within a larger enterprise to test it out for a couple of additional months before rolling it out to more teams. And even then it's not a switch of, let's say, pilot phase completed, now everyone gets it, but it, let's say, dribbles down, so to say, through an enterprise, which is something that we are, let's say, having as a learning here. The second part of your question was related to -- sorry, could you repeat that?

Yes. What is your experience until now in terms of the average price?

Yes, we can't disclose that also because it differs really from customer to customer. So there's, of course, a couple of even free benefits that you could use to, let's say, avoid budgetary questions internally. But there are also some, let's say, very prominent benefits. However, they come hand-in-hand with higher costs for the employer, just, let's say, as one example, vouchers. And many people think vouchers are something new, something that is in the German Mittelstand since ages already is vouchers for petrol stations. The difference is that previously, people have picked them up physically and now they can do it just digitally through Probonio. But I mean, the pricing of our different modules is available online, so everyone can see that. However, we won't, let's say, give an expected number per user, what we expect to earn so far.

Then phrase it a little bit differently. Is it like you expected or higher or lower than when you bought Probonio?

We can't disclose it really, but also because to be very honest, it differs too much from customer to customer. We have some customers that jumped on board directly with the all-in-one package, which we would have not expected them to take up. But some of them start with only a very, very small package at the same time. So it's very hard to say at this point in time. I think it becomes clearer the more customers we actually onboard.

Okay. And on the enterprise area, what is the current split in terms of enterprise versus small and medium companies?

We -- actually, I don't have the split. So I know that we have some enterprise customers, especially those that are very loyal Bikeleasing customers as well. But also as I said before, in those cases, they have not rolled it out to each and every employee yet. We have a couple of, let's say, call them enterprise customers, but the vast majority is also in the SME space, which is not very much a surprise because also the majority of Bikeleasing customers are SMEs.

Okay. And then last question on Probonio. Last time we discussed your expectation from last year concerning the mid-single-digit million EBITDA contribution for this year. So I don't want to repeat the question again. But from another perspective, what is the current cost base of Probonio, if you can share maybe some light in this regard?

We don't split that out because it's also, let's say, intrinsically embedded in Bikeleasing by the time now, right? So of course, we have some differentiated head counts that we can split and some other operating expense that we could split. But at the same time, there's a lot of, let's say, crossover work going on as well. And splitting that up, you would then also need to prioritize, I don't know, management time and capacities, cross-functional development, et cetera. So I -- even if I would have the split in front of me, it would not be accurate.

Okay. But will they stay separate brands in the future? Or do you also consider to bring them together as one brand?

A very good question that we are considering, but the reality is Bikeleasing is a very strong brand and Probonio is, let's say, ever stronger becoming brand. So I don't think it makes sense to change one into the other, but it's more a question of how you can harmonize the brands with each other.

And next up is Kai Kindermann from Montega AG.

I'm here on behalf of Christoph Hoffmann. And I have a question with regard to the shareholder structure. According to the last 2 annual report, Mr. Brockhaus' share increased 1 percentage point from 21.4% to 22.4%, and we couldn't find any directors dealing publications. Could you please explain how this increase took place?

I can take that as well, but Marcel will jump if it's -- if I'm mistaken here. But I think it's not an increase per se, but it's a change in, let's say, percentage voting rights due to the buyback that we did. We did, if you remember, a share buyback end of 2023. It was in the amount of 5% of shares outstanding and those accordingly don't have voting rights anymore, which automatically increases everyone's voting percentage. And this is what happened here. That's why there's no director dealing because it was not a dealing.

Okay. And just as a follow-up, are there any restrictions on insider purchases? Or are they possible again with the publication of the half year report?

This is Marcel speaking. This is something we cannot comment, sorry about. If we have to talk any important information, we certainly will do so ASAP. If not, this is something which cannot be communicated to the outside.

At the moment, there are no further questions. [Operator Instructions] And we're coming to the next question. It is Sebastian Weidhuner from Paladin Asset Management.

To start with some add-on on Probonio. So Paul, you mentioned free benefits by Probonio to get it clear, are there any corporate clients in the [ 2,500 ] who don't pay anything?

Honestly, I don't know. There might be some older clients that have only, let's say, a limited amount of basically free benefits. But I'm not aware of, let's say, a big share of clients who have been onboarded for free because they wouldn't bring us anything, right?

Okay. Right. And could you please share how much or how many employees those 2,500 corporate clients represent?

We don't share that. We might add that at a later point in time. But so far, it's not a KPI that we are communicating.

Okay. And then another topic in the previous H1 and also in the Q1 report, you disclosed the gross margin of the bike brokerage business. I was missing this kind of information. Could you please provide an update for Q2 or for the full first half of the year?

Good catch. There's no specific reason why we deleted it. It's stable. So there was no significant change there. We just excluded it because the -- we added it for some additional clarity, but at the same time, the returning bikes business is, let's say, business model imminent. So we can't really split those 2 at least yet. And that's why we just circled back to coming back to the consolidated gross margin for bike leasing. It's still stable as reported in the past.

Okay. Stable would mean 92%, right?

90-ish percent. I don't know the exact number, but at that level, yes.

Okay. So you mentioned the cash flow was due to a delayed payout of a big refinancing. Could you please explain the reason for this? And more general, would you say that refinancing partners have become more cautious or less willing to purchase receivables? Or do they demand a higher risk premium?

No, not really. So maybe by way of explaining it again technically, Bikeleasing always purchases the bicycle from the retailers because it's just quicker because you need to mimic a cash purchase at the retailer. And hence, we purchased them in T0. And then at the same point in time, Bikeleasing turns around and sells them off to leasing companies. In the case of external leasing companies, we get the cash in, I don't know, 1 or 2 days delay. In case we sell it to our own leasing subsidiary, it's, of course, sold off, but it's still intercompany. And the leasing company again turns around, let's say, quite quickly and sells it off to either banks, meaning forfeiting or securitizes it or takes up loans to refinance them or cash. And the speed in which in all those, let's say, nonrecourse cases I just explained, so giving it to external leasing companies or in our internal company, giving it to banks and forth facing or to other investors in terms of securitizing the speed in which we get the, let's say, reimbursement or the payment for those receivables differs from institution to institution. Some of them are more, let's say, linked into our processes already where we get the cash quite quickly. But sometimes you have, especially in the securitization part, you have structures that only purchase receivables on a weekly or biweekly basis. And in this case, it was unfortunate that the, let's say, purchase date was just shortly after the cutoff of 30 June. So this is the only reason there's no, let's say, increased caution or so it's just standard processes and the payment date, unfortunately, was in early July.

Okay. Got it. So no higher risk premiums from the buy side?

No, it's rather that the interest rates have again been decreasing over the last month. So they have been increased with the interest rate increases, which is why we shifted from a fixed to a floating rate system. But over the last month, they have started decreasing again.

Okay. So as for now, after Q1, you reported a year-over-year decline in brokered bikes of just 10% in April and then even a 6% increase for the first 3 weeks of May. So the H1 number should imply a drop again in June. You already have data for July and the first week of August. So how do you assess the current trend based on these numbers?

Yes, you're absolutely right. June was a bit of a disappointment because coming out of Q1 and into April and May, we thought that, let's say, the bottom of the market has been surpassed. But apparently, this wasn't the case, that's what costs us a couple of units. The good thing is that the delta to previous year is becoming smaller and smaller. I think in Q1, we were still some 20% behind the previous year. Now we are some 12% behind previous year. And as I showed you before, we are -- we had a pretty strong H1, unusually strong H1 last year and a weaker H2. So the comparables against which we fight, so to say, become smaller now in H2. So we think the number will improve. But yes, if you listen to the bicycle industry and go to Uruguay, you basically hear the same talk every year. It's just being postponed by another 12 months, right? The bottom of the market and excess inventories, et cetera, has been reached. And then 6 months later, it is announced that it has not been reached yet, and there's still excess suppliers. We actually don't have the crystal ball and can tell you when the market and especially the discount situations will normalize again.

But to be clear, did the delta fell below 12% in July?

A, I don't know. I don't have it in front of me. B, we wouldn't comment on that now on a month-to-month basis.

And the next question comes from Guillaume [indiscernible].

But my question has just been answered. I was going to ask you about the gross profit as well that was not disclosed in Q2. But Paul, you did answer.

Great. Again, there was no specific reason. We can also read it, but it's -- we thought it's business model imminent. So we come back to the consolidated figure.

And we're coming to the next questioner. It is [ Werner Friedmann from Ascendis. ]

I have two questions. Actually, first is on maybe again this topic of selling the used bikes. Maybe you can just give a number what the sales volume in H1 was that you sold used bikes for? And is this a part of -- if I look into your half year's report, I see the sales mix and there's a EUR 35.2 million sold products number. Is it catched here?

Correct. We are just looking up the number. But when you look at sold products within Bikeleasing, that is the number of used bicycles sold. So it's the EUR 35 million in H1 this year.

That's the amount. That's a lot.

Yes, that's a lot. But to also be transparent here, this includes each and every bicycle that comes out of the leasing contract, irrespective if it comes to us physically or not. So in -- I think last year, the split for a normal leasing term ends. So after 36 months, we always offer the employees who have used it to purchase their own bicycle, so to say. And last year, I think it was 93% of employees who take this option. But anyway, those 93% still run through our revenue figure with a close to 0% or plus/minus 0% gross margin. They are included here.

Okay. So maybe you could be more specific in the shopping, I think it's down to [ Weiterstadt ]. What's the sales currently there? And what are you expecting for next year?

Yes, we haven't reported that yet. We can think about adding that in the next report. That's a good point. So far, the sales in the physical store have been on a lower but increasing level. So it has been increasing month by month. But you can also not look at the physical stores separately, but you need to factor in also the B2C online store and the B2B online store because we have connected our retailers that we anyway have on the platform. At Bikeleasing, we have connected them also to the B2B online shopper, Bike2Future. So it's not only B2C going through them, but also B2B.

Okay. That's understood. So maybe if you can add that in the future, it would help interpreting the numbers. And the second question actually is on your new dealer agreements, and it would be to gain more insight into the relevance of the bike dealers as a sales channel. How many of the 71,000 bikes in H1 actually were referred by bike retailers? Is that only 1,000 pieces? Or is that a meaningful number?

Also, I don't have the exact split in front of me, but it's unfortunately a low percentage. There is -- and that's also one of the reasons, as I hinted at earlier, why we introduced this partnership model now the new one because we see that it's always the same, let's say, select number of retailers who understood the advantage of our commission-free model, and they were actively waving our flag and pushing us in the market. And they are also the ones that earn -- should now earn the 3% premium, by the way, right? So they are being honored through the new model, and they like it. But unfortunately, the vast majority of retailers didn't care about the differences, but they treated everyone the same way. And that's also why we switch now to the system because we can, let's say, we make the good or we make the active retailers profit from the new model, while everyone else needs to then also pay a fee towards us as to everyone because if everyone is treated the same way, then we can also get a commission.

A follow-up question comes from Lukas Spang, Tigris Capital.

Yes. One follow-up on IHSE. You showed the more or less stable development on the revenue side for several years. And in the past, we know there was this China impact, which was bringing down the revenue for the company. But now going forward, and we also discussed that in the past that it's, a, not your ambition that you have flat revenues or even declining revenues at a portfolio company; and b, that you have just a margin like currently. So you rather aim for a 30% EBITDA margin at your companies and portfolio companies. So going into the second half now of the year and also already looking into 2026, what are the measures you are doing on IHSE to bring the revenue growth back on a substantial growth. So let's say, at least double digit and also in terms of the profitability.

Yes. To start maybe with the second piece, profitability at IHSE is always a function of top line because if top line comes, the margin, let's say, more or less automatically falls out of it. But anyway, we have a close monitoring on, let's say, the operational efficiency there, right? Because you can have a certain, let's say, fixed cost basis with an eye on potential revenue. But if you don't achieve revenue for an extended period of time, then you also need to think about if the cost base is still adequate. But the more interesting question is how do we come back to a, let's say, double-digit growth, which IHSE has been achieving if you look at a, I don't know, 15, 16-year plus time horizon, they have achieved a, let's say, it was sometimes a bumpy road, but over the long term, have achieved a 10%-ish top line CAGR. The answer is by systematic segment business development. We have more mature markets, which is air traffic control or broadcasting. We have now worked a lot and invested a lot of time and money into bringing up a third vertical to a similar maturity level, which is defense or government and defense, which has worked out nicely. And this is, I believe, what we need to replicate, right? So bring those forward and at the same time, look at which other verticals are there to be systematically built up. And the more you have, hopefully, the more, let's say, diversified you are then also from, let's say, solitary projects, which, however, will always be part of the nature of IHSE. So there will always be in some years, some very big projects that are then hard comps to fight against in the next year. But we tend to focus on the, let's say, baseline revenue. And that's, of course, the goal to bring that up again.

Do you already see some fruits of this in your pipeline or your lead generation and discussions with either existing customers or new customers?

I mean the pipeline usually looks good. The question is just how quickly do those projects; a, are they being won by IHSE; b, how quickly do they turn into order intake and c, how quickly do they turn from order intake into revenue. And I think we have shown that in the defense space, we have built up quite some good project relationships that have brought our margin up in H1. However, those also were projects that had a very long lead time upfront. Those are not topics, let's say, that were originated in H1 and already converted in H1, but they all, let's say, had much longer lead times. The benefit of that is that once you are designed into such a system, you basically collect more orders from every system that is being sold.

So going into the second half of the year, do you think the revenue growth will pick up or further pick up?

Yes, without being the booman, but we don't guide on an individual basis, of course, as we have never done before.

No, but from a more qualitative perspective?

I mean we have a good pipeline in front of us, a good pipeline, order backlog. We are positive, but you always have to see which projects still are being realized in the correct year. And you saw last year what happened is if someone wanted to change that, which led to a hefty postponements on our side for the annual report, which is incorrect to do. The nature of the business is a project business. And even if I would hand you out the project pipeline for H2, unfortunately, you can't be sure that all those projects are being realized also in H2. That's why I'm -- even qualitatively, it's hard for me to give you a judgment because we have seen everything. We have seen all the projects that we see in the pipeline turn out to be in the same period that we expected them to come. Those are in very good years. And we have seen very bad years where everything is being postponed basically. That's unfortunately the name of the game.

At the moment, there are no further questions. [Operator Instructions] And the follow-up question comes from Sebastian Weidhuner, Paladin Asset Management.

In the first half of the year, we saw ERP implementation costs of EUR 2.3 million and one-off compliance cost of EUR 3.0 million. So how should we think about these 2 items for the second half of the year?

This is Yannick from the Finance department. So to start with the second one, the compliance costs, these will be significantly reduced in the second half, so not as high as in the first half of the year. And for the ERP system implementation, I think, yes, it should be quite constant over the next quarters.

Okay. And do you plan to end these costs, the ERP costs in this year? Or are we seeing some in 2026 again?

It's a good question that we can't answer, to be honest, because we need to see how the implementation and rollout continues. As you can imagine, it's a quite complex project and ERP projects are always complex. But yes, we are making meters here step by step, but we are not yet, let's say, close to the finish line. So there might be more to come. If it ends this year or if it shifts also into next year, honestly, we don't know yet.

Okay. And also, in the first half, Bikeleasing paid a EUR 10 million dividend. And from my point of view, Brockhaus was able for the first time to upstream your share to the holding, even though the acquisition financing hasn't been fully repaid yet. So can you comment on that?

Yes, that's technically correct. And the reason is good relationships with our financing partners. In that case, we -- then the normal procedures would have been that they are mandatorily repaid on the EUR 5 million as well, but we were given the option to upstream that into Brockhaus AG, which, of course, is more favorable for us because that gives us optionality.

So in the last call, we talked that this is -- so Bikeleasing dividend would be needed to do share buybacks again. So is this possible now? Or how do we should look at this?

No, without having the exact numbers in front of me, but the dividend of, let's say, what was it, EUR 5-point-something million that came up were not sufficient to, let's say, fill up the -- how is it called? Yes, retained earnings sufficiently for a new buyback. So there needs to come more for this.

Okay. Clear. So are you planning to repay the subordinated loan in full in view of the expected strong cash flow in H2?

Let's see. It's, of course, one of our key priorities. But we want to repay it because it's a quite high interest rate that we pay on it. And since we own 95% of the holdco, it's also 95% of the interest that is, let's say, EPS relevant for us. So you can be sure it's on top of our agenda.

Two questions there. So the first one, you state in your report that Probonio and Bike2Future cost EUR 5 million in additional OpEx. However, the delta between gross profit and adjusted EBITDA in this segment was EUR 12 million. So do we assume that the remaining EUR 7 million is to the brokerage business?

If you mean with brokerage business, Bikeleasing as a stand-alone entity?

Yes. Okay. So yes. And the last one, can you get more specific about the M&A pipeline? So have there been any deals in the last 8 months that were close to completion? And are you at the moment, working on something there?

Yes, we are not giving -- Marco?

Yes, maybe I jumped in here, Marco Brockhaus. We are not guiding this. You know that. But yes, we are looking at certain transactions in the market, always with the same high level of selection detail. And yes, sure, we are looking at transactions and also on a certain one, but nothing yet which we can talk about.

[Operator Instructions] So there are no further questions.

All right. As there appear to be no more questions, thank you all very much for attending today's earnings call of Brockhaus Technologies. I would like to use this stage a moment to thank our employees for their outstanding work and performance as well as our shareholders for their continued trust and support. Thank you very much for that. Goodbye, and have a great day. Thank you.