JDC Group AG (JDC) Earnings Call Transcript & Summary

Welcome to today's earnings call of the JDC Group AG following the presentation of the financial year figures of 2024. So the preliminary results will be presented by CEO, Dr. Sebastian Grabmaier, CFO Ralph Konrad and COO, Dr. Ramona Evens. So after the presentation, we will move on with the Q&A session so that you have the opportunity to ask your questions directly to the Management Board. So having said this, Sebastian, I hand over to you.

Yes. Thank you very much, Sarah. It's a great pleasure to present you the figures of -- at least the preliminary figures for the full year 2024 and we can proudly state that this is by far the best year in the history of our JDC Group as it comes to absolute terms, but also to gross terms and percentage terms, you will see that this will be a very happy meeting. So let me introduce my colleagues to you. With me here in the line are both Ralph Konrad and Ramona. I just saw Marcus as well, but as he's just listening, hi, Marcus, and Ralph and Ramona will present themselves. Ramona.

Sure. Hi, I'm Ramona Evens. I'm here for the first time, and I will introduce myself a bit longer later during the presentation. For now, I'm the new Chief Operating Officer, and I'm responsible for operations for human resources, for digital processes and for data management.

Hi, I'm Ralph Konrad, responsible for IT, finance, legal compliance and the M&A department of the JBC Group. Sebastian?

Thank you very much. On the next slide, we just introduce the company to you real quick for the few that do not know the company from scratch. Yes, so we are a typical platform business. That means that we have contracts with all the product providers basically in Germany. So we take in the data of more than 220 insurance companies, all the mortgaging banks, the alternative platforms, the asset management platforms and the investment companies. We digitize the data, we standardize the data and then we process it and then we make the data visible in our own systems or we load them up via an API structure to the systems of our clients. So typically, our clients is not anymore the individual brokers and agents, but more and more other fintech, Intertech companies, other platforms more and more insurance companies and the German banks. So right now, we have about 5.8 million contracts on the platform and earn about on average EUR 40 per contract each. So the 5.8 million contracted data sets, and this breaks down in about 2.4 million contracts. So on the next page, please. So we can see that this was really, really a very, very successful year for our JDC Group. We had a very strong Q4. For the first time, the company could achieve a turnover of more than EUR 60 million -- EUR 62.7 million indeed. So that's a new record high than what we did in a single quarter. And it's also good that we are growing and the growth is growing. And so the entire year 2024 could exceed even the very good Q4 2023 by more than 28% following or leading to a growth a turnover of EUR 28.6% over the entire year from EUR 171.7 million to EUR 220.9 million. So that's even a little bit higher than the upper end of our guidance last year. And you also can see that according to the increase in turnover, also the EBITDA is growing quite nicely, also in real terms of by 28.9%, but there is some one-offs, as you can see of EUR 0.8 million. And so if you eliminate these one-offs, EBITDA growth would even have been almost 36%. So a very nice development and especially against the backdrop that TopTen was consolidated in the end of '23. So there's more than EUR 60 million organic growth in the year -- in the Q4 2024. You can see here the table of the figure development, the Q4. You can see that, that was the most successful Q4 and therefore, the most successful quarter we ever had from EUR 48.8 million in 2023. The turnover revenues grew to EUR 62.7 million. So that's also 28.4% growth. And overall, that's what I said, is the growth from EUR 171.7 million to EUR 220.9 million. So that's also a growth of EUR 28.6 million. And then you can see how this breaks up in the different segments. So we will have more to this by Ralph in a minute. And you can see that also the most important line is always this gross profit line that's commission in minus commission out, you can also see that there's a nice growth of 17.8% in Q4, leading to a margin of overall EUR 64.3 million, growing by EUR 21.7 million. So very nice development also for the earnings figures. EBITDA for the first time in a single quarter was EUR 5.9 million now coming from EUR 5.0 million in '23. And the full year, we could grow the EBITDA from EUR 11.7 million to EUR 15.1 million. So also in the mid of our guidance. So we're quite happy about that. And also, you can see then that the growth figures in percent, they grow even more, the more you go down the lines. And so EBIT is up almost 50%, very nice development as we think. So the nice fact is that the growth is based on like a number of factors, all the business lines and all the product groups are growing nicely. So the biggest boost came from investment in financing, especially the consolidation of TopTen. First consolidation again was December '23. So it was the first full year we had TopTen in our figures. So that's a little bit more than EUR 20 million on Top for the year 2024. So we have a very nice growth here of plus 56%. But so the base of our business is the insurance business that was also nicely growing by 17%. That's just a margin of EUR 18.4 million more turnover than last year. And all the others are back. You see that real estate markets are back in the retail sector and also financing is back. So some alternative forms. So that grew by 10%. So overall, a really nice development overall product lines. Yes. And you see this, that's what I stated, not only all the product lines are growing, but also the different business segments. So still the biggest part of our business comes from the 16,000 IFAs we have under contract, and this segment grew by EUR 35.1 million. That's a growth of EUR 31.5 million, but also our major customers that we have on board grew by 30%. That's a margin of 11.1%. Also Advisory is back on track. Here, we always tell you that you can expect growth of plus or minus 10% was also a very nice growth of almost 17%. So you can see that our turnover split is roughly 3/4 is the IFA business and about 1/4 is the major customers. So very good distribution here, too. Yes, Ralph, maybe you go deeper into figures.

Yes. Let's look into the comparison by quarter. If you look there the development by quarter, we have seen a very dynamic year 2024. It's particularly noticeable that the distribution of sales over the year was very stable compared to the previous years. In other words, there was no weak summer with weak turnover that we normally see if you look at '21, '22, '23, this was not a fact in '24. And nevertheless, we had a very good fourth quarter with a record turnover, as Sebastian mentioned, of more than EUR 60 million in just 3 months. We expected a strong year-end business, a typical year-end business, but the development in Q4 was even above that expectations. But in contrast to the previous years, the driver was not the insurance business, but the investment business. And let me please mark that this shows how important the balanced business mix is and that, I think, confirms our strategy not only to focus on one of the segments. And at the end, we ended up slightly above the upper end of our guidance, which is, from our point of view, a very good success. In the Advisortech segment, like in the previous quarters, that segment showed an extraordinary good performance in the fourth quarter. The revenue was up by more than 31% to EUR 55.7 million and EBITDA increased by almost 19% to EUR 5.3 million. Some of you will wonder why EBITDA has grown more slowly than sales. And there are mainly 3 reasons for this. The first is that Q4 2023 was already an exceptionally good quarter and was hard to beat. That's the first reason. The second is, we again had one-off costs for the integration of the TopTen group of around about EUR 200,000 in Q4. And the main reason is that a good -- due to the very good stock markets, we received a lot of performance fees for many managed accounts. And there, the JDC's margin participation is significantly lower compared to the normal margin participation. And these 3 reasons led to the fact that we saw a very good EBITDA, but a slower growth in EBITDA compared to turnover in Q4. The personnel costs are up by 18.6%, a small portion of this due to inflation, the main by part driven the consolidation of the TopTen top 10 group. Same with the other operating expenses, they grew by 10%, including these EUR 200,000 restructuring and integration costs as a one-off. In the meantime, the cost for the restructuring of an integration of TopTen and some more M&A costs are about EUR 800,000 this year, and that's the reason why we decided to show some pro forma figure in gray, so that you can see that the EBITDA margin or that all the margins are even higher than reported if you deduct this one-off costs. Pro forma, you can see an EBITDA growth for the full year of 33.3%, reported 26.6%. The turnover grew by 30%, which is EUR 197 million, which also shows a record high. We are very happy with this development. You can imagine and some operational figures on the fly, new orders peaked around 150,000 in 2024, which means a slight growth, the number of contract transfers achieved an all-time high of more than 560,000. And this figure is even more impressive given that 2024 did not include any mass transfers or bulk transfers due to new major customers. So it was all operational day-to-day business. And as a result, our annual net premium on the JDC platform is now above EUR 1.3 million, which is a plus of 10% compared to the end of 2023. This all would not have been possible without our highly committed and highly motivated team. You have to realize that behind a growth of 30%, there are hundreds of thousands of additional contracts, documents, applications, processes that we have to -- or that we have managed without a large increase in personnel due to our automation efforts. So I would like to take the opportunity to say a big thank you to our team. And that's not very common because to say thank you, it's not my core competence. So this plays a very honest thank you to the team, excellent and exceptionally good job. Okay. Let's come to the Advisory segment. The Advisory division continued its very good performance over the year and has also achieved a great result in the fourth quarter, with a sales growth of 15.9% to EUR 11.1 million, Q4 EBITDA of EUR 2 million was achieved. In my memory, this is also an absolute record high number for the Advisory segment. And for the year as a whole, our Advisory division is approaching the EUR 40 million sales mark, which we will hopefully see then in 2025. And we were able to increase EBITDA by 36.8% to a very strong number of EUR 4.2 million. The Advisory segment is now contributing more than 25% to the group results. Thus, you remember, I never tire of emphasizing how important this segment is for us. Here, too, I would like to thank the phenom team in Germany and Austria. We are very happy to have you with us. Okay. Cash flow statements. Let's start with the disclaimer because the cash flow statement is now presented at a very early stage. The preliminary figures are already discussed with the auditor. Thus, we do not expect any material changes, but cash flow statement has not been reconciled with the auditor and there might be in shifts within the items. We started the year with a cash and cash equivalents of EUR 26.4 million, which is a plus of almost EUR 10 million compared to 2023. Cash flow from operating activities amounted to EUR 15.8 million, which is below the previous year. You may remember that we had around EUR 5 million of our 2019, 2024 bond on our books. We then issued our new bond in 2023. And before that, however, we placed large parts of this EUR 5 million. In other words, we sold them. And this sale in the cash flow statement was qualified as cash flow from operating activities because it was not the direct financing. So that's the reason why cash flow from operation -- operating activities is below the previous year. But if you look at the real cash flow from the sale of our financial products, through IFAs, then the cash flow from operating activities is up by EUR 2.5 million to EUR 3 million. So a little bit misleading from today's perspective. Cash flow from investment activities amounted to minus EUR 12.6 million and mainly driven by our investments into Summitas participation with EUR 7.2 million and we invested another EUR 2.4 million in purchase price for participations and earn-out payments into already consolidated companies, so around about EUR 10 million into participations. The cash flow from financing activities amounted to minus EUR 4.8 million. Main reasons for this were at first, our share buyback program, which ended May this year -- May 2024, sorry, with an investment of EUR 1.7 million and the interest payments of EUR 1.4 million for our bond. Just to remind you, the cash flow from financing activities last year was positive because in this year, we sold our treasury shares to Provinzial for EUR 13 million. And that was the reason why this cash flow from financing activities was positive in 2023. The quarter ended with a cash balance of EUR 24.7 million and cash on hand last Friday was EUR 32.2 million. Okay. As always, some more information about share price and the bond. The share price is developing positively stable, let's say it like this. It's -- you all know at the moment, it's not that easy for smaller companies at the stock exchange. We had a close at EUR 21.90 on Friday. This morning, the market has responded very positively to our publication. Today, the share price went up to EUR 23.40, I think. And at the beginning of our conference, it was back to EUR 22. Market cap is around EUR 300 million. We have 147,000 shares on our own hand as treasury shares, with an average purchase price of EUR 19.89 still, the bond is valued at EUR 20 million, is trading very stable at around 106% right now. And maybe of interest for you, the bond is due at the 1st of November 2028. And we have the first call in -- at the 1st of November next year at a quarter of 101.5% and a year later at 100.5%. Shareholder structure remains unchanged. Okay. Let's come to the spotlight. The first spotlight is my new colleague, Ramona. We already reported in the middle of the year that the JDC Management Board was being expanded, and now Ramona will be able to introduce herself in person for the first time to the investors, Ramona.

Thank you very much. Can you -- hi to everyone. My name is Ramona Evens, and I'm thrilled to be here today. I'm also thrilled to be on board JDC as their new Chief Operating Officer. I'm with JDC now for a couple of months, and I have to say it's pretty much exactly how I imagine it to be. It's a great company with very smart and very dedicated colleagues, and I'm just very happy to be contributing to their work. And my job is to make sure that the company growth is supported by very strong and very efficient operations, and I've done that already with CHECK24. Maybe for those of you who are not familiar with the German consumer market, CHECK24 is one of the largest sales platforms in Germany and one of the largest insurance brokers in Germany as well. So I've got some experience in dealing with massive growth, and I'm happy to share that experience here with this company as well. Maybe a few words on my background. I did my PhD at the Chair of Finance and Banking. I have a background in strategy consultancy, I was with the Boston Consulting Group. And I was also in the sales management of a German insurance carrier, which is tremendously helpful in our business model, also to know the other side of the business. Yes, and I'm a little bit of a techno myself. So I'm genuinely happy about every work hour, we save with technology and looking forward to shaping the future of JDC together with my colleagues.

Thank you, Ramona. Okay. The next spotlight is that we wanted to give you an update on the stage of integration of the TopTen Group. We already did this last earnings call. Once again, transaction is done, closing is done, all regulatory requirements are fulfilled. We have completed the formal integration means that in the meantime, all the entities of TopTen are merged on to the corresponding JDC entities. And thus, please keep in mind, there -- the TopTen companies no longer have their own accounting groups. So we know that you are interested in the turnover and EBITDA contribution of the group to recalculate the organic growth, but we cannot give completely accurate answer here. What we can say is that the group's organic growth without TopTen would be -- would have been above 15%. Within -- with TopTen, it's 28.6%. And without it's plus of 15%. So contribution -- turnover contribution of TopTen is around EUR 20 million. And the EBITDA contribution is slightly above EUR 1 million and thus, within our business plans. So we are -- yes, we are very happy with that. It's more or less exactly what we have planned some years ago. The last thing left is the IT migration. The systems are already talking with each other means that they are connected via a set of APIs, and we are already using features on both platforms, but we still have to merge these platforms. We now have 2 platforms in the asset management area. So that's work in progress and one of our important goals for the year 2025. This is my favorite slide. We show this slide to you every year and we do our back tests of our efficiency gains and our scalability. And if you have been following us for a while, you will be familiar with this graphic. The columns show the development of the JDC Group's total cost. The overall costs are increasing. But in terms of growth in a very modern range and primarily driven by M&A transactions, from 23% to 24%, it's mainly the additional cost from TopTen. And if you look '20 to '21, it's mainly the additional cost of the MORGEN & MORGEN transaction, which we bought then. And if you compare this total cost to the gross margin as a kind of cost income ratio, you can see without any doubt that our platform is scaling. In 2018, the ratio was above 105%. And today, it's already below 90%. And will soon, I think, next year be definitely below 85%. The efficiency gains in 2024 were achieved with many tools and automation efforts. But if you remember exactly 1 year ago, we told you that in the year 2024, we plan to optimize the first processes using an AI platform which we, at this time, were actually pair programming with a team of external specialists. And today, 1 year later, this platform is live and helps us to provide insurer data much faster, much cheaper and in a better quality to the broker. So a big success. And this platform will help us to gain further efficiency in the upcoming years as well. So I'm very convinced, when we meet next year here, the trend will still be our friend. Sebastian?

Yes, some words to our guidance. So you see that there's a lot of checks in the boxes, so -- check marks. So you can see our guidance was in turnover EUR 205 to EUR 220. So with EUR 220.9, we are just a little bit above the upper end of our guidance, which is a nice check mark, but also EBITDA is on track. So we guided EUR 14.5 million to EUR 16 million. You can see that one-offs led to -- we are also on the upper end of the guidance with EUR 15.9 million minus EUR 0.8 million in one-offs, so with EUR 15.1 million mid of the guidance, but also our individual goals for 2024, we could reach all of them as Ralph reported integration of TopTen Group is 95% done. We have now from Summitas in '24, we saw about 600,000 in gross margin. So also check the box. We have our refocus on smaller IFAs. We have a marketing campaign and also refocusing our sales team to the midsized and small IFA groups. And also there, we are making progress. You could see that a lot of growth comes from this very big chunk in our business. Also growing even more than the major customer business, so very content with this development. And also our major customers could grow with more than 30%. So also here, a very nice development. Yes, we are expanding our key cooperation with insurance companies, both in the MORGAN & MORGAN side and also in more -- delivering more and more services to insurance companies themselves. Yes, as Ralph said, we have very successfully tried out the first processes and projects in AI, and we could save quite a bit in resources by gearing up our digital quota to more than 90% in the business groups where we use AI. This means that costs in these sales channels goes down significantly. In the end, 12 to 15 employees could be moved to other parts of the company and that gives the cost savings, making us more efficient as Ralph showed in the slide before. And also, that's what we are aiming at is our economies of scale. The cost per contract is first reduced as also Ralph showed. So we're very happy that we can have a very clean sheet here on the guidance about 2024. Yes, this brings us to the guidance in the year 2025 from EUR 220.9 million in '24. We want to grow to EUR 245 million to EUR 265 million in turnover, resulting in EBITDA growth that is significant from EUR 15.1 million in the year 2024. We want to achieve EUR 18.5 million to EUR 20.5 million. So hopefully, we can see the EUR 20 million that will be a very good development over the last years. And also, our individual goals, we think are challenging but achievable. So we want to integrate the Morgan Moore, comparison platform to the JDC platform. So we will now combine the product intelligence of Morgan & Morgan with the broker management platform. It's a very good and important project. Also, our asset management platform, that's Deutsche Finance portfolio for Weilertung. As you remember, we merged our PBV, our managing account platform into the management platform of DFP with a very nice development. And also Summitas, we want to grow our margin coming from Summitas and are looking at a pipeline of M&A transactions that might or might not be signed. So here, we still see ourselves as being ideally positioned as being one of the main consolidator of the market with all our very stable shareholder groups and also with this very nice growth and development. Yes, we definitely want to develop our IT platform even more. We still think we are the service provider of choice for all the institutions that are looking for an IT platform. And yes, we also will continue to scale up the JDC platform with AI projects. So now 2 of our business lines already run with support of AI processes, and this, we want to expand to the rest of the business lines. And then obviously, that's a known point year-over-year-over-year. We want to use economies of scale and also firstly reduce our cost per contract. So we think that we have a very strong base for the development in 2025 with good KPIs beginning in the year. But as always, right, our business is depending on further developments of the global national economic environment. You see some -- there were some heavy clouds in the -- above the German economy. You see after elections, there may see some light on the end of the tunnel and some change to the better. Obviously, all of this is influencing consumer confidence, and that's what retail investors in the capital markets need and also what insurance clients need to buy more product. But overall, we're confident that we are in a very good environment and can grow even more in the coming years. Yes, this gives us a new outlook for 2030. As you could remember, in 2020, we were very bold and we said we want to come to EUR 250 million in turnover in the year '25. And at that time, we want to multiply our EBITDA. I know that many listeners made a quadrupling of our EBITDA. So it's up to EUR 20 million and you can see that we are quite certain to get in this direction. You can see that our guidance is in the median higher than the EUR 250 million and also the EBITDA expectations are in this direction. So I think we did a good job in telling a vision of the future in the year 2020, looking into 2025. And this is what we were asked by many of you, can't you give us like an outlook what JDC could look like in the year 2030. And I think it's important to know that our market share is still very, very small, right? It depends what figure you're looking at, we had 0.6% market share, and we don't see why we can, like, quadruple or even have 10x the turnover. If you see mature platform businesses, these have easily 10% or more of the market. So there is no ceiling here. So we think that step by step by step, we can move turnover in the direction of EUR 500 million and also move EBITDA then, and this is a clear result to EUR 40 million to EUR 50 million. And that's what Ralph and I was thinking when we are looking at our own future. We were asked by the Supervisory Board whether we are not open to extend our contracts for the next 5 years, and we happily agreed after some discussions where we can go and what we can develop the company into because we think with these figures of EUR 500 million turnover, EUR 50 million in EBITDA at a more -- a continued growth path. That's what we want to see. I think we can envision the valuation at not being at EUR 300 million but rather coming in the direction of EUR 1 billion. And this is what Ralph and I and the team, Ramona and Marcus will fight for that we have, one of the market leading or the marketing platform in the German investment and insurance industry. And why are we so convinced that this will work? We are in the core of these 4 megatrends in the German finance industry. You can see that digitization is like now for the last 10 years, the word and the main concern of all these companies in the market. So the insurance industry will not be the last industry that's not digitizing. So this is just a given. And also demography tells us that the average age of the intermediaries is so high and it's growing year-by-year with such a high margin that half of the holders of contracts will go out of business in the next 10 years. So there's a huge pond of fish out there that the bigger fish can eat up. And this leads to buying portfolios, buying brokers and also buying other platforms as we did with top 10. So this leads naturally to the next point, yes, there's a big consolidation game now already going on, but it's rather a start because the market is very fragmented still. There's a lot of other platforms still out there who read the Oliver Wyman study. There's only like 3 big platforms that are growing. They are big and they are profitable and the rest is rather not. So that means that the bigger platforms in the market have the best outset and starting point, we see we can say as a pole position for market consolidation, and I think we can play a good role in this. And regulation, you can see that now there is some trend to take back some of the ESG regulation, but combined with data protection, data transparency, only the big players will be able to really transform in this regulatory environment and also transform the IT platforms and they'll be back at digitization. So this is a combination of these 4 drivers, and I think we are ideally positioned. I'm happy that here, Ralph is on my side now it's a 22-year-old marriage and now we go -- we are at least now open and convinced that we can go into the year '27, Ralph, right? And but together with Ramona and Marcus, I think we have a very good management platform as well. Ralph, maybe you want to add to your personal decision.

Nothing to add.

So. Thank you for your attention. And so we will be with you as your management in this company and try to drive your value. And hopefully, you still trust us and help us to fulfill our aims. Thank you very much, and we are happy to take all your questions you might have. Sarah?

Yes. So thank you so much for your presentation and congratulations on the results. So we will now move over to our Q&A session. So for a dynamic conversation, we appreciate it. [Operator Instructions] And we will start with the first one with Benjamin Kohnke, so you should be able to speak now.

Super. Let me start with, I guess, a bit of a typical question if companies provide an outlook range. Can you talk a little bit more about the assumptions that go into, let's say, the high end and the low end of that guidance range? And maybe related to that, what sort of contribution from M&A is baked into this, if at all? The second question would be around gross margins, if I may. That is, obviously, what we see is the gross margins continue to trend down, understandably so. So I guess the question is how should we think about the development of gross margins going forward? And Ralph, if I recall correctly, you once said that you expect an annual contraction by around 50 basis points or so. Is this still valid? And maybe related to this, just wondering how we should think about gross margins in the mid- to long term, i.e., where do you expect gross margin to settle over the next sort of few years? And maybe thirdly, can you talk a little bit more about the contribution from Summitas in 2024? Is there anything extraordinary you would point out? And I guess, also here, let's say, how do you expect or what do you expect Summitas to contribute in 2025? And maybe very lastly, apologies for that. What is the profit -- Sebastian, if you could remind me, what is the profitability profile of Summitas? And to what extent does it dilute your current margins, if at all?

Okay, Ben, thank you for your questions. At first, that the guidance next year is without any M&A activities. As always, when we do our planning, we plan with the contract that we have already signed, and that's enough, let's say, uncertainty for the planning. So no M&A activities included. If we would do some M&A activities, then there might be a bigger growth. Yes, you're right, gross margin is trending down. The reason is at first competition. Sebastian can give some color on this. And the fact that more and more business is coming from bigger intermediaries, which is a result of the consolidation. So I think this is a trend that we will see for the next years that we will lose, let's say, 50 to 60 basis points. But on the other hand, we are growing fast, and we are able to scale our platform and deliver the services at a lower cost per unit. So that's the reason why we still think that there's a question in the chat that the EBITDA development will not flatten. This was a very special situation in the first -- in the fourth quarter because of this managed accounts thing. Yes, maybe that as a first response. And Sebastian, maybe you can give some answer to Summitas.

Yes, we are very -- thank you for your questions, Ben. Yes, we are happy with the development of Summitas. You could see that in December, we could sign and close the one of the biggest or actually, it's the biggest occupational pension platforms in Germany. It's the broker BBUK with a turnover of more than EUR 40 million that came to the book of Summitas. This is -- it's also developing nicely. It's growing and very profitable with the profitability more than EUR 10 million EBITDA. So Summitas is now a grown-up company with more than EUR 30 million EBITDA and more than EUR 55 million in turnover. So really nice development. So for '24, Ralph, you correct me, we have about EUR 550,000 in additional margin from Summitas. And this, we expect to grow in 2025 to more than EUR 1.5 million. So we don't think this dilutes maybe on the contrary because we saw that this very specialized business of the occupational pension platform does not really fit into our more retail-oriented platform. So we will just have more income on the margin level. So most of the commissions of BBUK will not go from the top line to the payout of commission, but will contribute on the margin level. So this will not dilute our margin rather on the contrary. And that's also the profitability profile that you asked for. It will be a very nice contribution on the margin level, and that's what we expected to earn about EUR 1.5 million to EUR 2 million over the long run in EBITDA. So very happy with this development there. Answered your question, hopefully?

Yes, yes. Maybe just coming back to my first question, Ralph. I mean, thank you for answering the M&A part related to your 2025 guidance. But maybe just to the rest, so what defines the lower and the upper end of your guidance range, i.e., what needs to happen for JDC to come out, let's say, at the higher end and what's baked into the low end, just to get a feeling there?

Yes. I think when we did our planning and also our guidance session, we are rather conservative, right? So you can see that the growth is only 13% to 16%, knowing that in the past, we have an average growth of about 16% in the company that's our, like, 4-year the mid CAGR. So we see that the platform is ideally positioned, and we have a strong business. But on the other hand, there is some clouds above the world economy and also German economy. And this gives us a more conservative outlook. We're happy if we see the turnaround in Germany, you can see that the -- all the business confidence figures are on a very like all-time low, right? So this is the third year, the last coalition government led us to a 3-year depression basically in Germany with sentiment being quite low. There was an election that what business leaders think is rather successful. It promises to be a stable government. And then there's big hopes that the economy is turning up in Germany, but this is what we did not price into our growth figures. We rather think that the sentiment will rather stay a little bit low in Germany and therefore, this conservative outlook for our turnover. And the rest when it comes to the costs and then also earnings. It's just a progression of all the measures we took using more AI, saving on costs, becoming more efficient. So we see that the EBITDA figures will increase much more as the turnover picks up. And that's exactly what we want to show you that the platform is scaling and we're earning more money year-over-year-over-year.

So we will now move on with the questions from Lukas Frank.

Yes. altogether. I would like to also go more into the financial numbers. Concerning, let's start with the 2030 guidance also related to M&A or organic split. Did you factor in any organic -- inorganic so from M&A effects into your EUR 450 million to EUR 500 million outlook for 2030? Or is this just organic?

Okay. When you go back to 2020, we told you that we will double turnover to EUR 250 million within 5 years. And for the next 5 years, today, we do not know what company we could buy. But given the fact that the market is consolidating. Of course, we will take opportunities or use opportunities if we will see opportunities. We grow on average, as Sebastian said, by 15%. The bigger you are, the harder it is to keep this pace. So yes, there will be some M&A activities, but we will be able to achieve this goal or almost this goal even without M&A activities. Sebastian, would you agree or disagree?

Well, it depends then is Summitas organic or not, right? So it's a question of definition. So we will definitely keep on supporting Summitas with platform technology and also investments. For us as a platform, it's organic, right? But then investing, you can as well claim that this is not. And then we are already buying a lot of portfolios of our brokers that go out of business. So that's -- yes, you can say that's M&A, but in the end, it's just organic because we're just a natural buyer or the last resort for the clients that are left in the market. So that -- so we would consider organic as well. Also, you can argue that. And yes, if there's other platform opportunities that we saw in top 10 in the end, top 10 was exactly as successful as we wanted it to be. Now with a push in the capital markets, it was a very wise decision, although it was not an easy one in the beginning. So yes, we will definitely -- we are in the pole position for this consolidation game in the market. And we will use any opportunity we will get.

Okay. And then going more from top line to bottom line. If I remember our last conversations, you had more the ambition or the target to reach a 12% EBITDA margin going forward. Now if I calculate the margin on your 2030 guidance, we talk more about 10%. So is there still room for, let's say, a positive surprise? Or did the change anything in the last month or quarters concerning your margin profile going forward?

Yes, what we said is once we are at EUR 1 billion, right, we said we will earn EUR 120 million. So we still are there that obviously, in these businesses, you can imagine an earnings margin of 12% to 14% at the most. But as you can see, as long as we pay out 72% of our commissions that we earned, then there's a natural ceiling, obviously, right? So yes, there is also a positive surprise. It also depends on whether this trend that platforms do not only -- that are not always in the intermediary chain, right, where you get in commission and you pay it out, but rather provide platform services as a service provider, paying value-added tax if this goes on, you will see that there will be more margin to the commission. So in the end, it's rather on the absolute figure of the margin, but at the percentage points, right? So -- and then also this goes for the bottom line because in the end, it doesn't really matter whether you earn EUR 50 million on EUR 500 million or on EUR 400 million.

Yes. Let me please add. There's no change in our view or there is no change. It's just, let's say, we want to give you an outlook, but let's be cautious so that it's, from our point of view, very good achievable.

Yes. Okay. And then third question, to the investment side. In the past, you had more or less very low investments. Will this be also the case for 2025 to 2030? Or do you have to make any bigger investments we should bear in mind?

Investments, you mean our cash flow from investment activities?

Yes, without -- excluding M&A.

There's nothing you should have in mind. We invest like EUR 2 million a year into our platform, which is activated and then it's depreciation is in the same size and the investment -- the cash flow from investment activities is only that high negative high because we still invest into Summitas. We have now invested EUR 10 million and our commitment is EUR 15 million. So we will invest another EUR 5 million into Summitas, but that's it. So...

To add on it, we invest more in our IT for, it's rather EUR 10 million-ish, but 8 of these 10 are reflected in the P&L and CapEx.

Exactly. Thank you, Sebastian.

And then small last question. Do we should expect any further one-offs this year? Or is everything done by 2024?

Nothing from the top 10 group. Yes, we're done there.

All right. So we have one person in the queue and then a couple of chat questions. So let's move on with Andreas Aaen.

Congrats with another impressive results, definitely a happy shareholder here.

We are happy that you are a happy shareholder.

That's good. Maybe just starting with the new government. You seem to tell that it's already reflected in kind of the sentiment in Germany like it's picking upwards. But have there been any talks around kind of the regulation from the new government, if that will change for you either positive or negative direction?

Yes. So there's a lot of talks about stabilizing the pension management systems. Obviously, in Germany, we have a pay-as-you-go system, so with no investment to draw from other than the Scandinavian countries. So there's a lot of talks in the end. There's some driving factors, some that could be a little bit like distracting. But in the end, this is nothing to really worry or be happy about. So this will just -- it will not influence our business a lot. Let's put it this way.

Okay. And then maybe on the P&C inflation there in insurance premiums, how is that trending right now? It's still like mid-single digit? Or I think it was higher this year, but...

Yes. I think on the long run, you can calculate with the 3% or 3.5% in a normal inflation environment. The last year, it was higher. Car, for instance, was above 10%. Health was around 15%. Building was around 15%, but that's not, unfortunately or fortunately, not the normal development. So I think, Sebastian, 3%, 3.5% is the right number.

And then you did this, announced this major, major new insurance network with, I think it was 7,000 agencies that you would launch. Is that progressing on time and you still expect something from that this year? And then -- or is it like the other bank insurance projects takes a long time?

No, we are -- it's a silent launch. And at the moment, it's done with the test group, and we reviewed the first results together with this network. And yes, we will see financial effects in 2025, and that's part of our guidance.

Okay. And I think now I've been following you guys for 5 years, and I think this is the first conference call where we have gone through and now we're talking about the bank insurance. So I don't want to let you go that easy. So can you maybe just -- yes, some of the deals going well, some not going well? What's kind of the summary on those major deals there?

No, we're -- it's a good observation, Andreas. Thank you. So obviously, the bank insurance development is still important, but it's not the only thing. That's the reason why we are also talking about other issues. The development with the savings banks is quite good. We will see an 8-digit turnover in 2025 from savings banks alone. And I would say it's within our plans. That would be my evaluation on this, Sebastian.

It's a bad voice saying it's as low as we planned.

So let's now move on with the questions from Edwin de Jong.

Yes, a couple from my side. On the longer-term guidance and the EUR 450 million to EUR 550 million turnover 2030, going back to the assumptions underlying. What part would you expect to be the insurance platform? And what part would you be expecting the asset management side, e.g., the top 10 like business? That will be the first. Shall I go on? Maybe easier. And then Ralph mentioned that one of the reasons of gross margin pressure was the competitive environment. And maybe it's good to have a few words on how that's developing and what has happened there in the last year? And then thirdly, on Summitas. So you're nearing, I think at the end of your investment, where you're going from EUR 10 million to EUR 50 million. That is the end of it. And what happens next? And are you going to sell it? Or what's exactly the exit scenario there? Those were the questions.

Maybe you take the first, Ralph, and I take the other two or...

The first is the hardest. What is the share between asset management and insurance in 2030? Good question, Edwin. But as I said, it's very important to have a balanced asset mix. And if you look into the figures 2024, then asset management side has a bigger share than I expected at the beginning of the year. I would say it would be wrong to just focus on one of both. So we -- the last 10 years, we had a very hard focus on the insurance side. That was the reason why we then won all these tenders and had the development you know and you have seen. And now it's time not to refocus, but to also focus on the asset management side. With TopTen acquisition, we have a very broad set of features, and we can do good -- very good offerings, especially on the managed account side. So I don't know.

1/3, 2/3, more or less? Is that a direction?

Rather 40-60, I would say.

Yes. Competitive environment. Again, I can recommend this Oliver Wyman, ASCOMPACT study. It shows that in the end, it all plays into the hands of the very big platforms. And then yes, that's where the competition comes from mainly. So that's 2 groups. One is ForFinance and one is CloudDirect. ForFinance still being a little bit bigger than us and CloudDirect a little bit smaller. But that's by far the top 3 market leaders, and there's also the margin pressure coming from basically Blau giving away a lot of margin paying out a lot of commission and ForFinance having an okay margin, but then giving out checks for newcomers. And we see that both of these platforms are bought by private equity, HD Capital in the case of ForFinance and [indiscernible] the case of Blau. And we can also see that obviously, private equity investors want to earn money as well. So there is pressure on the cost base and leading to different measures, layoff of people for the first time or than drawdown of services. So we can see that our platform is more and more better positioned as we always try to balance growth and profitability. We will see these efforts with the other platforms as well. So we expect that these free launches, times are over and customers also have to pay their fees or their margins with the other competitors. So we think gradually, the competitive environment is improving. And then as compared to the like big number of smaller platforms. Obviously, size gets more buying power gets more commission volume and then also has more margin to spend in IT. So it's a spiral upwards. And you can see that the gap between the big platforms and the smaller platforms is growing and growing because the small ones are not growing, the big ones are growing fast. So in the end, there will be -- it's a clear outcome of the game.

It's also already -- this is a question, is there also already an increasing trend visible in multiples that are paid for smaller ones? Or is it still [indiscernible], 6x to 8x, I think?

For the platform businesses, this mostly can be more. Yes, it depends. So I think it will be a little bit higher than that. So the last transaction was PMA, also bought by HD Capital, but we don't know the price. So -- but what I hear it's more than 12x, right? So -- but I don't know.

For platforms, yes? Right.

So when it comes to Summitas, Yes, you're right. So there's EUR 5 million more to be invested. So it means EUR 50 million in equity, but it's not a secret that Summitas also has a debt facility of at least another EUR 50 million. So there's at least EUR 100 million to be spent for investments. I think this will carry through the year 2025. And then we have to discuss internally whether to have more capital deployed or find other co-investors but this is still in the open. Right now, as we said, we are happy with the development. And so we have a very active M&A team that basically buys the broker every month. So there's a lot of activity there. And as there's another 2,000 brokers out there about EUR 0.5 million in turnover, it could be bought. So there's a lot of room to go. And yes, so right now, we are well financed and we see how this develops over the next 12 months, and then we have to take the decisions. But obviously, it's a luxury problem more or less.

So you could continue. If you want, you can maybe expand your cooperation with Summitas.

Yes. And we see that the other models work quite nicely, right? GDW, for example, now just became the biggest broker in Germany being accumulated whatever group of around 50 brokers. So you can see there's future in this business model. And so we are glad that we are among the top 5 players there and also can derive some growth from this aspect.

Okay. Maybe one more, if I may, that's on the AI part. I think in our recent roadshow, we already talked a little bit about that. But 12 to 15 people that you can replace by AI in a year, that's quite a big number, I would say. What kind of savings can we expect more in the 2025, 2026 period, so to say?

The savings are that we do not have to increase our headcount in a relevant book way. It's not that we will lay off people. We need all our people that we have. And as mentioned, we have a very motivated team. So it's rather that we can show the information faster in a better quality and use the people that we have to do more -- to do tasks that bring more value to the company. So I would really like to look at it that way and not like cutting 10 jobs or 20 jobs. Sorry , which would be possible, but I think it would not be the right decision.

That's also how I meant. I meant it like -- so you can do the same work with less people...

I would say '25, at least 10 people, '26, more.

So in view of the time, we shall cover 2 or 3 questions from the chat as well? Okay. So what proportion of the full year 2025 midterm guidance is already covered by the ramp-up of existing partnerships?

100%, as mentioned. We did not plan anything that is not signed right now.

All right. So how is the progress with Pfau, physician on [indiscernible] and the new European insurance company announced on August 5.

Yes. So PKB, as we said, is as slow as we planned. So the savings bank are starts to onboard. So now there might be a roll up. So they have an internal structural topic as well as the responsible Board member also changed the first meeting that just to come. So yes, a slow start there. Also the big European insurance company, as Ralph mentioned before, that was a soft launch, but we are happy with this development.

But we already have more than 200,000 contracts on our platform from this segment. So I would say, all in all, we have to be happy with this development. As always, could be faster, and we definitely have partnerships that develop faster.

Right. Onboarding of big clients like [indiscernible] has shown to be quite a long process with many of the biggest potential clients being in the onboarding phase. What are the biggest bottlenecks? And what do you do to address them?

I mean the biggest bottlenecks in this big partnerships are that the management of our partner who decides to do the cooperation with us has to convince internal people and has to do the internal project after onboarding. And that's all our bigger projects, they suffer from this that the, let's say, ground speed of the corporation since it started technically is not that fast as it could be. So -- and what do we do, we service, we service, we service, and we educate the people. And it's a long -- it's a marathon. But if you look at the figures, we already have 25%, which is like EUR 50 million, EUR 60 million coming from these corporations. So again, we have a lot of these corporations, and they will carry us in the future and will help us to come from EUR 220 million today to EUR 500 million in 2030.

All right. On what evaluation metric is the goal of EUR 1 billion market cap based on? What number of the shares would you expect in 2030 to reach the EUR 1 billion market cap? I guess you need to increase the number of shares for acquisitions.

Well, obviously, Ralph and I, we hate dilution, right? So it's like we are diluted since the foundation of the company in 2002, we are diluted quite significantly. So we have the same interest, the two of us and all the other shareholders here and investors that we do not like to dilute. So by now, we could increase our EBITDA significantly. So on the debt side, we have some maneuverability and some leeway. So you would rather expect us to add to debt if we do M&A transactions than to do capital raises. So if we would think about capital raises maybe to increase liquidity a little bit, but then this will be rather small. So we do not expect to get to have a dilution effect. We can do this by organic growth and M&A transaction using debt. So good news.

All right. And then I guess 2 questions left. Can you add some color to your thoughts about the buildup of funds and whether you would consider another share buyback as an alternative at this point?

The problems of -- the only luxury problems that we basically have is that our liquidity in the shares is low, right? So it's like obviously, we have a big number of happy holders that are trusting in the company and just do not really sell. And this is why there's not a lot of movement. Most of the shares go into block transactions away from the stock markets, good and bad, every seller finds a buyer or the other around, but it doesn't look that liquid. And we saw that the share buybacks really helped to -- or let's say, was contributing to the fact that the share is not liquid. And this is why basically it was one of the reasons why we stopped share buybacks and did not have another one, right? So Yes, Ralph, maybe you want to add to that.

Yes. It's always the same discussion from a question of capital efficiency. If we think that there's -- the valuation of the company is higher than it is valued at the stock exchange, then a buyback makes sense. We have the profitability and we have the cash for this. If we do not invest the cash into M&A transactions, and then it's always that the discussion between liquidity and capital efficiency. So we didn't decide to do the next share buyback program, but we also did not decide not to do any again. So maybe this is the concrete, unconcrete answer.

So the last question, and I'm quite not sure if we already covered it. So with market share of 0.6%, why has your market share not grown at a faster rate if the value proposition is so compelling? Is growth curtailed by the capacity within JDC? Or is the market slow to transition to your platform?

Yes. Thank you for this question. The reason is the market is quite big, right? So the entire premium is 6.5% of German GDP and there's EUR 30 billion in commission paid out to German intermediaries, right? So also with our growth rates, right, we now coming from 0.5 to 0.6. We're doing our best to really roll out the platform as fast as we can, introduce as many major customers as fast as we can. But yes, that's -- we are highly motivated to grow our market share. And it's -- we're doing a lot. But yes, obviously, we are the most impatient of all in the market. And it's a very slow transition. That's really true.

Thank you so much. So with this, we will come to the end of today's earnings call. So thank you, everyone, for joining, your shown interest and all your questions. And a big thank you also to you, Sebastian, Ralph and Ramona for your time. So from my side, I wish you all a lovely day and hand back to Sebastian for some final remarks.

Yes. Thank you very much, Sarah. So yes, we want to take the opportunity again to thank our team, right, to stem almost 30% growth. That's quite an operational challenge, but this -- we have a very high image factors as well, very good satisfaction of our clients and our customers also among the institutional clients. So that's a very good sign for us. And also with our investors, we get very good feedback. So thank you also for that. The best feedback we can get is the stock market for basically all of you. As Ralph mentioned, it's not easy times for a small cap, especially in a European market, but we can see that we will go on to deliver quarter after quarter after quarter as promised. And you can see always the last years, we tell you what we do and what we plan and then we fulfill what we're planning. And yes, quarter-over-quarter, we will show you that we are growing, that growth is growing, that earnings are growing more than turnover. And this is why both Ralph and I and the team, Ramona, Marcus, we are really convinced that we have a good chance to become the market leader. We have a good chance to get to a valuation that can reach EUR 1 billion. So we have all the cards in our hands, and we will play them right. And then trust us as you trusted us 5 years ago, I think we have a good view on the market, on the developments, and we are -- and that's not optimism. It's just like a continuing approach step by step by step, we will conquer the market. And this, yes, then will be very positive numbers for all of us. So thank you very much for your trust, and thank you very much to listening a little bit more than the years before, but happy to take more questions you might have via phone, e-mail and then we're looking at a very positive year 2025. Thank you very much, and have a good afternoon.

Bye-bye.