JDC Group AG ($JDC)

Ladies and gentlemen, good day, and a warm welcome to the European Platform Summit. This roundtable is dedicated to JDC Group AG, and we are pleased to welcome their CEO, Dr. Sebastian Grabmaier, who will give us some insight shortly. Following the presentation, you will have the opportunity to ask questions directly via audio line and chat. And having said this, Sebastian, the stage is yours.

Yes. Thank you very much, Judith, for this timing introduction. My name is Sebastian Grabmaier, CEO of JDC Group, and a very suitable format on a platform -- summit as a platform. So welcome to the presentation of JDC Group. Brief introduction. So yes, we have a founder-led management. This is my partner, Ralph Konrad. Together, we founded the company 25 years ago with the roles, me as the CEO, Responsible Strategy Product and Investor Relations; and Ralph is doing IT, finance and legal. Yes, our mission is to digitize the German insurance industry, simplifying workflows and especially enhancing back-office efficiency. And this is what we built, a platform that connects the entire financial ecosystem. So most of the leading intermediaries and all the product providers in Germany. So historically, the roots of the companies go back as far as 1958 when a gentleman called Klaus Jung founded the first broker pool in Germany and the first service platform to sell investment funds in Germany. When we founded 25 years ago, we increased the product portfolio to all products and then also focused on the insurance market after Lehman. So we scaled up as one of the leading platform providers, especially for big institutions, corporate brokers, but also for 16,000 brokers in the market. And the latest 2 years, we are focusing on introducing AI tools as we think the platforms are the most -- the #1 beneficiaries of the AI tools that are introduced in the market. Yes, so we are happy that we are now listed for 20 years. We had a great celebration last November and many of you out there who came here. So thanks again for our guests from all over the world. We do have U.S. investors that attended, but also Scotland, U.K., Denmark, Scandinavia, it was a great party afterwards. So to give you some figures at a glance. So we now have about 2.5 million customers on the platform with about 400 employees that do the service for the 16,000 intermediaries that are using the platform today. So our fund volume is around now at EUR 8.4 billion, EUR 8.5 billion. And also the annual insurance premium is about EUR 1.5 billion that we are servicing every year. So you see that over the last 10 years, that was quite an impressive growth path. So we grow about 12% on average year-over-year. And obviously, the platform reached inflection point already. So earnings are rising faster than the growth. So on average, it's a 35% growth rate and will be a big jump up also in the year '26. And you can also see that also the margin is going up step by step. We stand now at 8%, knowing that our reports always show top line the commission in. And then if you compare us with a software company, you have to just deduct commission out. Yes, so the product portfolio is the core of the company is what we call Advisortech platform. So we take in the data of all the product companies, that's 250 insurance groups, all the asset management companies and platforms, the mortgaging bank, then we standardize the data and then we process the data. And that's the brand Jung, DMS & Cie that then services all kinds of intermediaries from the individual broker or agent around the corner until the very big corporate brokers, biggest one being Lufthansa's broker Albatros. And on the side with almost 20%, we have our FiNUM Group, that's an advisory group with about 300 advanced intermediaries that service more affluent clients for both insurance and investment. Yes. So here, you can see that this is our core with 2.4 million contracts now or 2.5 million now on the platform. Yes, the business model is quite easy. Basically, if you take out an insurance as a customer, you pay the premium to insurer and what you might not have present so much is that every little piece of insurance pays a commission. So on average, that's EUR 40 per piece of insurance. So we collect these EUR 40. We keep about EUR 10, and we send away the EUR 30 to our intermediaries. So the good thing is the customer comes for free. So we have always negative working capital that growth doesn't cost anything because the commission is first coming, then we deduct our fees and then we paid out our intermediaries. And you can also see that everything we do is white labeled. That means this is the corporate banks example in the wonderful orange and blue of the German corporate banks, but the savings banks uses in red are standard colors for the normal brokers blue. So you can see all the same tools where the customer feels at home and let's say, this is in the banking website world, but in effect, it's all happening on our own systems. Yes, we're introducing AI. The most important innovation here is our what we call JDC companion. So based on the MORGEN & MORGEN databank, we can dive into 80,000 contracts in tariffs of the insurance industry over the last 20 years. So that's every major tariff is represented in the databank. So whatever questions you might have as an intermediary or end customer, you can just type it in or you have a chat bot or voice bot where you just asked you questions and it's answered in millisecond. So if you want to know whether your son can use your car, drive to France, take in the nanny and the luggage and then drive home. Is this insured? Basically, AI will give you the answer in milliseconds that, yes, your son is insured as long as he lives in your household and as long as he drives in the EU. If transport of personnel is not commercial then obviously, you can take in the nanny and then also the packing and unloading of the luggage is insured. And then we also give you these little donuts here that's a quality measure in a traffic light system. So you see in red, there is -- the contract can be improved because it's here in this example, just have maybe 14% performance at the same price, it can give you a modern contract with 85% of performance. And this comparison is not only to price but also to all the individual risks that you have in the databank, in your own databank on you as your customer data. And then I can show you exactly what your cover is actually and what it could be and what different conditions could be met on top. And then you can also have a very quick online procedure where with like 2 to 4 clicks, you can have a new contract. It means the old contract is canceled at the next 2 days and you have a new contract. So it does work like your investment platform that you are used to, but only for insurance. So you can see a 360-degree view on your product portfolio or as an intermediary on the portfolio of your client. And then you can add contracts, cancel contracts or compare contracts, it works like an investment platform. And you might have noticed that last year, we bought a new business that FMK, and it's one of the largest and also fastest-growing customer acquisition platform in the market. So FMK is bringing about 40,000 new customers to the platform every month. How would they do it? They are expert in SEA, so that's search engine advertising, not to be -- not to sort to be differentiated of SEO, which is always not really liked because it's dependent on the algorithm. So our SEA platform creates advertising slots on all kinds of platform, marketing platforms such as Google or TikTok, Facebook, you name it. And also on the large language models, so Bing or Copilot, so if you live in the U.S., you will see that also ChatGPT is starting advertising, so behind the answers to the prompts. You get a lot of advertising slots now and then with a very high conversion rate. So all kinds of product providers find their clients with a bidirectional interface. It's a very good way to create customers. And with our platforms, we are cross-selling, upselling the individual clients, and then we auction out the huge number of new clients to our brokers. So our sales channels are the normal brokers, the corporate brokers, more and more the banks. So both the savings banks network and the corporate bank network are our clients by their insurance companies. And the new customer groups is the insurers themselves that outsource insurance processes to us as a platform. So we're now servicing the big platforms, tied agent networks of Allianz, [ Gothaer ], Baloise, Barmenia and a number of other insurance companies. So yes, so the life cycle, it takes quite a while to take up the customers. So the good side is that only like a very small number of our clients are organic growth phase, most are still in a ramp-up rollout phase, and that goes for the 25% turnover of the major customers. So yes, the market is huge. So it's almost 5% of German GDP. So there's more than 500 million insurance contracts in the German market, paying about EUR 230 billion in premium. There you can see that our market size is roughly like 0.8%. So we can grow, grow, grow for the next 10, 15 years. We do own the big contracts to do so. And what we want is more of this pie of EUR 30 billion that is paid to German intermediaries every year. So every little contract pays about EUR 40. And this is what we try to collect in a little chipmunk business. So total addressable market is almost all of the markets, so we can go up to theoretically 400 million contracts. So there's a lot of blue sky growth. And the other factor in the market is that the demography that brokers are much older than the average German. Most of them entered into the market in the '80s or '90s. So on average, they're 57 years old by now, and the age grows almost 1 year every year. So that means that most of the portfolios of these brokers are for sale in the next years. And this is also why we have this little aggregator with Summitas. We are buying brokers, and we have a little subsidiary there with EUR 55 million in turnover and also EUR 15 million in EBITDA that we run together with Bain Capital and our big shareholder, Great-West Canada Life. So here you see the market is still quite fragmented, but that's a logarithmic scale. So there's 4 big companies now dominating the market. Fonds Finanz, blau, Jung, DMS and VEMA. And they are not only big. They're growing fast and that are very profitable, and you see there's a lot of small fish. And what's happening right now is that these red guys are buying the blue and green dots. And yes, so there's only 3 companies Fonds Finanz, blau and us that have more than EUR 300 million in turnover, and the rest is much smaller. You can see most of them are EUR 100 million turnover and below. We talk more about the Netfonds transaction that happened 4 weeks ago, Fonds Finanz also issued that or published that they bought another competitor in the last 2 weeks. So that's basically the end game of the platform market. So you see here, that's the main competitors, Fonds Finanz one side, blau the other. So we're #2 in both the investment side in the insurance side. And whereas both of the others are owned by private equity companies, Hg Capital or Warburg Pincus, JDC Group has a listing, it's public and has Great-West Canada Life is the anchor or major shareholder. Yes, just financials, you could see year-end numbers. So we could grow 13% last year in turnover and then EBITDA growth depends whether you take into account the one-offs, 47% after deduction of one-offs and officially, that's 36%. We can also see that all the KPIs are on a record high. You can see right now that the economy in Germany is not running too well, starting from Q3. So new orders is just a little bit plus but we live from these number of contract transfers. You could see that we could transfer more than 700,000 contracts to the platform last year. And also, our asset base is growing nicely by 10% and also the annual net premium was growing nicely of 16%. And for the first time, we now reached EUR 1.5 billion in premium every year. So we did adjust by some external and internal facts. We merged our liability umbrella. So if you look at the green numbers, and you can see here, again, the growth figures are quite satisfactory against the backdrop of kind of a challenging environment. And there, you can also see that normally, you have a quarterly distribution of turnover. And normally, Q4 is always the strongest. And we look back into a rather weakly Q3, but in a very strong Q4. And this is why also last year, we could reach our EBITDA targets basically last minute. You can also see investment financing doing well with a plus of almost 10%. Insurance is also growing 6%. So the backdrop of the overall economic environment could be better, but you can also see here that overall, the growth goes over all kinds of product segments and also over all kinds of sales channels. Yes, we could reach our EBITDA target. So we almost reach our turnover target, but could reach our long-term turnover target of EUR 250 million, that's what we promised in the year 2020. We said we would reach EUR 250 million in the year '25, and that was just a very point landing. And also with more than EUR 20 million, we are right within our expectations. That's the beauty after the acquisition of FMK, you can see that turnover is growing even more to -- on the medium, that's EUR 315 million in the year '26, we're quite on track. And also the EBITDA is growing to EUR 35 million to EUR 38 million. So you can see that not only we are growing, but also the growth is growing now. Here, what's our strategy? We want to grab more of the market. We are still quite small with 0.8% of market share. So we grow organically of around 15%. So our growth target every year and also buy in the market. So from time to time, you could see we had acquisitions of top 10 group now 1.5 years ago or KOMM Invest. So we are buying our competitors as well, also product development. So we have cutting-edge technology always trying to lead us and win all these tenders and beauty contests out there in the market and then deliver top operational excellence for our clients, so to become more efficient. So you can also see that with our growth of 12%, personnel cost just grow 2% or 3%. So you can see that now the platform is scaling up very nicely. So capital allocation-wise, we have always focused on organic growth and also buying competitors. But now what's new is -- we think that, and also the Supervisory Board and our shareholders think that our stock is quite cheap. So we started buying back our own shares. We have a tender out there. It's still running where we buy back shares at the price of EUR 22.5, up to EUR 5 million, and we hope to get as many shares that we can because we think it's quite cheap. You could see a transaction in the market just 2 weeks ago or 3 weeks ago where Netfonds was sold, that was the only period that was also listed. And they were sold for a multiple of 17.5x. That means there were -- instead of their market cap that were around EUR 95 million before the transaction was published, they are now offering EUR 79 per share, that translates into EUR 183 million in valuation, equity valuation at an enterprise value of EUR 210 million. So you can see, whereas JDC trades between 8 and 9x, Netfonds was then bought out of the market for 17x. This is also why we think there is quite some difference between private equity valuations and public valuations. So we will, as JDC use our liquidity to try buy back as many shares as we can. So we can see our shareholder structure is quite a balance between very big shareholders. That's very helpful when we try to acquire more institutional clients and life, that's Great-West Lifeco, one of the top 20 insurance groups in the world owned about 26-point-something percent. Management, will often be almost, 10% to 12%, and then there's Provinzial with 6%. VKB, Versicherungskammer, the 2 are [ insurers ] behind the savings bank and a Dutch group, Teslin, they hold about 5%. Yes, we have also 2 bonds outstanding of about EUR 20 million plus EUR 70 million. There's cash on hand. So net debt is between -- it depends how you calculate the leasing is between EUR 55 million and EUR 60 million. Yes. Just on spotlight, we talk more, I think, in the Q&A session about AI, and there's some best guesses or plans that AI agents will be some part of the market. We don't care as a platform provider because it needs 3 things to run AI. Number one is data. We can say number two is data, number three is data, but you need an infrastructure that's what we own as a platform. And the third is customer access. That's what we get via FMK. And then we have a great impact because we don't care whether it's human brokers or it's AI agents that are using our platform. There's a lot of readiness to use also AI tools. And we will now try to call all these 40,000 new customers every month. We love that there will be AI bots ready in the next 1, 2, 3 months also in German language that are modern enough to really give a good impression on telephone to really get into contact with these new customers. Yes. So this is what we talked about before. So this is why we think we are the #1 beneficiary of AI development in the market because we can use FMK, as an acquisition engine. We could use these MORGEN & MORGEN leading -- Germany leading databank of MORGEN & MORGEN and also have the best infrastructure platform to really perform on these AI tools. And this is the other questions, number one, due diligence task when buying FMK, what's happening with all these large language models? You can see that all of them are now introducing ads, so that an advertising behind there as answering of the prompt and then you can see that the conversion rate is much better. And then the return on advertising spend is as much as 5x higher than using Google. Yes. So yes, you can stay tuned what we are developing a lot in this region. And yes, we have a good AI team that will bring you a lot of more innovation into the market. So thank you very much, and Judith, happy to receive as many questions as we can squeeze in.

[Operator Instructions]. And the first question is, the preliminary annual results 2025 was EUR 8.4 million. What is the preliminary figure after minority interests and how do we expect this influence to develop in the future?

The preliminary annual result for what? That's Q4 or I don't know, of FMK, that's FMK question or -- so yes, I'll take the second question. Maybe that goes to FMK, right? I don't know what figure, so because the overall...

Maybe [ Mr. Jacobi ] , you can clarify that, and I will read out the second question first. Has FMK matched the expectations so far, what unexpected problems occurred with FMK? And is it on track for EUR 10 million EBT in 2026?

Yes. So yes, FMK is just matching our plans quite directly. So I think they have provided -- I don't know, we don't have the final figures for March yet, but I think they are just on track. They plan to have to like EUR 1.3 million to EUR 1.4 million EBITDA every month, and they are quite on track. So we think there will be -- roughly end up at EUR 15 million EBITDA in the year '26. And yes, that's what I can read with these minorities. We only own 60%. So we have deduct 40% of this EUR 15 million. So there will be EUR 10.5 million or something with the -- staying as a cash flow with JDC. There were no unexpected problems. So they're just delivering as planned. Obviously, we did not reckoned or planned them at a growth rate of 30% that they showed in some years of the past, but on a 10% growth rate. And I think we are quite right on aim and on track. And I think it will be more than EUR 10 million EBT for FMK in 2026 because they have almost no deduction, amortization tax whatsoever. That's before tax. So I'd say, yes, there's almost no amortization. So EBT figures will be at EUR 15 million [indiscernible]. Okay. Thank you, [ Mr. Jacobi ] , for being more detailed. Yes, that's the -- okay, EUR 8.5 million is the EBT question. Yes, they are -- they ended at in their own year at EUR 14.2 million, I think, for the year '25, and that's exactly where we expected them to be. And the only reason is what you can see is there is a big disappointment on the government and development of the German economy driven by government decisions in the year or starting Q3. And this is what has some depression or decrease in consumer confidence. And that's the only thing -- that's the external factor that influences FMK, but still, right, we didn't expect them to grow more aggressively and same goes for the JDC platform. If people are really depressed, they just postpone their investment decisions. They also postpone their new pension plans, health plans, and this is why we'll see that this wave of new business that was not really strong in Q4, might come back in Q3, Q4 this year. So yes, we think that now we have Iran war, obviously, and the next energy crisis, which yes, decreased a little bit of customer confidence, but we think that this will improve and be back to normal days, and that's all we need to reach our plans. So we're very confident that our guidance is quite right and also FMK develops just as we planned them. So next year, we guided for EUR 36 million to EUR 38 million EBITDA, and this means that I think still very conservative. The platform to earn EUR 22 million plus and FMK to earn EUR 15 million plus. So I think we are quite on track quite happy of the developments, which we hopefully will publish soon in the Q1 figures.

Thank you very much. And with an eye on the queue, I see we have no further questions so far, and we, therefore, come to the end of today's roundtable. Thank you very much for your interest in the JDC Group AG. A big thank you also to you, Sebastian, for your presentation and your time. Ladies and gentlemen, it was a pleasure to have you as guests today at the European Platform Summit. I wish you a successful day and handing over back to Sebastian for some closing remarks.

Yes. Thank you again, Judith. Yes. So quite a run-through through the presentation. So you can see that JDC is very well prepared in the competitive environment. There's a big gap between public market valuation and private equity valuation. So there -- we think that -- and this is also, as you can see, with further share buybacks that we think the shares are comparatively low price. So we will buy as many shares as we can afford. And also, we can see that both the platform business doing well against the backdrop of the environment. And also FMK is doing really well. So I think we did a very good acquisitions, which has opening -- which is opening up all the benefits of AI as, again, all what it needs to be the #1 beneficiary of AI, biggest or strongest databank in the market, second strongest platform and infrastructure in the market and customer access, I think we will have a lot -- very good results of using these new developments. Thank you very much for your attention.