Moltiply Group S.p.A. (MOL) Earnings Call Transcript & Summary

Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the presentation of Moltiply Group First Quarter 2025 Results Conference Call. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Marco Pescarmona, Chairman; Mr. Alessandro Fracassi, CEO; Mr. Francesco Masciandaro, CFO of Moltiply. Please go ahead. Thank you.

This is Marco Pescarmona. We will rely as usual on the presentation available on our investor website and more precisely from Page 18 with the Q1 highlights. And first of all, we are very pleased with the results of the first quarter of 2025. And if you look at the revenues, they are EUR 132.8 million, and that's up 25.3% year-on-year and the revenues come half and half from the 2 divisions. The EBITDA in the first quarter is EUR 35.3 million, and that's up 28.9% year-on-year. And this corresponds to a 26.6% EBITDA margin higher than the 25.8% of the previous year. And the mix is 60% from Broking or Mavriq and 40% from BPO and Tech. The EBIT in the first quarter is EUR 22.1 million, and that's up 40.8% year-on-year. This is also improving in terms of EBIT margin. But the truth is that because of the effect of PPA, the EBIT doesn't give an immediate picture of the performance of the business. The net income is in the first quarter EUR 12.2 million and that's up 8.4% year-on-year. The main explanation for this different performance compared to EBITDA and EBIT is simply that in the first quarter of 2024, we recognized EUR 4.6 million of dividends from MoneySuperMarket. And in 2025, the dividend date is in the second quarter. So similar revenues will be recognized only in the second quarter of 2025. We can move to the next page with some details about Mavriq. Mavriq, which is, as you remember, our broking division in the first quarter has revenues of EUR 66.7 million, and that's up 31% year-on-year. This is, to a large extent, organic, but of course, also benefits from the inclusion in the consolidation area of Pricewise and Switcho, which were both acquired in the second half of 2024. In terms of EBITDA, Mavriq reported EUR 21.2 million in the first quarter. That's up 44.2% year-on-year. And it also corresponds to an expanding EBITDA margin of 31.7%. This compares to 28.9% EBITDA margin in the same period of the previous year. And this is basically due to operating leverage in a situation of growing business. Looking at the EBIT, again, this is not fully representative because of the effect of PPA amortization, but it is anyway EUR 14.7 million in the first quarter, and that's up 58.3% year-on-year with an expanding EBIT margin. Some comments on the performance of Mavriq. Well, here, it's quite simple because we have growth from all the business lines, in particular, revenues were across the board up double digit. And as we said before, the EBITDA overall increased, thanks to operating leverage. We anticipated to have pressure on e-commerce price comparison. We managed to keep this growing in the first quarter, but the pressure remains and the pressure comes from declining organic traffic from Google in particular and also from Google an increase in traffic acquisition costs. And this is, in a way, also related to possibly the changes introduced by Google with entry into force of the DMA. Regarding these changes, we, as many other operators, including the leading price comparison websites comparison shopping websites in Europe, we all complain that we consider this not to be in line with the provision of favoring of the Digital Markets Act. European Commission had started an investigation in March of last year. And finally, on the 19th of March 2025, the commission announced that it has notified to Google preliminary findings indicating a violation of this prohibition. And this will likely lead to a fine and possibly some interventions to terminate this conduct. But we still have other proceedings, the fines have already been given, and we have to see it will take a few months, we believe. And then of course, if the conduct is terminated, this would relieve us some of this pressure. Just as a reminder, this is something that is related. So it's still about favoring of Google shopping by leveraging the [indiscernible] position of Google Search. This is a different conduct from the antitrust abuse that was the object of the 2017 decision of the commission, but it is quite related. And if this is fixed, it will be certainly beneficial to not restore fully the market or 10 years ago, but at least it would eliminate some distortions that are really helpful for the operators. And we just have to keep watching what is happening. At the end of Q1, we acquired Verivox. By the way, the results that you see all the results do not include Verivox or better, they include Verivox basically in the balance sheet, but not in the P&L because the acquisition was completed at the very end of Q1. And so there is no P&L contribution. With Verivox, Mavriq becomes really international, well over half and possibly 60% of the revenues will come from outside of Italy. The results of Verivox, which again is not consolidated in the first quarter are solid, but down compared to the same period of 2024, which was characterized by an exceptional peak in switching of energy contracts. Basically, end of '23, beginning of '24 in Germany was the reopening of the energy market with very high saving potential from switching and so that generated a big peak in volumes. This has normalized and then now the rest of the year will be an easier comparison. In terms of expectations for the performance of the division for the next months, let's say, apart from the addition of Verivox, is basically a continuation of the year-on-year growth in revenues and margins and depending on could be a different speed, but still growth for all the business lines with the possible exception of e-commerce price comparison. First quarter was an easier comparison from the second quarter, it's going to be difficult to be up year-on-year on this. And then obviously, unless there is finally there are changes to Google's conduct. And this ends the comments for Mavriq, and I'll hand it to Alessandro for Moltiply BPO and Tech.

Thank you. Thank you, Marco. Good afternoon, everyone, or good morning, if you're in the States. So going to the Moltiply BPO and Tech division. As Marco said, also on this side, we are pleased with the results. We show a growth year-on-year of 20% from EUR 55.1 million to EUR 66.1 million in terms of revenues. In terms of EBITDA, which is probably the best way to look at our margins, we show a growth from EUR 12.7 million to EUR 14.1 million, which is a year-on-year growth in percentage term of 11.2%. And the EBITDA margin slightly decreased from 23% to 21.4%. We'll get to the explanation of that in a second when we look at - we kind of give you some color on the different business lines. The EBIT grew from EUR 6.4 million to EUR 7.4 million year-on-year, that's 15.3% and the EBIT margin was basically stable at from 11.6% to 11.2%. As a quick reminder, all these numbers do not include the discontinued operations that the Centro Finanziamenti, which was our lending platform and which we basically sold at the beginning of 2025 or let's better said, we entered a binding agreement to sell, which is under judgment by Bank of Italy, and we expect it to obviously close the deal and finalize the deal within 2025. So moving on to some comments, qualitative comments. As we said, this has been a good quarter and we recorded a significant increase in revenues and healthy double-digit growth in the EBITDA. It's behind this growth, there is basically a very, very strong performance, which we expected from Moltiply Mortgages and also still a healthy performance of one of our largest business lines, which is the Moltiply Lease. But we should really consider there is some unevenness in the performance between business lines. And we knew that. And we also, I think, communicated to the market that there were some headwinds and these headwinds are pretty clear in some business lines and these headwinds are pretty significant in 2 business lines, which are real estate and claims. The reasons are that both had a very, very strong quarter last year. One, the claims was very significant in the first quarter of '24, both in terms of revenues and in terms of margins because it was, let's say, the big part of what we did relative to the events of the summer of '23, the weather events. And instead for what relates to real estate, we still had the Ecobonus in '24 but all the Ecobonus effect was basically in the first half and especially in the first quarter. So you're really comparing some exceptional events to a quarter which instead didn't have this contribution. So these are both down in terms of revenues on average 20%. So that's what we see there. Instead, let's talk just a second about Moltiply Mortgages, which is the growth engine in this quarter and will be for the rest of the year or at least the foreseeable rest of '25. Here, we have a recovery of the market, which was expected. So recoveries both in terms of refinancing and new mortgages. So we are seeing growth in all our outsourcing activities. Actually, we expect some more growth going forward because we have some clients that are ramping up during the second quarter. So that is all good news. But I want to just point out a price effect that we're also seeing, meaning that in '25, we have the full effect. I'm sorry, there is some background noise, maybe if Marco and Francesco, you can mute yourself. Okay. I was saying, in the first quarter of '25, we have the full impact of the new regulation, which is called fair compensation, which is a regulation that impacts basically professionals and professional activities, lawyers, notaries and so on. The impact of these laws on us was that basically, there is now a minimum compensation that we have to recognize to notaries for what they do when there is a refinancing. You might remember that here, we have these para-notary activities where we are basically a purchasing center for these services for banks from notaries. So we not just purchase, but we also do, let's say, post-processing and preprocessing of this refinancing. And so before we -- so let's say that the part that we purchased from notaries has now increased significantly, let's say, something like 30%. So that has increased the price of our services, leaving basically stable our -- at least for now, our margin in euros, so our absolute margin on the rest of the activities. And therefore, what you see here is a growth that in terms of revenues is very significant, but that's not reflected in terms of margins. Margins obviously grow because the market is growing, but you will see a lower percentage margin on these activities. So there is sort of this mix effect also behind the decrease in the profitability percentage at the EBITDA level and also on an EBIT level in the overall division, which is driven by this very, very strong price effect that I hope I have explained correctly and comprehensively. Just a comment on the other business lines. We are seeing, as I mentioned, good growth in lease and wealth, while loans are a little down in terms of revenues, but the profitability has basically remained stable. We lost some volumes on a contract that wasn't particularly profitable. So it doesn't impact that much our bottom line. So summing it up, we expect that these trends can continue for '25 in terms of growth of our EBITDA margin in the next quarters. Then there might be some impact, obviously, on the different timing of the different trends that I described and the impact of seasonality. But overall, and looking especially at the year, I think we feel confident in these numbers. Thank you, and back to you, Marco.

Thank you. By the way, now listening to you, I think it's also useful to give some color on the developments of the mortgage market. We no longer write about that because they are quite diversified away from mortgages. But still, I think it's interesting to know that based on data from Assofin in the first 3 months of 2025, the mortgage flows were up more than 40% year-on-year. There is for now, nothing available in terms of forward-looking indicators. Maybe this was a particularly strong quarter, but the recovery that was already visible in Q4 of '24 is clearly in the market numbers in Q1 of '25. So this was the color that we wanted to provide on mortgages. Now, a couple of comments about the net financial position. The net financial position changes significantly between December '24 and the end of Q1, basically because we acquired Verivox, and we also took a significant financing in order to do that. Basically, we took a EUR 400 million term loan that we used to refinance a large portion our exposure, the exposure with the same banks that give us this loan and to pay for the acquisition of Verivox. And our net financial position is at the end of March of this year, negative EUR 515 million. And it's also interesting to note that the current portion, I'm on Page 25, the current portion of the bank debt is quite limited. So the current financial liabilities are basically the biggest part of this is really the liability for the put and call option, the estimated liability for the put and call option on the 49% of Lercari change management company that we still don't own that it will be due within the year. So it's also in terms of profiles of payments, et cetera, we also have a situation that is very well manageable. Basically, we design things based on the payments and so on, the extraordinary payments that we had to make during the year. And just as a reminder, we also have, which is not drawn now, but might be used in case a EUR 50 million revolving line that was obtained as part of the financing package that we signed for the acquisition of Verivox. If you also consider as cash equivalent the value of the shares of MoneySuperMarket, then the net financial position would be EUR 409 million negative. So this is, I think, all that we have to present, and we are ready to open to questions. So please, operator, go ahead with questions.

[Operator Instructions] The first question is from Aleksandra Arsova, Equita.

Just 2 questions. The first one, maybe on Verivox. So in the press release, you mentioned that the business is solid, but of course, it's slowing down vis-à-vis last year due to, let's say, tough comparison. But maybe can you provide a little bit more color on this? And what do you expect for the, let's say, performance for full year on Verivox in terms maybe both of revenues and EBITDA? And linked to this, I noted that you booked roughly EUR 15 million as earn out related again to the deal with a potential, let's say, maximum of EUR 60 million of course. So on what base of EBITDA or estimated EBITDA you booked this EUR 15 million? And then the second question more on the organic trends. So you mentioned a very strong, of course, first quarter, according to my estimates, I estimate roughly 15% organic growth for revenues and more than 20% EBITDA. So maybe just an update on the second quarter since we are in mid-May. Are you seeing strong trends or maybe some deceleration? So just to understand whether this was more of an exception or something that is already going on in -- continuing in the second quarter and maybe beyond?

Well, regarding Verivox, basically the message, we are not in a position to give a precise indication on what to expect in terms of revenues or EBITDA. I would say what we are suggesting is that it's going to be down year-on-year. But still, it's not going to be a terrible performance because we are still booking a portion of earnout. For now, the estimates are really preliminary because we -- by the way, this adjustment year-on-year in the first quarter was expected. The energy market still remains weak in the sense that even if there is not such a difficult comparison, still is a market in which the savings available are more limited than usual. So I would say you can read out of what we say like a contraction but not a disaster, let's say, like a moderate contraction. And the truth is this is a business on which we want to do a lot of things and that has a lot of potential and lots of assets, a good team. I mean many positive things on which we can build and that give us room to improve the performance, but it will take time. So I would say for this year, we suffer a bit and again, mainly because of the difficult comparison. And then as we start working on this and delivering, we'll be able to give more precise indications. In terms of -- but anyway, we are very happy of this transaction. This is to be clear. And we are now starting to spend significant time in Germany, meeting the teams and starting to make plans. And so this is going to be one of our priorities, if not the priority for the rest of '25 for Mavriq. In terms of what we see for the second quarter, I think that the message we are passing is that it's a continuation of the trends of the first quarter and of course, you have different seasonality. You will have possibly April, which is potentially a weaker month for some things because especially in Italy, we have a lot of holidays, a lot of distractions, even the passing of the pope, all these things, especially for people that are thinking about, I don't know, like getting a mortgage, they get distracted. But still, I don't think this would make such a big difference. So I would say the indication is this remains similar to Q1. Also, of course, for now, we don't see anything, but you have all the trade discussions, all the uncertainty about the tariffs. So all these things might bring a little bit of slowdown. But maybe whatever slowdown, if any, we see now would be visible more later than -- other than today. For now, it's like a continuation, I would say. I don't know if, Alessandro, you have anything to add on this?

Sorry, I was mute. Well, in terms of the mortgage market, we actually are not seeing the first quarter as particularly exceptional relative to the second quarter, but maybe we didn't see it as strong as the 40% that said in the market. But we still see, as I said, in the market, a continuation of the first quarter, at least for our performance. And actually, again, this is not a market effect that I mentioned it before. Maybe in Q2, we will not see that. But definitely in Q3, we'll see the impact also of the new clients ramping up.

Yes. And I'd also say that -- I mean, we now have a very diversified set of businesses. So it's difficult that you have big deviations from one quarter to the next. One thing could slow down and the other will accelerate. So again, fingers crossed for now, we remain optimistic that this will continue.

Next question is from Gabriele Venturi, Banca Akros.

Two questions on my side. The first one on Mavriq division, if it is right to assume that around 1/3 of the growth rate in top line comes from M&A for this quarter and around 2/3 come from organic growth? And the second question on remortgages. How do you -- if you can give us some color on how they are impacting the mortgage business line.

Okay. Sorry, can you just repeat because the line was not good, the first question?

Yes, actually, also the second. I really didn't hear that well.

I ask if you could comment on how M&A is impacting the growth rate for the Mavriq division, is it right to assume that around 1/3 of the growth comes from M&A and 2/3 come from organic growth? And second question, if you could comment on how remortgages are impacting the mortgage business line.

Okay. So I'll take the first one. Qualitatively, this is, I think, more or less what is happening. So like the majority -- like more than half, I think 1/3, 2/3 is a good estimate. It's a legitimate estimate of the weight of M&A versus organic. So the majority of the growth is organic, still M&A is relevant. And regarding the remortgages, we see remortgages both on the broking side and on the BPO side. And actually, I was looking at the Assofin data. And basically, purchase mortgages are up 30% year-on-year. So remortgages are growing more. And we are benefiting in a different way of remortgages in the 2 divisions. So part of this recovery is significant part is purchase. So this is, I would say, a bit more stable. Part of it is remortgages. This is due to interest rates going down in recent months. But even remortgages are -- it's not going to be 1 quarter of remortgages, it's possibly going to be longer.

Next question is from Tommaso Nieddu, Kepler Cheuvreux.

Looks like a strong start of the year. I have a few questions. The first one is on margins. The improvement in margins has been outstanding this quarter. And maybe can you help us understand, especially in the Mavriq division, what were the drivers in profitability? What -- if you can, business lines in particular? The second question is on Lease. I remember in Q4, we were talking about a potential deterioration in the outlook. Did anything change? It seems to have been one of the main drivers in the BPO division. And then a third question, more qualitative one perhaps on the cultural integration with Verivox and the operational differences. Any insights there would be appreciated.

Okay. I'll take the first and the third. So the margin expansion is simple. We have -- different businesses have different structures, but there are some that have mostly fixed costs like insurance or insurance-related businesses apart from traffic acquisition costs, so online marketing, all the other costs are basically fixed. And so these businesses, as they grow, they tend to have expanding margins. I mean in the past, this was already happening, but then the mix was always switching in a way that was unfavorable. So historically, what we had was lots of businesses that were steadily growing and expanding their margins, but that was masked by a rebalancing between different businesses. And now everything is moving in a favorable direction. So I would say all the mostly fixed cost businesses, as they grow, they continue to see expanding margins. This includes, I don't know, like Rastreator in Spain, which is mostly insurance, our insurance business in Italy. And then you have mortgages that had been suffering quite a lot and also in terms of margins in previous years that finally had a recovery in volumes. So also you have an expansion there. It's a bit more variable, but still there was a margin expansion there. So it's a more favorable alignment of plan. Many things have already been expanding for quite a while, but were masked by other effects. In terms of cultural integration, I think we don't expect any issues. I mean, of course, Germany is different from Spain, which is different from France. But so far, we have, I mean, nice colleagues and we've just started working together. And we have a very similar culture in terms of -- and this was also an important thing in driving the deal in a way that we are customer focused. So our approach, just as the approach of Verivox is to treat the customers, the consumers with respect, honestly, with integrity. So it's not a sales culture, it's a customer-focused culture, and that helps a lot. And then, of course, we'll need to do a lot of work, but we don't have any particular concern, not more than we have in other situations. And actually, we also have a lot of experience in dealing with integration projects now.

Yes. [Foreign Language]

No, they always tell us, okay, if you want to say something more funny, we can say that every time we do a meeting in Germany, but this was also with our lawyers, but also with the guys of the company. First time we see people, the first thing that they say is you're on time. So they are surprised that we are on time. So of course, that's something I would never say to anybody. But we are on time. So I think we are fine.

All right. So going to the question on the lease, I hope my wording hasn't given too much importance of the contribution. I mean, lease is one of the business lines that is growing. And given the fact that it's big in relative terms, growing adds to the EBITDA line more significantly. The headwinds are still there because they are structural. And as of today, we haven't seen that significant impact, but I wouldn't say that the outlook has changed. And again, maybe I haven't stressed it enough. Here, we have a very, very, very strong performance of Moltiply Mortgages relative to last year. We are talking not even in terms of percentage, we are talking in revenue terms in multiples. So this is really strong. Then again, in terms of multiple -- in terms of revenues, there is that price effect relative to the notary services. But even taking that away, this is a very, very strong performance. And that's really what's driving the growth of -- especially in this first quarter, which for our business line was a very tough comparison to the first quarter of '24. So Moltiply Mortgages is really the key engine of this performance for the BPO side.

[Operator Instructions] Next question is a follow-up from Aleksandra Arsova, Equita.

Just the follow-up, a couple of [indiscernible]. The first one is just on the insurance broking. So you are still witnessing an increase [indiscernible]. So since we are seeing some normalization in inflation, so I was wondering if there was also some normalization on the insurance broking side. And the second one is on marketing costs. If I remember correctly, last year, there were a couple of quarters where margins were a little bit worse than expected due to some additional marketing costs since you were expecting some acceleration in mortgages? I was wondering if you are comfortable with the marketing cost or maybe you are thinking to increase them or how you see the competition out there and if you see more pressure and more need to do some marketing, advertising or whatever?

Okay. On the marketing cost, I would say no, we don't see anything changing in a material way compared to Q1. And then, of course, you could have fluctuations. Sometimes you are better at controlling things and sometimes you react a bit later. But no, the landscape -- and this is I think looking at the different geographies [indiscernible]. Sorry, the first question [indiscernible] getting on a cab, so I lost a little bit of the first question. Can you repeat it?

Yes, sure. On insurance premium, if you are still experiencing an increasing trend.

Okay. Yes, there is still a little bit of inflation in terms of premium. Insurance in general has been a steadily growing business for a very long period of time. Of course, it tends to accelerate a bit if there is a bit more inflation. But irrespective of that, it's been growing double-digit for quite a long period of time and it is continuing to do so. And in doing this, by the way, because of this fixed cost base, tends to achieve continuously growing margins.

[Operator Instructions] Gentlemen, there are no more questions registered at this time.

All right. So thank you, everyone, for attending this call. And as always, we are available for one-on-ones if any of the investors is interested in interacting with us and with further follow-up questions. Thank you, everyone, and enjoy the rest of the spring. Bye.

Thank you. Bye-bye.

Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones.