The Platform Group SE & Co. KGaA (TPG0) Earnings Call Transcript & Summary

[Foreign Language] and I would like to give you a warm welcome to our Capital Markets Day today. We have some foreign attendees on our call on our Capital Markets Day today. So we stay in English. You can always feel free to ask all the German questions. [Foreign Language] So thank you for having here the following people. We have Laura Vogelsang, Member of the Executive Board; we have Christoph Wilhelmy, who is COO in our group; Heinrich Traude, he is Head of M&A; and Reinhard Hetkamp, he's our CFO. And we altogether want to go through our today's agenda. Because the Capital Markets Day is not a day where we just want to present some financials because you can read it in our presentation, it is not so relevant. We want to make a deeper dive with you today. Deeper dive means we want to show you how we make M&A. We want to show you how we make our post-merger integrations and what exactly is our strategy when we ramp up this business in the next years. So let me start with the agenda from our side. So first, I'll give you the current status of our group. After this, I will continue what does it mean platforms for success. Why do we make platforms and why we are not a typical e-commerce player, as you might know from other competitors. After that, Reinhard will follow with the financial perspective. Today, we will also announce a guidance update from our side, which is quite relevant for us. After that, we will continue with the M&A approach, means we explained to you how we look for post-merger integration, how we make the due diligence and how we manage all the software implementation after we close the merger. And last but not least, Christoph will show you how we make our software road map, what we exactly develop in our software strategy and why we have a competitive advantage because we develop the software by our own. All right. So you already know all these persons. I don't want to introduce you everybody, but I also would like to welcome here our Supervisory Board, Stefan Schütze, Jens Wasel, Florian Müller and Dominik Barton. Thank you for attending today and being part of this great day here. As you can see here, we already raised our guidance this year. We started with a very conservative guidance, and we raised it in the last weeks that we want to achieve a revenue up to EUR 500 million. We expect an EBITDA adjusted up to EUR 30 million. And we think that we can achieve a GMV in German [Foreign Language]. It is quite relevant for platforms up to EUR 870 million. And our midterm guidance, we will follow with later on today. So first, we can be quite happy about the stock development. We started from a pretty low basis when we acquired Fashionette last year. So at the point where we acquired Fashionette, the market cap was EUR 35 million. Now it is already EUR 200 million. And I think we had quite a successful path, develop a good track, convince more and more stakeholders and also shareholders on how we make our business and show that our strategy works and that is profitable. I'm not only the CEO, I'm also the majority shareholder. I'm currently at 70%. And to be honest, I also want to stay on board with this percentage. So I like my major shareholdership here, and I'm more than convinced that we build up a good company here. And we -- in May 2024, we had our guidance update for this year, and we got a lot of positive feedback also from the research side. Right now, we have 4 different research companies covering our stock. And next one will follow up also in this month. When we look on the peer group like BankM did it, we can be also very happy about this development. We've been the only stock with a positive development last year. So all in all, I think it is a good development, and we got a lot of great feedback. A lot of shareholders ask me what is the trade volume because we are a small stock in the market. And we -- that is our average turnover at the Frankfurt Stock Exchange, not at other places, only Frankfurt. And you can see here, it's getting up and up, always more. Now we are around 200,000 300,000 per day. So this is a good increase compared to what has happened last year. It was maybe 10% out of that. In the last month, we had a very successful M&A track after us. So one acquisition was, for example, OEGE Group. OEGE Group is a family-owned business. They are a B2B platform. They are not so small. So they have around EUR 80 million turnover this year, and we will consolidate it hopefully by 1st of August. Avocadostore. It is a platform for sustainable products. We acquired them at the beginning of February this year. And we also acquired HOOD Media, and this is a platform for general goods, especially DUY products and garden products. This had a big impact for us. To be honest, we really much increased the number of partners. And why this number is so important for us. I will tell you later on because we do not so much rely on industry trends. We do rely much more on number of partners and number of products. Because when I talk with industry experts, research analysts from banks, they always say, well, Mr. Benner, what's about the furniture industry? Does it go up and down? What's about the bike industry and so on. And we say, "Yes, maybe it goes up and down, but this is not relevant for us. For us, this number is relevant number of products and number of partners." Additionally, when you look on our balance sheet, we always had minority profits. So that means we have profits, which only rely on minorities. And part of our strategy is that we reduce our minorities within time. So that means when we make an acquisition, we usually buy 50.1% also for risk reduction. And after some years, we are convinced by the company, we had a great development, and then we raise our shareholding to usually 100%. So we did it for now four companies, Möbelfirst, ViveLaCar, Lott and also ApoNow, that is the pharmacy platform. And we also established our final group structure. As you know, last year, we merged with Fashionette. And after this merge, we had some structural legal entities to build up, and that is our final structure, how we work now and how we are managing our group. What is our strategy? First, we want to become the first #1 platform in Europe. Second, we want to enter with our software into new industries. Right now, we cover 21 industries. We want to expand it to 30 industries by next year. Every year, we make 3 to 8 acquisitions because that is part of our strategy, how we enter new industries. And third, we have to expand our global footprint because right now, we are very focused on Germany, Netherlands, Austria, France and so on, but we are not active in the U.S. We are not active in India. And this is one thing we want to change in a very effective way this year. So let me start. What does it mean Platforms for success? So here, you can see our portfolio. So these are our portfolio companies. And with these portfolio companies, we always want to grow organically. And sometimes, we make additional acquisitions, how we can also strengthen their own business and how we can expand their business activity. When you look at our segment overview, you see that more than half of our revenue is coming from the consumer side. I'm always very skeptical about consumer because you rely so much on consumers, and it's a very low-margin business. But actually, we are very happy about the development because we are working in niche segments. And in these niche segments, we can be very successful even with better margins than the average competitor. What are our core competencies? We go on that later. So I don't want to talk about too much right now. But this is basically what is our value chain because sometimes people ask us and say, "Well, why do you not make just SaaS revenue? Why do you make this full value chain like logistics, like coding, like shipment and so on? Why do you want to manage all this stuff here? You can just code your software, sell it and have great SaaS revenues. They are lower, but you are much more profitable." And then we always say, "Yes, you are right, we could do it because, yes, it's much easier. We're just a software seller. But on the other hand, we would lose a lot of track. We would lose a lot of partners because they can change the software every time, every year, and we don't want to rely on that." So we want to really cover the full value chain for our partners, and I'll show you how we make it. So for example, here, you can see how we make the work with Dentatek. Dentatek is a partner for dentists. So dentists in Germany, in Austria and so on, they buy their stuff here from this platform. And this platform, they have more than 60 partners, delivering products to them. We make all the pricing. We make all the technical stuff. And we make sure that all the products are in good shape and work for the dentists here because they have a lot of consulting needs. So for simple things like last and so on, it's easy. But for other things like really technical equipment, it's very complicated. And you just not sell it easily by online. You always have to make some consulting service and explain which product does fit to another product. So the same with fashion. For example, here, we have a typical fashion retailer. Usually a fashion retailer with one or two stores. They have, on average, EUR 1 million of revenue. And this EUR 1 million revenue we want to improve and make higher numbers for this partner. And for example, when we implement our software and when we make the e-commerce servers, we increased it to EUR 1.4 million. So it's a big impact for our partner to do that. And additionally, the partner can also cover the costs because as you might know, usually the growth rate in retail and retail fashion, it's not existing. They do not grow. They are in best case, stable. In worst case, they lose more and more percentage every year, though they have sometimes problems to cover their rent and to pay all the loans. And with our platform solution, they increase the revenue. They get more liquidity and they can work with that, and they can cover the high fixed cost in their stores. And also one additional point, how much do they earn with that? Because when you compare local sales to online sales, you have a good margin perspective because, for example, we take this fashion retailer. And when we look on the margin calculation, I think for them, it's more or less a good business because usually, they have higher discounts in their local store, and they have less discounts in online sales. It sounds strange for you because most of you will think, well, online is always cheaper. It's more transparent and you can make better prices for the customer, but it's the opposite. Pricing means also going up with prices. Pricing means in foreign countries, France, Italy and so on, you can achieve higher prices for German products compared to the German market. And that means you have higher percentages here, and you have less discounts when you make online revenues. Additionally, you have much lower HR cost relations, so it's much lower compared to stationary business, but you have higher rents. So compared to the local rent for the store, which you operate in, you have to pay much more to the platform like us. And -- but totally in a total perspective, all in all, you make a little bit more profit when you make e-commerce with us, and they have no monthly fees, though, there's no risk. They have no initial fees. So they're not coming invoice when they start working with us. So I think the risk is almost 0. They can work with us. We make all the technical integration and we ramp up the software and the platform business for them. So it's a very easy way how to participate in this e-commerce market without any risk. And this what for love we think when we run this company, we always think we have to create real values and we don't want to shift just some revenues from this to this place. We always want to make a fair value when we acquire companies. We really want to make and create value over time. And we can only create value over time when we make e-commerce for more partners, get more partners. And this is more partners, we have more stable cash flows and receive more revenue and also more profit with them together. When we acquire new targets, Heinrich will later go on with that and what kind of companies we acquire and how we integrate them. And one important thing is our M&A pipeline. We showed it on the last day on the last Igon Capital Forum, which companies do we have right now in our pipeline. So one company we acquired, that was OEGE Group. They have around EUR 80 million revenue. They have up to 70 employees, depends on the seasonality from them, and they are located in Western Germany, and we will acquire 50.1% and this will be closed by August '24. And in all of our cases, we always make a good call option for the minority shares so that we can buy them in 2 or 3 years or the seller can sell it to us. Additionally, we are very close to make a signing on the luxury platform. This luxury platform is located in the Netherlands. We are in the final due diligence. We almost did it right now. And now we are talking about the contract details, the SPA. And on the right side, you see another platform for sports where we closed for the final due diligence and also think that we can achieve it in the next 2 months. All right. So that was the first interaction from my side. Now you are informed about our current status, and we would like to continue with the financials and also give you a midterm outlook because this is what we will increase today our midterm guidance, and Reinhard will take over now.

Yes. Thank you very much, and a warm welcome from you -- from me to all of you as well. So happy to see this big audience here, and everybody has found the way to Frankfurt to hear what is new, what is interesting coming out of the Platform Group AG. So I know you are much more interested in all the details what Dominik already raised and what you all the others will point out later. But nevertheless, we are also interested in the figures and the financial situation of the Platform Group AG. And so therefore -- sorry. Therefore, I would like to start to give you an overview again about the situation in '23. And most of you may already have learned all the details and have heard a lot of things about these calculation processes, German, U.S. -- sorry, German GAAP and IFRS GAAP. So therefore, I would like to underline the main important item here that we are reporting the so-called proforma figures. That means we make a comparison between '22 and '23 under the same conditions so that you have a very good overview about the growth in between of both years. Additionally, I have to point out that we, for sure, are also only reporting the continuing business. So in former years, we have had these adjustments already in our figures, and so we are continuing in that way. Nevertheless, when you see the comparison '22 to '23, you will see we have a very great target, and we reached that target, what we announced in advance. And so therefore, we are very happy that we can say we, all the time, told you the truth. We told you what is our expectation. And at the end, we have audited the triggers which exactly underline what we told in advance. So that you can see, we announced a GMV of EUR 700 million. And we are very happy that we could achieve or maybe also overperformed our GMV for trend our GMV guidance for 2023. Additionally, the revenue guidance also was reached and a little bit overperformed. So we told you EUR 440 million is our target for the complete group in '23. And that is something that we also reached and overperformed. And much more important is the EBITDA and the guidance we told you was around EUR 20 million. And at the end, we reached a little bit higher of it. So that is something what we are -- where we are very happy about. And I guess that's also something what you want to hear from us as an investor. The net profit also was much higher than our own internal expectations. So overall, we can say the year 2023 was well done from our side was over expectations, and we try to continue in this way. And I now calculate this figure into what is the earnings per share. You also can see we are coming in '22 out of a roundabout performance of a little bit more than EUR 1 per share. And we could increase per share overall by EUR 1.50 or when you see only the continuing operations, we are resulting into EUR 1.90 for the year. And that is, again, a result much more higher than our internal expectations. Last but not least, when I tell you something to the outcome of '23, I would like to give you a quick explanation about our cash flow calculation or cash flow statement, what we have reported in our business report. For sure, some of you may have seen the big variances inside. And that has to do with the consideration of the cars. We have had to buy by taking over the ViveLaCar investment. And so you can see, on the one hand, we have had a very high operational cash flow that comes out of our sales of the cars because the ownership of the cars is, for sure, not our business. And so therefore, we decided to bring these cars into the inventory, and that is considered here that brought us a very high operational cash flow. On the other hand, for sure, we spend a lot of money for our investments so that we also have had a very high investment cash flow and bringing both things together, you can see that we have a very stable cash flow already generated in 2023. And we hope, and we are very sure optimistic that we will continue in such a positive cash flow situation in '24 as well. So now I will give you a quick overview about the first quarter '24. So some of you may be already part of our earnings call, what we have had in the past. Nevertheless, as you can see, the first quarter '24 was also already very successful and was, yes, better performing than we internally have already expected because as Dominik earlier said, a big part of our complete portfolio is consumer goods. And the first quarter is usually not that strong quarter. So in consumer goods, we are much more -- or we generate much more higher revenues and better figures in the fourth quarter, so Christmas time and so on. You may remember my explanations for the fourth quarter, which we have explained to you, yes, last year or for last year. Nevertheless, for this period, we also could generate very good increases to all the KPIs, what usually are explained. So as you can see, the GMV grows up by 18% and the revenue grows by 28%. One negative item, what we have pointed out, and that is for sure something what we will work through over the next weeks and months is the increase of the distribution costs. That is something which brings us a little bit lower out of the performing and the ending results. Nevertheless, the EBITDA and the reported EBITDA also increased by more than 20%. So it's 25%, 26%. And overall, our net profit situation is internally already again higher than our internal expectation. So as you can see, the very well development in '23, we were able to continue in the first quarter '24 as well. So that here, again, we have made a calculation of the earnings per share, and that is again an increase from 33% compared to the respective period in '20 -- sorry, '23. So that overall, we are very optimistic to keep this situation and to continue in that profitable situation for the future. Here because figures are figures, but sometimes it's much more easier and better to see it in a graph. As you can see here, the strong GMV and revenue growth. We have 18% in the GMV, and we have 28% in the revenue third quarter of '23 compared to third quarter of '24. The same for the EBITDA. So also the profitability is our strong key what we are considering and what we want to keep. And as you can see here, also very high growth between the first quarter '23 and first quarter '24 by 25% and 26%. This is very important to understand why is the Platform Group AG all the time reporting an higher reported EBITDA than an adjusted EBITDA because usually, the adjustments taking out will bring your EBITDA calculation much more higher than the final EBITDA. But in our case, as you know, we have a very strong position in buying new entities so that our results, what we are reporting will all the time cover the purchase price allocations and the included bad will situation buy as -- acquiring new entities. So that you can see already in the first quarter, we have had an EBITDA by EUR 8.5 million. Reducing or considering the adjustments, it's only EUR 0.5 million, which is the non-ongoing business and so on, as I reported. Nevertheless, we have had very good or very good luck in acquiring very good entities. And that happens in the first quarter by a result by PPA allocation of EUR 7.7 million. So that overall, this is the explanation that the reported EBITDA, what you can see in our figures is more than EUR 60 million already for the first quarter. For sure, also some non-financials are very important, and that is something that we also want to show you. We have a very positive development in the amount of our partners. As Dominik already explained, we are coming from 4,000 -- 4,500 partners in the past. It grows and grows, and we are currently by nearly 12 million -- sorry, 12,000 partners, and that is for sure a very great and very positive number for us, which will guarantee us a very strong development in the future. So the 4.4 million -- sorry, that is 4,000 partners we have had in the past, it grows up to 12,000. And the 4.4 million I mentioned earlier, these are the numbers of our current customers. And this customer growth is also very positive on our side and will grow up much more positive as we have expected. Another very important KPI for us is the value of the orders. So that also increased so that we can say it's not only the increase of the numbers of partners and the customers, but also each customer is ordering much more than in the past. So that we see a very positive development in this area as well. And last but not least, what we for sure and I raised that issue already with the distribution cost. But what we also have very clear under control and will develop in this area as well. This cost efficiency in our company. We have a strong program still running. And that shows already the first good results. So that overall, we are also not only from a revenue side or on GMV side, but also from an expense side, we are on a very good way to continue in this way and to support our growth for the future. The new guidance for 2024, I guess all of you have already heard about it, what we announced in our earnings call for the for the first quarter. So what we are considering is that in '24, and that for sure also is caused by the new acquisitions we are currently running in '24. So that our GMV, we want to increase up to EUR 840 -- up to EUR 870 million. So that is our new target for '24 and the respective revenue guidance, we want to increase from EUR 470 million up to around about EUR 500 million for '24. So this is the target for '24. We announced already, but I would like to underline that this is -- we are very optimistic that this is a target we will reach and maybe also over perform as we did it for '23. Here, the adjusted numbers. So the EBITDA adjusted will grow up to EUR 30 million. And the partners, as I already mentioned, we are coming from a very low basis, 4,000 something a couple of years before. It goes up to 11,900 last year, and we are expecting that in end of '24, we are around about bigger than 12,800, maybe 13,000. This is something what we are expecting and where we are working on, and this will support our positive development for the year. Here the same numbers as a graph, you can see a very positive development. Everything goes up, and we are very hopeful that this will happen in the same way. I will now go to this target here because very important, I mentioned already that the cost situation is something what we have very hard under our control, and we are looking forward to get it much more -- in a much more relation to our much more better -- sorry, much more better in relation to our equity situation. So coming from a leverage of our debt situation from 2.6 the last year, it goes more and more down. And as I explained, so one big reason for a peak in this situation was the acquisition of the ViveLaCar investment. But by now, in the meantime, selling all the cars, we could very well reduce our liabilities, so that we are coming now more and more to in relation of underneath of 2. And so at the moment, we are expecting 2.5 until -- sorry, 1.5 until 2.3 as a leverage EBITDA to our debt situation. Last but not least, as Dominik already pointed out, we are not only increasing our guidance for '24, we have now calculated and considering the very well running situation at the moment so that we are now increasing our midterm guidance. This information goes out this morning. So everybody is informed so that I can talk about it. So our new target for '25 will be revenue, EUR 550 million. The adjusted EBITDA will be in the range of 7% up to 10%. And the overall GMV will be higher than EUR 1 billion, so EUR 1.1 billion is our target for '25. That was a very quick and dirty introduction about our figures. I hope that everybody has now the right understanding about what is the situation, what you are coming up and going forward. And now I will give to Dominik or who is the other one?

Well, I think we had 2 parts of our presentations right now. Maybe it's a good time to start with some questions regarding the financials and also the company perspective before we start with a very detailed view on M&A. So who will be the first one for questions.

[indiscernible] Can I ask you a couple of questions, probably on the mechanics of the business. I think you showed some figures, which is the average order value around EUR 110. Your take rates, slightly above 20%. If you calculate that, it means there's a EUR 20, let's say, top line item that comes to your company. And there are some costs associated to that. I mean someone needs to take a picture. If we take the fashion example that you had with the fashion boutique with one or two shops. If we have this EUR 20 as a revenue contribution, what is actually the cost item against that? So someone need to take a picture, someone needs to write something about this item a description. It needs to be probably SEO-compliant to make the work. So can you probably run us through this cost structure against this revenue contribution?

I think Reinhard gave you this overview about our P&L calculation. I think it's very transparent. Maybe it's better if you could ask me more detailed questions because market and distribution at HR, it's quite transparent for me. What is exactly the question?

No, it is very transparent on a group basis. But if you break that down into the individual bits and pieces because these numbers are made up of very small ticket sales. And if you break it really down on a particular item, we probably want to understand sort of how does it work if you, let's say, only get EUR 20 as a revenue contribution and you sell individual items and they need to come to your software. They need to have an SEO description and all that. So someone needs to take a picture of that. How does it really work to come up to these numbers?

That's a very good question because we have 3 cases, which we will show you later on. The 3 cases are GINDUMAC, Möbelfirst and Fashionette. Laura will give you a better insight perspective on Fashionette and the P&L. We also show you how the EBITDA and how the inventory developed there? How we manage the working capital? We did not prepare a presentation about each mini cost structure for [indiscernible] and so on. That's what we did not. But if you want, we can give you more details on that in another discussion. But today, we did not prepare such a detailed P&L calculation. Yes. But we will -- this is the session of the perspective, we will go on that later. Thank you. Next question? Yes.

Russell Bonson from Edison. A couple of questions. On the long-term margin guidance. You've got four operating segments which have very different EBITDA margins. Do you assume that getting to the 7% to 10% that all of those operating segments have a margin within that range or some below, some higher? And within that 7% to 10% margin, what are the sensitivities that mean you're at the low end versus 10% at the high end? And a third question on the KPIs, as your business evolves and you get into different product categories, how relevant are some of those KPIs? Because, for example, you may be selling a more expensive item, and therefore, fewer of them. So therefore, that will distort potentially a number of transactions, average values, that kind of thing.

I want to start with your last question. I guess we will find it here, sorry. So we are starting with the guidance for '25, correct, this one. I guess that's your part for the 7% to 10%...

Well, yes. So 7% to 10% is ambitious for us, yes. But I think we can achieve it. It really depends on what kind of business we also will acquire in the future. For example, if we would make a major acquisition with EUR 200 million revenue and with 2% margin, then it's not possible, but we do not see such a target. So we think we can achieve it. And of course, in our different four segments, which we have, we have different EBITDA margins. And one example, let's go on the chart here. As you have seen in our annual report, we made a detailed segment report for you. And the industrial goods segment was the lowest in our EBITDA calculation. And that was because in general, this industry, for example, machine trade has always lower margins. And the problem was also that we -- in the subsidiaries, we made too much revenue with low margin products with key products, for example, machines below EUR 10,000. And after these results, we decided not to continue that. That means we focus more on higher pricing machines above EUR 15,000 or EUR 20,000. And I think it is a good strategy, but we will never ever achieve 10% in the segment. It will never happen because we always have to be realistic. I think we made a pretty good job here. We make good revenues and good profit with this. But with industrial segments, it is realistic to have between 5%, 6%, 7%, that is realistic, 10% is not realistic in the segment right now. Your last question, I did not really understand it. Can you repeat?

Sure. As you move into different businesses, the value of transactions may be much greater. You may have fewer transactions. So therefore, that will potentially distorts average order value for the group as a whole. So how relevant will all of those KPIs be over time? Will some of them become less important?

That's a good question for cases, which you show later. Because there we show you exactly the number of average order volume in each subsidiary and show how it developed over time. And this is quite relevant for us because if you have higher margins -- if you want to have higher margins, you need higher prices. We have the deep conviction that with cheap products, you can never make money in e-commerce. It's not possible from our perspective. Some competitors say the opposite, but this is our strict confident overview on that topic. Next question.

[indiscernible] from Metzler. I know if you go to the doctor, the doctor only normally see sick people. So just keeping that in mind, I looked at some of the online reviews of your distribution and products, and they weren't wholly positive, if I put it in that context. But it does raise the question, you're talking about quite large expansion of your footprint, a big markets like the U.S. So could you talk about the levels of control you have in terms of product availability, being able to fulfill that? And then in future, how you plan your fulfillment strategy as the group grows because it must become more challenging over time?

Yes, very good question because what is advantage and also competitive disadvantage of our group is that we have such a big footprint here in Western Europe and not in non-EU countries. This is a big mistake, I think, from the history, how the company has developed and how we get our customers and partners, and we want to change it in the next years. That means we will focus on the first step. On products we can directly send to the U.S. market and Indian market. That means we focus on consumer goods. That is the first priority, which we do. For example, luxury goods. If you want to sell a skirt or trousers from Gucci, Visage and choose from Armani and so on. It is not such a big issue. We have 2 kilo freight goods. So it's not the biggest thing. You just deliver it to the U.S. market, and it takes you 5 to 6 days. You have to make some custom issues, but it's not a big deal. And this is how we start with that. My biggest fear was that when we enter new markets, we burn money, and we don't want to burn money. So we had to find a solution how we can enter a new market without burning money. Usually, all e-commerce companies, which I know always make the same decision. They say, okay, we want to enter, for example, U.S. market, then they hire a team for customer support, for marketing and so on. They ramp up their page and they try to achieve more and more customers and spend a lot of money. Usually, they all make cash burn in the first years. We go exactly the opposite way. We do not open our own page in the U.S. market. It is not relevant for us because nobody is looking and searching for us. We choose and will choose a way that we make it with partners together. That means we list all our Prada, Gucci and so on product in the U.S. market with partners. If you are in Germany, pointing out for example, pointing out the most of you maybe not know this, but they are also a platform where we cooperate with. And you have companies like Browning also the U.S. market. It's not obvious for customers that this is a platform, but they work as a platform and we work together with them. And so we do it with fashion. We do it with companies like Walmart that we cooperate and have already contracted them, and we go this cost-efficient way in the U.S. market. And this is our strategy, how we want to do it. But this is step 1. Step 2 means we also have to connect partners in the U.S. market to our software. And therefore, of course, when we say we want to go this way, we have to hire 5, 6, 7, 8 people in each industry to ramp it up. That has to be decided within this year. We don't want to be quick on that because it has to be a careful decision, but we will decide it this year. And maybe we will do it and start with some local employees to connect partners. What we will never ever do is that we ramp up stores in other markets. We will never ever make big inventory hubs there. It's not what we do. We sell products there and if they get returned, we return it back to Europe. And also, we don't want to ship any, for example, sofas and e-bikes and so on to the U.S. or India market, it's not relevant. It's too costly, and it does not work out. Industrial goods is always completely international, though that means they have, I think, 8% revenue share in Germany. So the biggest market is already Turkey. It's very strange. But as you might know, since Russia has this war, a lot of machines go in other ways through Turkey. And of course, we have 60% Asian and U.S. market share. So it's quite a big market here, and Germany is not relevant for this.

Shouldn't have given the microphone back so early. Just coming back to Germany then, if I'm a German client and I, a customer and I buy something by one fewer partners, how do you -- what influence do you have in terms of that customer journey, the customer satisfaction, the returns policy that as a customer, I'm happy that I bought something was one on. I sent it back and it all happened seamlessly and it's a good customer experience. If you've got 11,000 partners climbing to 12,000. I just want to try and understand the elements of control, which you have that to ensure there's a nice customer experience taking place.

Well, I mean, Heinrich, if you want to come in front, maybe you can explain a little bit more from our platform on the Fashionette side. The customer does not realize that there are many partners in the back end from us. They just see there's a shop. I want to buy this product because the price is fair and the valuation, the customer feedback is good on the shop. So that's the only thing a customer sees there. But at the end and our back-end structure is quite different. And we have to make sure that the customer experience is not bad, that we do not have too much cancellation rate and so on. But maybe you can explain a little bit more on that.

Okay. Hello. Okay. I think it's quite easy. We have a technical system, and we have a core back end, I would say, and every partner is connected via interfaces to this platform. And afterwards, out from this platform, the articles are pushed to the relevant other marketplaces, for example, to Fashionette. And within Fashionette, they are fully integrated as a normal product on stock. So if you see the front end out of a customer perspective, you see an article and it looks really the same as if it is an own board article. And due to this effect, the customer doesn't see it. It will last, let's say, probably one day more to send the articles out to the customers, but it shouldn't be a problem because -- so we have many more articles live. Nowadays, we have roughly 50% of the whole articles or marketplace articles, which are already live. And we just launched the marketplace in September last year -- by the end of September. So the customers won't really see it. And the return process like this, we have a software onboarded and within the software, for each partner, there's a carrier number like DHL or UPS. It's behind in the system and as the customer approaches to the site and says, "Hey, I want to return", and she or he receives a return label out of the system, and she never sees that this label is from the partner. Just from a front-end perspective. It's Always from the perspective as if it is like, "the articles are in stock". So we built it up a technical way. And we have also the customer care team to help people adjust in some cases, really perfect work. Does really perfect work. Okay?

Yes. I also want to add, so I guess that was my understanding of your question, how can you guarantee that the availability of the products of the goods is all the time existing. And that is exactly what Reinhard says that again a certain link to all the inventories of the partners. And I guess that's -- that will -- or we can take it later in our presentation, I guess.

I don't think that is in there, but that's quite easy. It's really the software core system, we have to look into it later on. And we have -- I think we have within 15 minutes, we have our stock knowledge up-to-date. So within every 15 minutes, the partner sends us some stock update. We ask for it afterwards, it comes to the main system and it's pushed to the system because the articles are sold. So you see -- I would say, to 98% only articles, which you can buy, in the sizes you can buy them and so on. So it's not a problem that you come to the site, like if you are on a travel agency, for example, you pushing it and say, "Hey, I want to book it and afterwards the checks to the system and comes back and says, "Oh, no, it's not available anymore. You have to buy the one who's 20% more expensive, for example. In our case, all of the articles you see and the sizes you see are available to 98% roughly.

And I think we have a total maximum cancellation rate of 2.5% for each partner. So 2.5% is limit. If the partner is exceeding this limit, he will get out of our system. So it's very strict for the partner because otherwise, we would not get an average customer satisfaction.

I have to go there into a deeper detail, we build up a system [ with ] a partner calls -- so we call [indiscernible] partner part at least once a month. To go through KPIs with him or her to go through it and say, "Hey, you did list like this, very perfect or like it's not really perfect to have a very, very good customer experience because if the customer -- if the partners don't work like they should, the customer experience is very bad. And that's very important for us that the customer experience still stays the same as it used to be.

Next question. Last question, then we will continue with our next part. All right. Okay. Thank you. All right. Heinrich you stay here. So let's jump to the M&A perspective. So a lot of shareholders and also people from the bank ask us, what is the exactly your M&A strategy? Why do you make such an M&A track? And how do you integrate them? Because it's always very easy to sign a contract and say, yes, we own a company. But at the end, the post-merger process is the key element, how we create the value and not a buying process. It's also important buying, but the integration is much more important. All right. Let's start. What is our strategy? Overall, we have the vision to become the #1 platform group in Europe. And that means -- we have to achieve also organic growth. We never want to rely only on M&A activity. And we always have to define organic growth rates by each subsidiary. So every portfolio company has to grow, has to realize the growth by itself. And we always have to find a more or less balanced growth path. You can never exactly make 50-50, of course not, but that is our average track where we say we should find this way as a group that we have 50%, 50% organic and organic growth. And as you know, we want to expand it to 30 industries. To realize this vision and the strategic goals, we have some strategic initiatives, how it works out, and we want to go now on a deeper level. So as you have seen already, we have partners and we have customers. And between that, we have a lot of different industry platforms, which we run and which runs since more than 12 years now. And we are always focusing on asset-light, with only one exemption we had with [ cards ], we always have asset-light business because we don't want to ramp up EUR 400 million for inventory. It's not our business. We always want to focus on asset-light business because there, we can have a good scalability and do not realize so much on capital. Second, everything has to be software-enabled. So we never enter an industry and we never buy a company, which is not software driven -- that would be hard for us. If they do not understand what software means and how we integrate it. Next, process excellence. I think it's a buzzword. I don't like it to be honest, but it is really relevant for us because when you integrate a company, you have to make a process excellence when you work really close with them together. We are partner-centric, that is strange because usually, people think, you have these customers and you always look on customers. But on some platforms, we are only average in the customer service, we are not better. But because we are so much partner-centric, we focus on them because this is our real business. We are a B2B player, and we just have clients to sell the product. And third, we are strategic driven in our path how to ramp up this business.So here, what is our lessons learned, which we had in the last years because obviously, we make some mistakes, and we have to think about what did go wrong and can we make it in a better way now. So first, we always focus on hidden champions. Sometimes, we think that companies, they are offered in a public M&A process, sometimes we say no, it's not relevant. But when we go more into the deep knowledge and talk with the founder of the company, we find okay, this is a real hidden champion. Nobody is realizing it. And when we change the business towards more platform, it will work out. And we also want to avoid any kind of meltdown. So we will not make losses on our subsidiaries. Second, we have to be very structured. At the first time when we started with M&A, it was more opportunistic. People just say, okay, we have 10 companies. We want to have a look at it. And we changed it to more and more a qualitative idea generation, say, which industry is good for us, where we would like to enter and what are the relevant players? Is there a platform which we can acquire? And third, financial is nice, but also we have to focus on the people. But at the end, if you lose your Management Board in a portfolio company, it's the worst thing which could happen to us. So we always have to find a way how we can work them together and go together this growth path. So what exactly when we look at returns and at risk structures because we are a very risk-averse company. We don't want to make high-risk investments. We are very much diversified. Maybe some of you will say, well, you are in German [Foreign Language]. It's too much mixed portfolio. We say exactly the opposite. We said, no, we have the software and we want to implement it in two new industries. It is not a strange mixture of different companies. It is a clear vision how we want to expand our software in new industries. We always want to make a moderate leverage. That means we don't pay too much. We cannot buy companies by 10x EBITDA. It's not working for us. We would never pay that. And of course, we need executive owners who really want to be part of our game and also a skin in the game. When we look back on our development, my -- I'm the fifth generation of our company, though that was the origin. It is 20-minutes away from here. The house where my Grand Grandfather is still existing. So that was the origin of our group. And as you might see, we did a lot of M&A acquisitions. And since November last year, it was a merger of our company. And through this process, we made a lot of mistakes and we learned a lot on how we can make it better, especially with the M&A process. But we found one thing. We want to make it in a systematic way. And the systematic maybe it's a little bit strange for you now. we want to rely on some empirical evidence on that. I don't want to bother you with any strange correlations. We want to just give you some key essentials from what we've learned in the last years and why we think that our M&A approach is a good way and better than a lot of big corporates make M&A in Germany. So first, we decided to make a systematic approach. So it's not opportunistic driven. It is a very systematic approach where we say, what is our minimum return profile, what industry we want to enter and how we get stable and robust cash flows from these entities. So it is not only financial driven, it's strategic driven and always focusing on our software and how we can implement it there. Have a look on acquisition-driven compounders. Maybe you know some compounders here in Europe. There are a lot of compounders here, active and also in U.S. market and private equity investors. Usually, typical compounders, they have -- the investment horizon of permanent, usually private equities, they have 3, 5, 7-years, whatever. When you look on the culture, private equity is more or less unpredictable because they are financially driven. And from due diligence perspective, it is a very long process. Usually, they have x hundred parties or the KP&G, EYs and so on, they're working on that issue. Governance, the compounders usually work with the board members here. And here, they have a more operational environment and say, okay, maybe the executive members, they are just there for some time. On the post transaction, clearly want to make a change and look for an exit and improve the case for the next exit. And they, of course, use a lot of debt when they make all the finance structure there. When we look on TPG we were thinking, what is the best approach for us as a company. And so first, we said, okay, we always buy things to keep it in our company. We don't want to make exits. Maybe sometimes an exit could happen, but this is never our strategy. We never did any exit so far. So we are really convinced that our portfolio is a good strategy and that we really want to rely on that. So we have very high stability and also can communicate it to the people there. Because we're not going to the company and say, okay, we buy it 3-years later, that's an exit. No, we want to stay on a stable way. But of course, we also make cost reductions. I'll come to that later. Additionally, when we look at the due diligence, we have a strong team. I'll show you how we do it, and we usually only have some lawyers for legal DDs, all the other things are internally. The same for board members, we make a mixture on both perspectives and post transaction we really focus on change because we ramp up a platform strategy, and that means that we have to make a change process in this company. And for finance, we have 4 different sources, how we make a finance structure on our M&A deals. And I'll show you also the next -- on one of the next pages. So when we look on the McKinsey company study, it was in 2019. That was our basis where we said, well, it was a great study, they took more than 1,000 companies, researched and analyzed them and found out what is good M&A and what is bad M&A strategy. And it was quite interesting for us because when we saw it in 2019, so some years, 5 years ago, we really found out that there's so much difference between companies who really focus on a strategic M&A approach and who are just opportunistic and just say, okay, when we see something we have a look at that. All right. So let's start with this overview. Maybe, Heinrich, you can go on with that.

So here, you can see on this slide, the acquisition value. So when you have high enterprise value and when you have a lot of deals, typically, you have large like Siemens, BOSCH and so on, they typically make large M&A deals. But when you take a look on low numbers of values and here, you have the focus on programmatic M&A deals. That means McKinsey made out of this research that programmatic M&A deals are really different on type of their process and also found out what is more successful at the end. And successful does not mean with it 1 year, successful means with after 5 years, 6 years, 7 years. And that was a quite interesting study for us because at the end, they found out what has really more successful returns for shareholders. So let's have a look. First, we found out or McKinsey found out that all the programmatic acquirers had quite different regulatory reallocations for M&A and also the capital allocation was quite different. And also when you look on the perspective of how much of the M&A parties had clear criteria or do the continued M&A process or not. So that was quite different between programmatic and opportunistic acquirers. The same happened when they ask the company, do you strongly agree that there is a clear owner for a given M&A phase so that you really have clear responsibilities and that in the post merger, this person is still there and still responsible for that. So that was also a big difference. And on the right side, you see the responses, if they have a really playbook. I don't like to have a playbook, but if they have a real guide, how to manage this one phase of the M&A process instead of just, okay, we do it, and that's it. So -- we also had a look at some examples. So one example was Constellation Software. Maybe some of you know this company, they are not a small player, they make a revenue of more than $8 billion they acquired a lot of companies. I don't know exactly the number, but here you can see how many companies they acquired each year and how they integrate it into their software universe because they are also software driven. They have a very strong focus on how to make software much more profitable and also grow it to other industries. And they are very successful with that. You also see it in the stock price development on the right side. But this was not only one example. We also had the same examples like here, like Bergman & Beving, they are niche specialists. They're not a big company. They make their business for more than 100 years now. They are in the Nordics, but they are quite successful in their small niche markets. And also the M&A process is very applicable to the perspective on those compounders and to make a very successful post-merger integration. The same for Danaher. It's a little bit different because they are only focusing on one industry, so I don't want to compare it too much. But the way how to make the playbook running the creation of value, it is exactly the same. They improve the cost structure. They go very deep into the target company. They reinvest always the growth and to make more R&D, and they accelerate all the margins and really focus on a good growth but profitable growth strategy. And that was always very convincing for us in the management team that we want to go through this path. So how do we manage that? We have some criteria. Reinhard maybe you can focus on that.

Yes. We try to find out niche markets in niche industries. And we look through, I would say, we got roughly offers of 5 to 10 month, some months 2, 3, sometimes 5 to 10. We go through it and say, which is a niche player, which is a platform business approach and which fits to us, part of the old perspective. Afterwards, we go into first taking -- and afterwards, we decide if we make a short due diligence to get the company a little bit more into a deep dive and understand that just a little bit more. But what is very, very important for us as a part on the right side, it's a cultural fit. On one hand, it's a business, but if the culture doesn't fit, it wouldn't work for us because we are not 100 people and managers within the headquarter to send them out to the companies. So our approach is that we have the niche players, which are very passionate to their business and evolve them increase the business, find some synergies, look for some share opinions like finance stuff, stuff like this. [ HR ], but to push the business of these partners and focus them to do what they really passionate and strong and experience to do it rather than focusing on doing all the [ administrative ] stuff like that. And this is a big benefit combined with IT part this marketplace we have. Christoph will tell a little bit more about this. So we go through it to other points you see here to decide if a company really fits to us. But again, repeated if the cultural fit doesn't work out, we don't do it because it needs to be like this that's Managing Directors and the staff also still works like they did before with a little change and the big impact from us, the idea behind it.

And for us, it is not a worst reiteration of thing or something like that. Culture means they have to really understand the culture of IDA and the ERP systems here. So we are a technically-driven company and we don't want to acquire any trade business like, okay, we sell and buy shoes and so on. This is not our business. Well, that is very much our understanding on that. And then also McKinsey made the analysis on who was more successful when they really have a strong understanding when information on revenue and cost synergies. When did they realize and analyze it during the M&A process. That was quite interesting for us when we have a look on 5 years before in this page here, the most successful companies have always been companies who make it very early. When screening the target, they think, okay, how can we ramp up the revenue? How can we much make more cost reduction because we use our software? And these were all the relevant things for revenues and cost synergies. And our M&A process is exactly doing this. So we have three analyzed steps, the first analysis when we see a target and think yes, this industry is suitable for us. We think we would like to handle that. Now we first think about what kind of revenue synergies can be realized with our customers and with our platform. And second, how can we reduce the cost? Because when you look on the P&A calculation of a target, you always see the software. How much do we pay for Oracle, SAP, Microsoft and so on. Some things we will not replace like Microsoft Office 365. We will never replace, it works for us, and we work with them together. But for ERP software, this is the most expensive thing. So we have a lot of companies which we acquired, they pay more than EUR 1 million per year just for ERP from Oracle or for Navision and so on. So this is such a costly effect here, which we always have a look on the first analyzed here. And if we say, well, we want to continue, we make the same pre-due diligence and make also the final business plan, it means BP here. And also to realize how much exactly can we save with our software, how much revenue increase can we achieve with us and how much general cost savings we can realize with them together. And then these numbers are also relevant for the post-merger approach means we have to get all the numbers in the post-merger plan. And each month, we have a look on what is the plan and what did we really achieve with that. Yes. I think with this process, we are on a very good track with that, and we can take these lessons learned from McKinsey and all of our acquisitions made this pass-through, and I think they are successful at the end. How do we manage that? Because we are not a finance holding, some people ask us, are you something like INDUS Holding or [indiscernible] Holding and so on, we are say, "No, we are not a financial holding". That is not our business. We are an operational holding and that is quite different.

I think that's one of the most important charts of the presentation from the M&A part, because of the services we are able to provide the company's with. And if you see it on the left side, that's software and IT because we talk about this marketing, marketplace know-how. It's not only often, if you have smaller companies, managing directors and also the teams need aspiring partners because they are in the loop and they don't get the next step. And if you have some knowledge within the company but also within the other subsidiaries. So we have many know-how players with an experience, know-how [ track ] within the whole TPG Group and bring them together at least 4 times a year, but we have also other rounds on a monthly basis to talk about the experience and the questions of the other companies. That's a very great achievement for these companies, and it's a very different approach like others do it. And if you see here, marketplace know-how, quality management for sure, design and [ videography ], events and fares, but also business intelligence. We have a very, very strong business intelligence team with lots of subsystems, which they can connect to the data lake. And out of the data lake. Second, we have very, very quick set up reports for the company. So one of the first things we do setting up the business intelligence just to have better KPIs for the companies, also to be aligned with the other companies, but also for the insights. So they have better insights to increase their business and find better ideas to increase it. Human resources, finance and legal and laws are not to be low, but the shared services, we can provide services. Could you please flip to the next page? This is one deeper dive for a marketing team, which is really, really interesting because maybe all of the companies we buy with an e-commerce business, nearly all of them, due to this effect all of these have some marketing approaches. And if you know a little bit more in detail about this, you have hundreds, I would say, thousands of tools how to handle this and also agencies they work with. And if you, for example, one of the targets, which was in front represent -- they have three agencies for a very low budget and they have also tools and they pay a lot per user -- not more per user than we pay. So you have scale effects just for the tools. But also, if you put the amount of marketing expense, which is quite a high amount for every e-commerce company, usually together to get better margins and they have also scale effects. And if you push the scale effects directly to the company, you're only out of -- having this out of the box for sure. You Need to build it up last some time -- sometimes, let's say, a month, sometimes some months, but you reach scale effects and synergies out of the box just for being there. And this is the experience we built up over the last years because we started in 2020 with subsidiaries, but we also started with the online business in 2015. So we've learned a lot about this. And we can share this with the companies we buy -- and that's -- I think you know other words about this. And that's one of the main positive effects we can bring to the subsidiaries to increase their business to have some synergies and the also this share know-how together.

And when you look on this page, I think it's quite important for you to understand that our perspection on resource allocation, it's not only capital. When you are on the private equity side, you always think, okay, how much capital do we invest? And what is the return for that? We think not only about capital, it is important, but also about software education. Because software is a very good -- you have to code it, you have to update it every time, and we have to invest in it that it works out for the company. And we do exactly that. That means every company require, we have to implement parts of our software or our full software into this company. And that is not an easy project within 1 week. It takes us month -- several months to manage that. Also, we always focus on cost reduction. It means we have to think about what kind of people do we really need in this company, what kind of workforce can we get rid of and how we can focus on the people who really run the operational business in the subsidiary. And additionally, we reduce the working capital. We show you later on our 3 cases here, how we always reduce working capital. And while we manage this working capital because we want to be asset-light. And asset-light means we don't want too much inventory. When you look on the decentralization side, yes, it's also important for us because we need really good incentives that the people manage their own business and that they stay on board. We always look for diversified business models that we do not rely on too much risk. And very important, we always want small teams. So all of our business, usually, they have 10, 20, 30, 40 people working in the company. So it's not a too big project for us and we can manage it in a good way. All right. Here you can see how our core asset TPG 1 is structured and how it works out because of -- we'll go on with that later. But this is an overall perspective on how we manage our CDNs, our catalogs, the product catalog, how we have the order management system with our partners, how we make the promotions and the customer retention, how to get good analysis and how we send it out how we export it to other players like marketplaces and so on. So I think I don't want to spend too much time on that.

This is a track record, which we have gone so far. And all of these companies are e-commerce companies. With all of these companies, we increased the business. We had a deep impact to change it. And think about it. I think one person got pension. Nearly all of the managing directors and the managing level the senior level is still on board for pushing the businesses together with us because they feel and sense [ it as ] the impact and they push it. Now come some examples. Do you have some questions so far?

Maybe we make it after the examples. I think it's the best way. So first, we have three case studies for you. Some qualitative aspects and also some financial figures for you. So first case is GINDUMAC. GINDUMAC is the leading European platform, transaction platform for machines. So if you want to buy a machine for metals and so on, you can directly buy it on our platform. And when you buy a machine, it is not just doing on click, pay EUR 30,000 and then you get it. It's a more complex process means you have to make a call and say, okay, what kind of logistics do you need? Do you need the installation at the buyer's place? That's also very important. At the end, how can we make all the payment process for you that everything is safe? Even if you ship to foreign countries like India, China and so on. Yes, and also customs, right, yes. And this company was founded in 2016. They -- at this time, had 25 employees and they expect this year $30 million revenue, and they are headquartered in Barcelona, and they have also one address in Germany. And quite interesting, they started from a very low basis because in 2016, there was no platform online for machines. So they were the first one. He was the founder, and he was attending the management board last year. And when you look on the issues and what kind of problem they had when we acquired them. The first was trading with old machines, it was not usual in the market because it was a complete analog business. So people send a fax or call somebody that -- I have a machine or some insolvency people said, okay, we have some machines from banker companies. But there was no used machine market online. So they were the first ones who did it, yes. And that was quite interesting because everybody in this industry was sceptic about that. Everybody said you will never achieve, you will never have success with that. You will get rid out of the market within some months. Interestingly enough, they found out that machinery is an international commodity good. So it's like a car. If you look for Mercedes E-Class, you can buy it in the U.S., in U.K. and Germany, it's more or less the same car, but you're looking for one specific car from sales and this machine is the same. It's much more niche market because not too many players in the market are looking for the same machine. But for every machine, 100, 200 buyers are looking every day for a good machine in this situation and for the special price. So what has happened? We started with a majority of 50.1%. The sellers of this transaction were for smart portions of founders and for a bigger portion called [indiscernible] is a big corporate in the defense industry. And we made this transaction by a capital increase. And it was in 2020, the first lockdown happened in Germany in March 2020. And that was the time when we negotiated the SPA, and at this time, they had a revenue of EUR 6 million, and I will show you how we developed it over time. Why did we acquire that? Because before that, we never heard about machine trade online. We never had any focus on that. So we really had to get a better understanding how this industry works out and do they really need our software to work with. And that was the strategic rationale behind it. We said, well, yes, we can ramp up this business. They have a problem that they do not have much machine. So the number of machines were their biggest problem and their own IT competence, they own software competent with 2 people, 2. So if 1 of these 2 people are going away, the company is getting out of business. And third, they had no financial security because [indiscernible] never made any capital commitment on them. Well, that means they are always with very small numbers on their bank account. And what we did was clear that we made a complete focus here on internationalization. That means we entered new markets with them together and we changed their strategic perspective. That means we really realized what kind of big potential they have on foreign markets. And we also made a lot of cost potential because we made all the software together with them. What did it change within GINDUMAC, we fully integrated our Platform software. We said that India, we have to close the Indian business division. They founded the business division in India with more than 20 people, and they never made any profit. So we shut it down. Additionally, we also put an order in-house for online marketing and public relations activities to Platform Group. We also reduced the cost levels for software for marketing for HR and for finance. And additionally, we also said that we want to improve the public appearance because if nobody knows you in this industry, machine handlers, you will never get more contracts or get more customers. And what are the next steps? So first, we said that we want to enter the U.S. market by next year. Second, we also want to make some M&A, small M&A activities to accelerate the growth. And one thing what we announced today is that they also acquire a small company, a smaller midsized company, it is Weinmann -- you can see it on the next page, they acquired it today. Weinmann is a very old business, though they are more than 80 years in the market. They only make wood machines. Well, they only focus on machines in the wood sector. It's quite a big market here in Europe and also in the U.S. And in the last years, they were completely focusing on e-commerce and make digital trades with the machines. They have a very solid financial background, so they never made any losses. They were always profitable, and they have very high technical skills in the niche segment, and that was at the end, our recommendation to acquire them. And today -- or yesterday, we signed the contract. What has happened with GINDUMAC, when you look on the total number level, on the total figures, you see that the number of partners was increasing from 100 partners before we entered the company now to more than 500. The GMV ramped up from EUR 10 million to EUR 40 million, and also the revenue starting from EUR 6 million. They now expect more than EUR 30 million this year. The EBITDA margin, it was very low. Still, we are not so happy. We want to achieve more. But again, this market is not so easy, though you never will achieve 10%. But I think we are on a very good track, how to ramp it up and how to maybe achieve 5% or more next year. And this is the most important thing because it is not relevant if the market is going down 10% or going up 10%. It's not relevant for us. It is relevant how much machines we have. That is the relevant thing. And so we can be very happy that we increase it by 200% this number because if you have more machines, you get more customers and with more customers, you get higher revenues and more machine sellers will come back to you and say, well, we make good revenues. I think you make a good solution for us. So this is one example on how industrial goods segment was our first acquisition. Our first acquisition 4 years ago, and it was quite successful. So second case study, we would like to present to you is Möbelfirst. This is a very small company, but I really like this company because it is still founder driven. They are in the niche market, but they are very profitable with what they do. And as you can see here, they were found in 2016. They are located in Bonn in a very nice office there. They only have 15 employees. So as you can imagine, there's nobody making online marketing. Every -- all the only marketing software and so on is managed by Platform Group and not in Bonn. They have a 10% EBITDA margin expected this year. So as you can see, it's quite profitable, and they are a small company because they are really focusing on luxury furniture. And this is only affordable for 2%, 3% of the population in Germany. As you can see here, the average order value is very high. It is EUR 4,200. So if you buy a [indiscernible] sofa or if you buy a furniture from Thonet so on, this is the core business. These are the main brands here. And this is a very small niche market, but a very successful one. Those the 2 founders both came from [indiscernible] and they founded it by their own idea because his grandfather was already in the furniture industry. His father was in the furniture industry. And he always said, "Well, I like this industry, but I don't want to open a store. That's too boring for me". And that's why they founded Möbelfirst because they want to make it completely digital and sell the products from the local retailers in a digital way. And yes, the partners, they are typically stationary retailers in the luxury segment. They have some manufacturers. And also they have some online retailers where they offer the products from them. And as you can see here, right now, we have full ownership of 100%, but we started as almost every time, like 50.1%, and we bought it from the founders, and they had some venture investors at the beginning, and we bought all the shares on them. What did we change? Now we've changed a lot of things in this company. So first, we expanded to other countries. This is smaller niche products, especially to France and Italy, we can also send those products even if it's quite difficult because you need too man-handling. Second, we also reduced the number of external services and make it within TPG Holding. Additionally, we also get good financial numbers and found that we don't need any debt. So they are completely running by themselves and with their own cash flows. And we also increased the number of customers -- and we always -- I think the 200% increase by customer, we achieved within 3 years. When you look on the financial figures on this small case here, you see the number of partners. That was a very good development. The same is for GMV and for revenue in the last years. And also here, you can see that there was a very low EBITDA number when we acquired them because they had a lot of internal costs for marketing for software and so on. And this we can completely change within 2 years or less. And you can see here also the average order value, which goes up to EUR 4,200. Next case, a lot of them -- a lot of you know this case because this was a company which was public listed. We merged it, and now it's not obvious to see in our balance sheet. But still now, it's quite important for us. And we also want to show you the development of fashionette within the last 14 months that you have a better understanding how it worked out. And if we have a successful M&A case with that.

Yes, last but least, I'm happy that I can present yes, well-known fashionette to you. First of all, I would like to start with some facts and figures. You can see here the numbers, including our former subsidiary Brandfield, which is located in the Netherlands. Yes, we -- fashionette was founded in 2008 in Dusseldorf as you know. And yes, we are expecting a revenue of EUR 175 million this year with 221 employees yes, representing 300 or over 350 brands on our different web shops and selling the goods in over 14 countries, yes, in Europe obviously. We're expecting an EBITDA margin of 5% this year with an inventory of EUR 29 million overall for both companies. As you can see in the middle, we are representing a lot of luxury and fashion brands at the moment, which is slightly different between those 2 companies. So as fashionette, we are representing more of the luxury business. And as Brandfield, we are representing more lower-priced goods, but especially we are representing there or offering there our very famous own brand, which is called [indiscernible], which is very successful in the Netherlands and now coming over to Germany as well, which has really, really high margins. And yes, represented like the entering real or, yes, gold luxury jewelry. Yes. As you can see here, I'm standing here as also the HR representative of the TPG AG, but also the CEO of the new founded fashionette GmbH, which I will -- or which I am, yes, I'm doing together with Stefan Miebach, he is our new COO. He just joined fashionette yes, 2 months ago and is responsible for all the IT operational and marketing departments. And I'm covering the Sourcing department, HR and Risk and Payment. As I joined fashionette like 6 years ago, I experienced a lot of change during the last year. So as you can see, I was hired by the own founder or by the former founders but then also yes, got to know the exit of the founders, the IPO in 2020, the acquisition of the Brandfield in the Netherlands, then the entering of Dominik and the merger last year from fashionette and the TPG. So a lot of things happened a lot of change that happened in the last years. Yes. And I yes -- yes, I experienced a lot of that in the former years. What you can see here, what is quite different to the other subsidiaries we have within the TPG. Fashionette and also the Brandfield is doing like a high bright model. So we have expertise in wholesale retailer business. So we started as just pure wholesale retailer, but we now transformed with the help of the TPG to become a hybrid online shop and where we can -- we also have the wholesale model, but also introduced the platform in the September last year. So we managed it to yes, to introduce and to transform our online shop within like half a year into e-commerce platform business, where we can also now offer also fashion goods, which we didn't do in the past because it's like very high risk or they are very high-risk product. But we think it needed to be introduced on our platform or on our online shop because now we are like selling the whole outlet of our customers. And yes, we can like now, yes, increase our number of products and be more -- yes, more attractive to our customers. As you can see here, we are mostly operating in the Dutch region, fashionette is, yes, doing the most business in Germany, Switzerland and Austria. So the German-speaking countries. As you can see, we are covering a lot of Benelux as well, but this is mainly driven by the Brandfield. But as you can see on the other columns, there is also potential for the future and growing our business as well. So we will grow in the Dutch or in the German-speaking countries as well. As Dominik already said, we want to expand also in countries outside of Europe, which is like our second focus. Here, you can see some transaction facts. So Dominik joined the fashionette 1.5 years ago by selling or by selling the minority or not selling -- buying the minority shares from our former investment partner from [indiscernible] which were like a long-term partner of the fashionette but then decided to sell their shares. Dominik bought them from them and then expanded his shares later on.

Yes. I think maybe it's also important to tell why we thought that this is a good investment because it was not complete aligned with our strategy. They were losing money. They had a net loss of more than EUR 50 million in 2022. So we were quite thinking that this is maybe too risky for us. But on the other side, we had a good insight look and said, well, we can change it to software and to platform. And when we make this change, we reduce the costs and we can increase revenue with this platform. And third, we also thought that this is a good platform for the luxury market, and they still not cover clothes. So if you want to say clothes, it's the biggest market, much bigger than shoes or accessories like bags, you really want to enter this market and make a good job there. And third, we thought that we are always anti-cyclical as an investor. And from our perspective, there was a clear undervaluation in this company, in the stock. And we said, well, EUR 35 million for market cap, which is much lower than the inventory and the cash amount together, that is maybe a good investment if we really want to change it by ourselves. As a passive investment, it would never work out. And we said, yes, we want to do that. We changed the management. And at the end, it was a good deal for us because we really make a very quick implementation of the software. As Laura mentioned, we need, I think, 5 months to ramp up the platform and to connect local retailers to this platform. We had a very good solution for all the financial aspects and also for the inventory, we really crashed down the inventory and to reduce the working capital, you can see on the next page. And we also say that we want to increase the profitability if we really make direct cost reduction. So the headquarter is half of the previous headquarter. We -- a lot of departments are not existing anymore. And we have no brand department and so on. It's not existing. So we really reduced the cost here. And at the end, we have some points for next thing. So first, we want to make an expansion with other platforms like furniture and so on and can connect it with Fashionette. Second, we can also make cross marketing that other customers come also to Fashionette. We did not do before. And third, we think that we make an additional acquisition in the luxury segment. I think we can communicate it in the next weeks. Maybe [ Heinrich ], you know more about that. And last but not least, we will enter the U.S. and Indian market this next year. How about the financial figures, usually, we do not communicate financial figures on subsidiaries, especially not on Fashionette, but we also want to give you some more insight perspective how it worked out for the TPG Group and was Fashionette a good deal or not a good deal? So first, as you know, there was no partner. They had no partner platform program. We changed it. And we are very proud that more than 400 local stores are now connected to our platform. They are not only in Germany, they are also in Italy, in France and East Europe. So they are coming from different regions all over Europe. The revenue pre and now, it was also increasing. So this is the revenue excluding Brandfield because Brandfield will start the platform this year. They are not ready for a platform. They will start the platform. That's why we only show the revenue from Fashionette, so it is still going up. And as you can see here, the portion between platform and e-commerce, there was no platform in 2021. And now you can see that we always have 20%, 25%, always revenue share from platform, and this is always profitable for us. The growth is coming more and more from platform and not from fuel playing and from own sourcing. The inventory, this has a huge impact. So the inventory in 2021 was EUR 54 million and now it's half. So we reduced it by 50%. So it was a crush project, to say, well, we reduce all the inventory. We will cut down some of our suppliers and some of the manufacturers. And we get rid of all the cheap products, and we don't want to buy it anymore. So that was a huge process, always with some confrontations, to be honest. But at the end, we reduced these numbers by a huge amount. And as you can see on the same side, we increased the EBITDA margin. And I don't show net losses or net profits, but you can be sure that we achieve also net profit this year. And in 2022, they had, I think, EUR 7 million net loss. And the average order value is also a consequence of our strategy. We increased it because we focus more on higher products -- on higher-priced products and also our partners usually give us Chanel, Gucci, Versace. And with these numbers, we can get higher. I think from today's perspective, not only EUR 216. All right. So that were our three cases. That was our M&A strategy. I hope it was not too boring for you with our empirical background, on how we make our M&A targets and how we make the post-merger integration. Before we get to our software perspective, we would like to open the discussion with you and answer you the questions. Sven?

We have one question from Simon Skols from First Berlin. Why do you expect sales as a percentage of GMV to fall from 57% in '24 to 50% in '25?

Yes. Thank you, Simon, and greetings to Berlin. So I think it depends always on the business. When we have a shift like Fashionette towards more platform and less outsourcing, of course, there is a gap between the GMV and the revenue. So indeed, he's right that our GMV is higher and the revenue resulting from the GMV is a little bit lower, but it's not such a big difference. So at the end, the relation is more or less stable, but he's right, it's a little bit different, yes. Next question. [indiscernible]

Robert-Jan van der Horst from Warburg. So can I ask a question on the basic strategy, what you showed at the beginning with the chart where you see yourself and -- just from the idea that, on the one hand, you had a point on your side in stability, but you also foster change, of course. And my question would be, especially when keeping the founders, isn't there like room for conflict just with Mobelfirst, you have like a founder, who's also young, who also had an online strategy, maybe you can relate. So is he eager to give away the strategy that he had? Is it easy to work with those founders and to implement the needed change in the culture and how do you handle those situations?

So when you look at Mobelfirst, you are right. They have been shareholders. And when we entered the company, we did not pay too much for acquiring the majority, but we always make a fair contract. And this contract means -- when we come together 3 years later, the value of the company will be much higher, and we guarantee this. And after 3 years, I said, well, Dominik, your prediction was right. Now our value is higher. And now we sell our shares to you, to TPG, and we get some money for that. And the some money -- it was some millions, which they achieved. So it was not cheap for us, but we had -- we've absolutely sure that this is a good company, that they stay on board, that they gave the best in the last 3 years, that the company is getting up and that they will still do it in the future. Do they still have skin in the game? Of course, they have even without shares because they are very close connected. They have long-term contracts in the company, and they are really close to this business because it's a family business for them. Even if they have no shares right now, it's still a family business, and they founded it and they love it. Maybe it sounds too optimistic for you, but in this case, it's really the case, yes.

Yes. And probably in addition to that, we have like a lot of conversations before the acquisition. So we are very transparent what we are planning to do. We like focus on the human factor as well. So it needs to fit also the human like the interest between us and them. And sometimes you recognize very quick that it is not a fit because the expectations and the mindset is quite different. But then we don't do it. But most of the cases, then you learn the people, you get to know them very, very, very good. And then they know what they can expect then in working together with us.

And one thing, 80% of the people who sell their company, they want to exit and they go -- want to go away. Maybe they are old or they want to change their life. They have new life, whatever. The reason is, they want to sell the company and want to leave within 6 months. That is 80% of the people think like that. And this 80%, there are no cases for us. We don't want these cases. We don't want companies where the management says, okay, 6 months I'm away. This is not our business. We want to buy companies and we want to grow with them together. So our last acquisition, OEGE Group, a B2B platform, EUR 80 million revenue, a big company, it is a complete family business. The owner is 60 years old, the son is in the company, the wife is in the company, and the owner said, well, I'm very old now, my son will success someday, but he is not a financial guy, he needs more support also on the software side. And then he said, well, it's a good idea to have a good shareholder here, but we work together as a family. So this is a business that we really like because they think also in a long-term perspective and don't want to exit in 6 months and buy a house on Majorca.

Okay. Understood. And maybe a follow-up question on the -- especially on the post-merger integration software wise. So I assume you have like a dedicated post-M&A software team also. Is there like a feedback loop because if you enter a new industries, how much is it actually that you just need to do at the company in one size fits all way? Or is there a lot of feedback that then requires you to also make changes to your TPG 1 central platform?

So there's not one size for everything or one solution for everything. You always have to make some adoptions, you always have to make that. But Christoph will go on that later.

I'll postpone [ for that ].

For the software presentation. But yes, you have to make some adjustments on that, yes. Next question.

[indiscernible]. A question to your mid- to long-term targets. M&A, which is extremely successful with you, is that a target to do it in the next 5 to 10 years, too? So not to stop it next year or beyond that and to do it the next couple of years because it's extremely important for the DCF model that you have also in the Phase II, a lot of growth coming from a long-term M&A strategy.

Yes. So all in all, we always say we need a good balance between organic and inorganic growth. We don't have to buy. That's very important. Because 6 years ago, when we also -- overall in the e-commerce sector, there were people with a PowerPoint presentation and said, "Well, I have a great business, I have 0 revenue, but I am a great alumni of a great university and my business here on this presentation is EUR 10 million worth. And they always found investors. It was crazy for us. We never invested in such companies. We always want proven track record in revenue and profit. But right now, it is exactly the opposite. These french guys with the PowerPoint presentation, they are not running around anymore, maybe with AI, in this case, some stupid people still invest there. But I think it's the next type, which will go down. But all in all, I think that we always find attractive targets. Right now, there are too many targets. We cannot look at all of them, and some targets are still in a very critical situation where we would say, well, insolvency and so on, this is not our target usually and we don't want that. But in future, maybe we get back to such high valuations. And then we say, no, we will not buy anything. There is no need. There is no pressure for us to do that. From my deepest personal understanding, from a family background, we are always anti-cyclical investors. And this is the right time. It is the best time, in my personal life, to buy e-commerce targets. It never happened before. It's like when you go into the housing market here in Frankfurt. I have some knowledge about real estate. And usually, all the houses here have been around [ factor 30 ] of the [indiscernible] rent. And now it's [ factor 8 ]. Some people would say, "Well, it's [ factor 8 ], it's strange, something is wrong here. I will not enter the market. We say, you can discuss it, but we buy for [ factor 8 ]. It's the right time to do that. And we have to firepower also to do that. Because when we buy a company, we have four different sources, how we pay the company. First, we have to make some cash components. Second, we sometimes make 50% debt for an acquisition. Third, sometimes, we also make some shares for the seller and offer it to him. And fourth, we invest our software and our marketing, and we give a specific amount for software marketing in the SPA. So we really say to the seller, we invest EUR 1 million for software, marketing and so on. You will get the return out of that, but this is part of our cash component at the end of our total value for this. Next question.

Quick question to the debt issue. Is it the bank line, credit line, or...

A mixture. So for credit facilities, we have long-term debts, which are running for 5 years, typically. And we have credit facilities for credit lines, which are available at when we need it.

So the bank doesn't care which project you take the debt?

No, no, no. They have a look at it. When we make a specific M&A finance structure. For example, we acquired HOOD, and we make a contract with one bank for finances. We said, okay, we want this amount for this target. We think that business plan is so and so. And then we signed the contract only for this target and the finance amount has to be a little allocated for that.

Okay, particular credit line, not...

When we make a credit line for M&A, it is usually for one specific M&A target, yes. But I don't call it credit line because for me, it is alone with a 5-year contract duration. It's not a credit line. [indiscernible].

Maybe a follow-up question on that. You have this kind of detailed guidance going forward on your leverage with like for every single year. I could look at that also as saying, well, 2026, that's [ 1.9 ] is the target. So there's room if you find some really attractive targets, right? So is that a good way of looking at it? Or are there other like strategic thoughts or limitations behind the number of companies you can acquire and also integrate? May I look at, if there's something that's really attractive it might become [ 2.1 ] in 2026? There is room, you already were like [ 2.6 ], so that's possible.

I cannot give you any answer on what kind of targets we buy in 2 years. I don't know that. I don't know the financial figures. I don't know the companies. I don't know that. The only thing I would say, this graphic is very relevant for us and it is suitable for our purpose is that you always need a relation between earnings between debt. Because just having debt, it says nothing, yes. If you have EUR 1 million debt, is it too much or is it not too much? It depends on how much you make money from your balance sheet and from your P&A calculation. And I think from our perspective, when we buy a company and make one debt structure on that, like 50% of the buying price of the purchase price, we make a down payment within 5 years. So automatically, with the cash flows, we have to reduce the debt level for each target where we make a debt finance structure. And I think from our perspective, [ Reinhard ], maybe you think it's different, but I think it's the only way how to make a good guidance on that issue. Or would you prefer total debt level as a target volume?

No, no, no, not at all. Not at all. I only -- I understand that was very helpful. My question was just it looks like more financial firepower in the back. So financial power could also be used. That was my thinking behind the question, but still a very helpful answer. I understand better now.

Question here.

Once you initially onboarded an acquisition, let's say, a fashion store or a furniture store, as you move along, how much manual intervention is still there? So once it's all attached to your software, systems are working, are you sort of as platform group are interacting on, let's say, day-to-day basis with this customer other than having monthly review calls, I understood that from your presentation. But is there sort of any day-to-day work, do you still go there, take pictures or anything like that?

It's like if you build a house, you have some certain targets, you want to build up in a certain period of time. And you sit together, for example, with this company, where we're negotiating with. I think we have [indiscernible] negotiating, we are still doing it. We are already sitting together and try to find out what are the next points we have to achieve? What are the targets inside? What are the shared service targets? Always a little bit difficult. We will never start with HR targets. But for sure, if we have some synergies to set up, after half a year when we find more, let's say, emotional, [ may ] to work together start also doing this, but we have a plan. Afterwards, we define who's responsible, and we try to set up, so that not only the managing directors are responsible, but also the head of in the company that we need, that we understand how these people are thinking, how they work, how do they fit to us? Is there any knowledge in the company we can use also for another company and so brings knowledge together. And then, let's say, we have a plan for half a year. Then we have some milestones. And within those plans, there are several people responsible for doing it. And they have usually weekly calls. And then there's always a monthly call to speak about all the good and bad things and how to solve it. Let's say, just out of IT perspective in a SCRUM way, it's just [ the one ] who was responsible for a company Scrum Master and try to put away all the stones in the way, but also try to always head against the target to achieve it.

That explains sort of the integration of a larger platform very well. I was just trying to understand more sort of granularity that means on an individual shop-by-shop basis, where probably only have the owner or so, how involved are you on a day-to-day basis with that specific?

Not at all. Not at all. Because what we really want, we want managing directors, again...

I'm sorry. He's talking about partners -- partnerships onboarding on our own...

Yes. So okay, partnerships is a total different way, sorry. Partnerships, we start with presentation, with talking, sometimes we visit them. And then we have the contract. And usually, we nearly always has the same contract only with some tiny amendment. And because it has to be fair, people talking in the market. And if you get 18%, the next market 20%, it wouldn't work out all. And so there are not that many things to talk about. And usually, we have a monthly meeting if there's something but a very, very small one, let's say, 15 minutes, if there are some topics half an hour, but that said, only if you have some issues. For example, if parcels get sent only after 36 hours, not in between 24 hours, we reach out, we have a team who reach out to the partners. It's a service, let's say, like this doesn't work or if you have some topics, for example, if you buy luxury stuff, we have quite often [ artifacts ], which are worth something like EUR 2,000. And sometimes customers get empty packages. And then you have to talk about this, who will cover this, who will search for it and so on and so on. We have a team inside or several teams, but we also talk our [indiscernible] partner. So [ nitty-gritty ] daily and usually on a monthly basis.

Let me ask the M&A question in a slightly different way. Dominik, you said that now is as good a time as ever to buy an e-commerce company. So why not just go for it now in terms of buy lots of attractive companies now, presumably if they are attractive, they're profitable. So you won't see a large increase in net debt to EBITDA by buying lots. And with the increase in guidance for FY '25 today, how much of that is due to the acquisition that you've announced today? How much is due to actually better underlying trading on what you have already?

Yes. So as you know that we always try to balance our growth by organic and inorganic, more or less 50%. That is also the reason why we increased the midterm guidance for next year. So now we plan a revenue of more than EUR 550 million and the GMV of EUR 1.1 billion. And of course, part of this increase is, of course, the acquisition of the last 3 targets. So it means OEGE Group, it means [ they are ] HOOD and also to some relation Avocadostore. So all of them are part of this increase in our guidance. But you always have to realize that we takes the revenue from the day of consolidation like OEGE, it was first of August. So more than half year is not relevant for our P&L calculation. And yes, I think this is the right answer for you. The other thing is there's only a limited amount of how many people can make M&A projects here. Let me go on this page here. We have our team here who can manage this process, but we are not able to make 20 acquisitions. It's not possible because it needs a lot of time to integrate them. It needs a lot of time to manage the software implementation, and we never want to lose our focus just because we get crazy and then buy everything, it's not working. So we prefer step-by-step, make small and good targets and profitable targets and can manage it in a good way, otherwise, it would not be possible for us. And also, we are limited with financials here. We cannot spend EUR 200 million. It's not possible for us. So we really have to think twice about each investment, what we do. Next question.

Just a couple of quick questions actually. You've mentioned, and I apologize if I missed this, but you mentioned you don't pay 10x EBITDA. But what -- how should we think about the numbers typically below 5x in a low single digit. And the other thing I just noticed on your -- one of your first slides, your marketing spend as a percentage has fallen this year. And I just wondered, is that just the mix of businesses you have now? Or is it a deliberate decision given a soft consumer environment in Europe at the moment?

I don't -- can give you any judgment about the consumer confidence or consumer spending.

But it's your marketing spend is down as a percentage. I think you had the marketing ratio. I just wonder whether that's a conscious decision in terms of how you look at the consumer environment?

Well, I think we are always coming from a cost perspective and profitability perspective. A lot of e-commerce players did exactly the opposite in the last year, they were always focusing on growth. We never focus on growth. It's not relevant for us. Because if I make EUR 1 billion revenue and have no profit, it is worth -- it has no sense for us. So when we make our cost efficiency program last year, it was published by March last year. marketing costs was one part of that. And because you can directly influence marketing costs because you can say, okay, this campaign on Google, this campaign on Amazon and so on, we will reduce. And we switch more to email marketing, which is much more cost effective. The other thing is distribution costs, for example, you cannot so much change it. If DHL or UPS is coming to you and say, TPG, I want more from you, this year, 10% more, you can say, okay, let's negotiate a little bit. But at the end, they will rise this price. It's not possible to get out of this game. So you rely on them. So yes, you are right. This number is going down. I think there's no relation between consumer spending or confidence or whatever. It is not so much relevant for us. Your first question was, how much do we spend on M&A targets? And we have a clear view on what are our strategic criteria, what we buy and what we do not buy. Let's go on that page here. Here you can see what is our minimum requirement for revenue. So below EUR 3 million, we do not buy anything. We need a good growth line organically by the company, and it also has to be profitable. That means we want to see profitable in the first year of the poster merger integration. We pay between [ 1, 2 and 5 and 6 ] EBIT. EBIT, we do not care so much about EBITDA because D&A sometimes it's 0 in the target, sometimes is very high. So we're much more focused on EBIT when we buy a company, and this is more or less a range where we operate in. Any other questions?

Okay. So we would like to continue for our last part. I think it's only 50 minutes to go through that. And then after that, we will continue with the lunch and have a nice break together with you. Christoph, you can go on.

Hello. We come to the fun part, software development. I will start a little bit in the past where we come from. So we started the 2013 area where we started with the first retailers to bring them online with -- a bought in ERP system. So we figure out very, very early that this system is not good enough for us. So we thought about what can we do? Research for other systems, ERP systems as it is the heart of our -- for our marketplace. Then we started to develop our own ERP system. It's normally one of these systems, you never touch, never developed like this, it's a huge software to develop. But if not, our developers and our teams are strong enough and experienced enough to go this journey and it turned out very well. So in 2015, we started with this process and we onboarded the first retailers to our very [ better ] softwares. And now back in 2001 and 2023, of course, but 2021 is very important. So we started the second generation of our ERP system core training. So we have an ERP system now to connect to products and to our enterprise systems. And also a retailer platform, where the retailers can log in and see all the sales and orders. And this system we rolled out in 2021 to 2022. And now we're starting with a very exciting new project, it's called TPG 1, what is already has been started, and this is a complete new way of our architecture. It's completely headless with Microsystems, HAM, API first cloud-based and headless, of course. And so that we can import, export any kind of systems or replace them with less effort as in the past, of course. To come back to the title competitive development, what does it mean for us? So it means for us that we have our teams bring out all the teams work [indiscernible], working scrum teams, you have regular testing, regular communications that work with indisciplined teams with UX builders, front-end, back-end builders with testers with business teams. So we have mixed teams, of course, that you have one team, you have a software architect, you have a tester, you have a UX builder, you have one from the business. So we are very close working together with kind of different teams. And we have always testing integrated. We have very strong quality -- that the software that we have built is always getting tested and on a high quality, of course. We are basing on very innovative software like when you develop front end in the current day. So we don't just do a shop software or any other shop software what you can buy in the market. So we develop on tools like Reactor, Vision or Agile and [indiscernible] from Google, for example. And what is also very important for us is the security area. We do all the penetration testing to our servers or to our shops and to the platform. So this is stable for the future. A little bit about our company. What is in the background of our company? So how many people we are in the development industry? So we have over 110 experience team [indiscernible] software developers, engineers, back and front-end developers. We developed in five different countries. It's Germany, Netherlands, Poland, Croatia and even in Spain. We have a lot of tools that we use. I don't want to go too much in detail. But what is very important is, we use Jira and Confluence. So we use Jira to manage our scrum teams and of course, conference to document all the stuff that we are developing. We have a clear documentation. In case someone is leaving or coming into the company that they have with a couple of days, they know exactly what we have done in the past there. On the right side, you see language, what our employees are able to code the marked language like Python, Java, Java Script, PHP and SQL the ones we are using at the moment. And for the question to answer how much time we need to connect to a new company? What we bought, we need about 2 to 6 weeks, then we have a base connection to the company. And then we figure out what we are going to do, what we keep, what kind of tools we want to keep and what we want to replace. And normally we connect to the ERP system and then we figure out what is good systems, what is systems we can replace or put our enterprise engineering. To take a look at what we are currently set up in our architecture that we have different kind of connection way. So when you are a retailer or a brand, you connect to our API or you connect with Excel file, for example, with product feed out of your shop system, then you enter the TPG systems. From there, you can directly connect to marketplaces. Why this is so important? When you are a small retailer or for example, a brick-and-mortar store, you just have one or two stores and you want to sell online. It's a huge effort for you to build your own website or to go to Amazon. It sounds very easy, but it's very complex that if you want to sell on Amazon. It might be doable, especially for auto or [ Zalando ], but you cannot access when you just have one store. And with TPG, you have the opportunity to connect to any kind of marketplace. We have the connections to the bigger marketplaces in Europe and worldwide. And we can bring these small and big companies to these marketplaces. And furthermore, we have so many different kind of companies that we have acquired in the past, like Fashionette, HOOD, Avacadostore, these companies where we can also bring these product online to these platforms from us. So you have not just the benefit of bringing your products on into marketplaces, but also to our platform. And in this year, we are also planning to invest about EUR 7 million to our software department -- software development. What does it bring to our retailers? So as a retail, no matter what kind of shop system or what kind of retailer you are, how big or small you are, you can connect to us. So we provide the service kind like AI-powered product enrichment process. So when you just have shoe shop, for example, you have your Adidas sneaker. You have no tax at all. You have barely an image or so, then we provide this kind of support for you. So we enrich these products with good quality text so that you can sell these products easily with us online now. But not only this, you have also a very high experience retailer portal where you can see your orders, your sales, your KPIs, how much do you do in the last and next month. I think you can manage your payout and you can also enter retail media. Retailer media means that you cannot just sell for us, you can also promote when you, for example, a brand like Morso, Gucci, whatever, when the brand is directly connected to us. We provide this service that retail media, for example, at HOOD, you can do special marketing campaigns for your brand on our platforms. And now we go to the -- started future already, I would say, this is called the TPG 1, this is one new architecture setup. It looks very complex for when you see it the first time. Let me expand a little bit for you. So as a retailer or a brand, you connect only at the very beginning. So no matter what kind of store shop or how you want to connect to us, you connect to the very beginning. And we changed the way that we want to work with our platforms in the future. So at the moment, we connect to the platforms via the ERP systems. We check what kind of systems they have, what can we replace and what can we use from us, like with enterprise licenses. And in the future, we want to make it even more smarter and centralized so that we use this when I go back on time. As you can see company, ABC, for example, we want to bring just the storefronts to us and the rest will be managed from the middle -- from our middleware and from our software out. So this is, of course, not possible for any kind of platform we bought like, a lot,for example, they are connected to a lot of car retailers and very special interfaces to other retailers. And this is not just easy to just take the design and put it to our streams, where it makes sense. We do this way, but where is too complex or it makes some sense or like for huge industry machines. It's a little bit complex. But for most of our shops, it's possible to just use the storefronts. And in the back, we use our smart and micro services so that even if it's a small or a big company, they can use any kind of services from us. So from retargeting, from marketing, any kind of risk checks or payment services we can provide from search pricing, stock checks, anything you can imagine. And this will be built in any kind of micro services so that you can easily replace, for example, when we have a CMS -- what we see, it's not smart enough for us. We can easily replace it without completely damaging the rest of the shops, the shops will work smooth, and we can easily change different kind of microservice in the back. And this architecture makes us very future-proof and stable for the future, and longer and longer term. So it is all API driven. The interaction is very, very fast. What you -- the question at the beginning was how you can manage the stocks from other companies? For example, with API calls, we can make directly checks what the stock is currently in the warehouse and feed this over to our store front. So it's super fast and future-proof for the next years, of course. That's all for now. Do you have any questions to the software part?

Maybe I can try to ask you a question that I had in the beginning because it fits probably better here. If I go in Fashionette, for example, I found a leather jacket from famous designer. It's probably sold by one of your partner stores, let's say, in one of the German [ islands ] or whatever, who has taken the pictures of this jacket and who has done the description of this jacket?

So it depends on the products. So normally, all products have year-end code. So -- and it's -- when it's not a complete customer brand, what no one knows, when it's a small shop in [indiscernible] -- no one knows, for example, just this shop has built these products. Then we need the products and description pictures from this brand. But when it is, for example, Adidas or Gucci or whatever kind of brand. Normally, these images exist from the retailer side of area. So we can receive this on the retailer areas or from year-end matchings or from public areas where we can -- we are allowed to take these kind of source images, descriptions, whatever. But the descriptions, for example, we sometimes do our own, or we have our [indiscernible] teams to do this and provide these best matching descriptions on them.

And that means from a cost and a scalability perspective, you're probably better off in selling, let's say, Adidas branded normal stuff which sells in larger quantities rather than individual items?

Maybe it's important to understand a little bit that each industry is different. So there's one example like if you sell washing machines from Miele, Bosch and so on. It's the easiest industry. We are not operating in it, but they are all information, pictures, text and attributes, everything is available. We don't need to make any content. Unfortunately, we are usually operating industries where this is not really good existing. That means, as we said, sometimes we have manufacturers who gave us the content. But usually, we have to create it manually and we have our own photography teams. And this photography teams, they are located in central places like Dusseldorf and so on, but we also have mobile teams and they travel around and make these pictures and it makes us all this action in the store of our partner. So it's a big amount of time what we need for that, and -- but there's no other solution. It depends really on the industry.

But I want to say this photo studios, but you always have to keep in mind, it's one article, one picture, one description. But afterwards, you can use it several times for several partners. And then you have your own content. And you have a really good content. And if you think about, that's definitely what you've said different markets. But if you think about the luxury goods, it is really difficult to get pictures from Gucci. If you want to have it, [ they ] won't't it to pass it to you. So you have to do it to have to do some on your own and [indiscernible]. But then you are the owner of the pictures, and you can use it also for campaigns and stuff like this. So it's not too bad to have that. And I think we have a very, I wouldn't say industrial, it's a little bit over paced, but we have a very good -- we found a very good way how to handle this, how to shoot as many pictures as possible? Or for example, if you find a partner and the partner has, as you've described it, many articles, many other partners also have. If we take the puppets, go to the partners, take the picture there, if you [ hear the ] room and do it and use these pictures for several other partners also. That's the idea behind it.

Next question.

Could you give some indication of how much of your GMV goes through the marketplaces versus your own sites? Because it's obviously more advantageous for you for transactions go through your own sites versus the marketplaces because you have the cost of fulfillment that kind of thing. And against that, I would probably imagine that because you have -- you can look at the pricing, you can maximize therefore, maximize how much goes for your own sites?

This is very important to understand. Usually, we are never in a competitive role to our partners. So in 98%, we never have such issues. For example, with Fashionette, they only buy, I think, bags and shoes. Okay, bags and shoes is nice. But 80% when you look at a woman or a man, is clothes and not shoes, of the total revenue with one person. So that means in 80% of the market, we only operate as a platform and not with own goods. When you look on the total TPG Group, I think it's less than 20%. It's less than 20%. And I don't have an exact number. I really have to calculate it. I never had this question before, but it's a very good question. It must be 20% or less from the total revenue of EUR 500 million.

You had a question?

I have a question kind of as a follow-up to the question I asked about the post-merger software integration. You mentioned that it takes about 2 to 6 months to be connected...

Weeks.

Weeks, sorry, 2 to 6 weeks to be connected. How often are you done by that? How do you actually -- what are possible obstacles to not implement your own ERP system? When do you implement your ERP system? How long does it take? And how much manpower does it actually take? So maybe just as a very huge project, Fashionette [ long ] TPG?

It's a good example because Fashionette, for example, Mobelfirst, when you buy companies that don't have some of the ERP, they're just use online shop systems now. it's easy to connect, but for example, with Fashionette sometimes connect to ERP and to product information systems altogether and to our systems as well. So we sometimes use ours and their systems for time being to managed migrating the stuff. And this sometimes it takes, of course, longer than just 1 to 2 rigs that can even take 6 or 8 weeks or so, yes. But the core connection is normally very fast. And from team-based, we normally do this with our own directly based team and what directly connected to us, it's about 10 to 15 people. But it can be increased depending on how much time we need. But normally, we don't need all these manpower. It is sometimes about 2 to 3 guys who can directly communicate with their architects or developers to find the best connection on now.

Okay. And a quick follow-up. I always thought about it this way, but you have like a fully operational own ERP system. Have you thought about like offering that as a service to your partners? Or is the ERP system really something you use with your own platforms?

So usually, we have two questions. The first question is usually why don't you use SAP or Microsoft or something like that? And second question, why don't you offer it to other competitors or to customers or to partners? So first, usually, when you call SAP and say, we want this they do not have it and say, okay, we can customize it. It takes you 2, 3, 4 years, I don't know. And then you rely on SAP. We always said we want the full value chain and knowledge insight in our company. We don't want external parties regarding our software knowledge. Your second -- your direct question was, why don't you offer sell it or whatever to competitors or to customers like partners. We said, no, because we are not a SaaS company, we are not operating and say, we are a SaaS company, okay, what kind of software can I have for you? Can I make some customizations and so on. This is not our business. Our business is to run e-commerce for our partners and make it in the most efficient way. That they do not have much time. They do not have much investment. They have no risk. They just make operating profits and revenues for them. And this was our deep conviction that we said, no, we make the software by our own, run it by our own, and our partners are only connected and cannot use it for external purposes. It's not possible, and we don't want it. We also got the question that about [ you ] also has a very successful IT team, platform team. They want to make a separate IPO, for example, for this company. This was never our idea. We don't look at it as a separate business division. It is not a business division. It is the core of our company and our backbone.

All right. So thank you very much for this very good questions for this 3 hours together with us. I hope we gave you a good impression on how we work with TPG, how our software works, how we make all the M&A processes. And we are also here for the next hour, if you want to have some further or more detailed discussions. We are here to enjoy a glass of water, wine, whatever with you. And thank you for being here. Bye-bye.