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

Good morning, ladies and gentlemen, and a warm welcome to today's earnings call of The Platform Group AG following the publication of the audited financial year results of 2024. I'm delighted to welcome CEO, Dr. Dominik Benner; Board member, Marcus Vitt; as well as COO, Christoph Wilhelmy. So the gentlemen will speak shortly and guide us through the presentation and the results and will give us an outlook for 2025. [Operator Instructions] So having said this, Mr. Vitt, I hand over to you.

Thank you. Good morning from New York. Today, I'm in New York, you see I'm next to the Wall Street, but there's no signal that we go to Wall Street in the next step. But it's important for me, it's my 13th day in the company that I can give you some information how I feel the company and how we work together. Our management structure, you know that I come in April to TPG. And before I worked 23 years, the leader of the private bank, DONNER & REUSCHEL in Hamburg, very old but international private bank. And I was the Head of Technology to the Asset Management for some years. So I'm in the financial business, and I will be one of the players in the Capital Markets because I'm the Head of President of the exchange in Hamburg. And so I can bring my competence and all my contacts to build a better financial structure for our company on the long term. You see here on the view that our management structure as well with -- in the Supervisory Board, Stefan Schütze and the team, Dominik, the leader of our company. We know him very well. And Reinhard Hetkamp is the CFO. I'm responsible because I told about me because I'm the new one for risk management, for Investor Relations, HR. And I will look to all the activities in our companies we had. So I think we go to the next step. You know the strategy of our company. We create a digital platform for a lot of activities. We are -- Dominik and his family, we established in 1882. We have a lot of partners, international partners and the company fashionette in Düsseldorf. But we are working in a lot of towns in Germany and outside of Germany. For example, in Wiesbaden, in Hamburg, Düsseldorf is the main activities in the U.S. and in other countries. We have a lot of platforms in industries from the beginning with the shoe business, but we have today a lot of things you will see on the next presentation. We have over 3 to 5 million customers. And today, it's 26 industries, but we get, I think, each year, a lot of new activities to our platform group. First of all, I think I show you how it works in the Capital Markets. All our investors are very happy because you see on this chart the long performance. We start 2 years before and you can compare the results with the DAX and we are normally a small mid-cap company, so we can compare it with the MDAX for the medium companies. And the MDAX is not run very good in the last 2 years, but you see typically a performance over 80% and the DAX over 40%. So everybody we invest in our shares is very happy that we are doing a good work, and we have good performance for all of them. You see on the next slide that we have the performance of a very volatility market. And you see that we are on the top of this capital markets activities, you have over 20% in this year, beginning of January. And I think we are a company you must focus because we have a lot of Dominik tell you later, a lot of activities in this year. Let me go to the next slide. Yes, here, you see the coverage of all the analysts. I'm very happy to know all of them because I work with them in other role. And you see that we have positive results of the coverage. And I think it's easy to focus this chart, you must buy our company because we are good in diversification of all the activities, and we are very modern in the technical activities of our company. And we are a good team. I feel after 40 days, I think, that it's a very active team. We see the focus, what we will do with the next time. And so we invest in every chance with interesting part. In the last 4 months, we invest in Fintus as a financial company. This helped to the complicated IT structure of the banks and the financial players. So we can help them to build a modern, best technic platform for their business. Then we invest in a B2B finance platform, which is in the debt business, very high technic, very easy to -- I will say the tender of the financing of debt, but it is -- you can compare it with that is a Parship, I think you can bring some players together, and it is easy to contract them. And you read in the news information in the last week that we invest in Joli Closet in Paris. That's a very good company because a lot of people in our business look what is in the fashion, what is in the luxury segment. And so Dominik and the team catch them to our company. So we have a good idea and possibilities to use all the product contacts of them and the solutions to bring to our customers and the customers of our customers. Yes. The next one is Herbertz -- Herbertz Group of company, you know them. We talked about it in the last month. And Lyra Pet company in the business of the pet. You know there's a big business. All of them are very happy to have a platform, you can organize everything you need. Then let me know in the beginning of the year at the capital conference of Montega, I was there in other role, and I hear what Dominik said, and I was very happy to hear what he is thinking about and what he will do. So we come to talk about my future after leaving the bank business. And so that was the beginning of together work in future growth of TPG. So let me go to the next slide, please. After the presentation of Dominik, you will get some more information to the TPG PAY. That is an innovation, innovation you have never heard before. We will build a possibility for the clients which are not -- we say not green in the payment functions of the credit rating. But we know from fashionette how it works to go in activities with this client, and we got the good results with provisions, and we can build the possibility for them to buy on our platform. If we build it, Christoph will take -- will informate you later, then we have good possibilities to get new clients in this special area. Then next step, first of all, inform you to our TPG1, it's a structure to bring all the activities on one platform together, very high in performance [indiscernible] Dominik and I are leading the companies now.

All right. So thank you very much, Marcus, for the first 2 weeks, which were quite successful and happy to work with you together. Now we continue with our platforms for success with our overview on that. So when I just jump in here, you see our long-term strategy. Our long-term strategy is that we want to become the #1 platform in Europe. That means we want to have the highest numbers of partners all over Europe and want to connect the most partners like traders, retailers and manufacturers to our platform. And we want to achieve that with organic and inorganic growth and want to make sure that we enter into new industries with our acquisitions and cover more and more industries. By end of this year, we expect to have 30 industries covered by our group. What is very important to understand is our growth model because sometimes people ask us and say, how can you grow when the average industry where you operate in when this is stagnating? And the answer is very simple. The answer is when you start here, we get more partners. That means retailers or manufacturers. And when we have more partners, we get more products. And the increasing number of products, it's huge. I will come to that later. You see how many products we get when we connect new partners to our page. And with the new products, we get a lot of more customers and the more customers directly lead to more GMV and to more revenue. And this is a growth model. So here is the basis and the heart of our company, and this is very important to understand. And I can only underline it every time again that we do not rely on the industry development. We rely on our partner development because with our partners, we grow and not with our industry. Here, you can see this summary on our partner development means when we started at the stock exchange 2 years ago, we had around 5,000 partners. Now we've tripled this number. So we expect to have more than 16,000 by this year. So it's really a strong development. And we can see that the strategy works out for us, and we increased the number of products, we call it SKU by 20% compared to last year. So it's quite an amazing number. And you can imagine, if you offer 20% more brands, new brands and new products, you get, of course, new customers with that. Our portfolio is quite diversified. So we have 4 segments by last year, and these 4 segments are covered with different portfolio companies. So these are all small and midsized companies working in the e-commerce sector and they make a pretty good job. So last year, we had all of these companies contributing to our profit, and we also expected by this year that all of them make a profit, and we can work with that for this year. Our core competencies, you already know, it's software, it's marketing and it's M&A. So that's we are pretty good in. And I think we can really also increase our competencies here and to make it on a better level. Christoph Wilhelmy, our COO, will come to this TPG software structure later on. So I'll just give you now the financial details. You have seen in our latest presentation by January, our previous number. So now they are all confirmed by our auditor, and they are only very slightly changes at the final numbers compared to the previous numbers. All in all, we are more than happy. So we had a quite successful year 2024. Our GMV, our revenue increased by 20%. Our EBITDA increased a lot by more than 40%. And all in all, all the numbers were outperforming our guidance and our internal expectations. So we had a positive number also regarding on the earnings per share. The earnings per share have reached EUR 1.7 totally for the continuing operations and totally also including the discontinuing operations, we had EUR 1.6 per share. Here you see the charts regarding the GMV growth and revenue growth. I think it's clear. I don't want to make a deep dive on that now. What's also important is the numbers regarding the purchase price allocations. As you know, we buy companies. And with some of our acquisitions, we have badwill effects. Badwill effects are positive for us because we do not have a goodwill in our balance sheet. And so we really avoid any kind of danger because of some impairment tests could decrease our value. And so here you see the outline from EBITDA adjusted with EUR 33 million with the purchase price allocations, and we end up to EUR 55.6 million for the EBITDA reported. The adjustments of EUR 1.9 million were by 60% determined by our bond. So last year, we placed the bond and we had around EUR 1 million costs because of that, and that is the main reason for this onetime effects, which we have adjusted in this composition here. There is one figure we would like to introduce now and it is new, but we think it is very important for investors to understand why we are very efficient in our capital allocation and why we think that this figure is important also for you as an investor. So as you might know it from other companies, we determined a return on equity and return on capital employed because it's very important to understand that our group is an asset-light group. And the invested money, which we have and which we get from our bank partners or from our bond investors, I think it's a very good capital allocation. And when you see these numbers here for last year, we achieved a return on equity of 26%, so which is quite above our internal guideline of 20%. And when you look on the return on capital, that means our group equity additionally added our debt and minus the cash, you see almost 20% return on the capital employed and which is also above our guideline. To compare it with other companies in our sector, we have, I think, the highest return on equity in our industry. So we are quite happy with that. And we expect a further increase by this year. In future, we will also give you each quarter and each half year and full year, these numbers that you can have a full and transparent overview on that and see how good we invest the money from you and how our return on capital and equity is going developed. When we have a closer look on the segments, as you know, we have 4 segments. We are more or less happy about the development means we have a good consumer confidence last year, especially in the Q3 and Q4 in the Consumer Goods segment. Overall, we achieved EBITDA of more than 7% and it was the strongest revenue increase in our history and also in the last year. So we are quite happy with that. And we added some companies into the sector like [indiscernible], that's a company in Austria for electronic goods and so on. We acquired Chronext, a watch retailer for luxury watches, Lyra Pet, as Marcus already mentioned. Aplanta, it's a company for flowers and Avocadotore, a platform for sustainable products. On the right side, you see the Freight Goods segment, also very important segment, the second biggest segment, which we have and we achieved our EBITDA level of more than 6%, which is okay for us. We are happy with that. The only segment where we are not so happy as it was also last year was the Industrial Goods segment. So we saw that we had a poor margin development in 2023. We did some actions regarding the carrier costs, the logistics costs and also the HR costs, and they implemented it. And so the EBITDA was already increasing compared to last year, and we are very optimistic that we have better numbers this year that we achieve at least 4% EBITDA. And we made one acquisition with Wehrmann Group, that's a platform for wood machines, a very specialized platform, but we are very happy with this company because they make a great job, and they have a good growth rate by this year. And on the right side, you also see the Services and Retail goods segment. We achieved an EBITDA margin of more than 4%. And we acquired Firstwire by last year and Fintus Group by this year. Fintus Group, by the way, is a pure SaaS company. So we have a pretty high number of SaaS revenue now in our group. Now we come to the nonfinancial KPIs. You see the number of orders. It increased with the same amount as our GMV and revenue increased, so more or less 20%. The average order value also increased quite successfully to EUR 124. The number of customers achieved 5.1 million. And our number of employees reached more than 1,000. This is just because we consolidated new companies to our group. What is the most important thing for our business model is always the number of partners, and we achieved by end of last year, more than 13,500, which is quite a good number and above our internal expectation. Below, that's also a thing what a lot of people always ask us, how much do you get from organic growth and how much is nonorganic growth. So last year, we achieved about 57% of nonorganic growth. So we have our internal guideline with 50% and 50%, more or less, it's a guideline. So we almost achieved it. It was a little bit more nonorganic because we made two big acquisitions with [indiscernible], and these are quite big numbers there. So it was a little bit more on the nonorganic side. This year, let's see, the year just started with 3 months ended now. And so we are optimistic that we also achieve a 50-50 relation on that this year. So all in all, when we look back on the developments on Q1, so this year Q1, we see that the consumer confidence is higher. And we also see that a lot of EU markets and the U.S. also turned positive after the long post-COVID decline. And you see that companies like Zalando, MyTher and so on, they increased their forecast for this year. So we see a positive development here. We also see a higher profitability. So our cost program, which we started 1.5 years ago, it is very efficient and we have a lot of good cost results from that. And we think that we can achieve our EBITDA number of 7% this year and we will maybe also increase that by someday. The distribution costs and logistic costs was not positive. So we had a negative margin development in that. That means all the carriers like DHL, UPS, DPD and so on, they increased their costs, and we also took some actions to mitigate that and to reduce it a little bit, but our opportunities are limited in this case. We see excellent conditions for new M&A. So we have a full pipeline for 2025 with new companies with very fair values with low values, and we are very optimistic that we get good companies into our portfolio by this year. And last but not least, our increased scalability because software is a backbone of our company, and we can really fast connect partners with that and enter new industries within less than 4 months and this is the basis of our success. So when we say we would like to enter a new industry, after 4 months, we are ready to do that or we connected our software with the first partners, and then we can start with that. So all in all, it's a very scalable platform, which we established within the last years, and so we can grow with that. Our 4 segments grow. Each segment is growing, and this is also important. We do not have one segment which is declining or have some problems. So all in all, we have a good view on that, and we see a good margin development. All in all, this leads us to the increase of our guidance by 2025. So today, we sent an talk message to all our shareholders and to the stock exchange that we increased the guidance on this year. The new guidance is a revenue of EUR 680 million to EUR 700 million. So quite a big increase on that. And we also see an EBITDA level of EUR 47 million to EUR 50 million, and the GMV also increased to EUR 1.3 billion. The leverage did not change. So we expect the same leverage, and we show you later on this presentation. The number of partners will reach more than 16,000. We are more than optimistic to achieve that and to ramp up the number of products in a huge number. By end of this year, we expect at least 30 industries, but we cover by end of last year, we had 25 industries. So that was the new guidance for this year. And Marcus and me, to be honest, we have been too conservative at the beginning of this year or we were too conservative. And we think that now we see good numbers, good Q1 development. And we will see how the year is going on, but we think that these are the right guidance numbers from a very, very positive tendency what we have right now. Our midterm guidance, as you know, we also give you a midterm guidance for the next year where we think this is our minimum revenue level. We expect it to be more than EUR 820 million and a GMV with EUR 1.6 billion. And the EBITDA level will be unchanged between 7% and 10% but this is only from the current perspective. So a lot of people ask us, well, do you calculate new M&A targets in that? Or do you plan any upscale with new targets? And we said no. This is just the current status. So that means we expect a 15% to 20% organic increase by next year. And if we buy new companies, additional companies for next year, it will be on top. So it could be easily reached that we achieve the EUR 1 billion revenue by next year if we acquire more companies, which are, of course, not included into this calculation. So on the long-term perspective, you see that here, we have a constant and stable growth rate in our GMV development. It's the same for the revenue development. We started with more than EUR 200 million 5 years ago and now we will achieve more than EUR 680 million by this year. And it's the same for the EBITDA development, the number which is the most relevant one for us. We expect to have EUR 50 million up to EUR 50 million this year. When we have a closer look on our balance sheet, you see that our balance sheet did not really increase so much. So all in all, we are very happy that we have a very stable level with EUR [ 33 ] million by end of last year. And you see it also on our liability side. So there was not such a big change. All in all, we had a reduction of inventory by EUR 19 million. So it's not so much. We had an increase of cash to EUR 22 million and the net leverage, the gearing is 2.6x as a factor to our EBITDA. Also important, the level of bank liabilities. We reduced the bank liabilities a little bit by last year. So we only had EUR 59 million. And we got our Nordic bond with tests last year, and we have a total Nordic bond volume of EUR 50 million by last year. Our equity ratio reached a record level of 42%. So we are very proud of that and can be happy that we have a very solid finance structure in our balance sheet. Just to give you forecast on our debt situation. So basically, we expect to have a net cash by end of this year with a little bit more than EUR 100 million net debt, and we expect to have an EBITDA adjusted by around EUR 50 million. So it's a leverage of 2.3x, and this is exactly in our target leverage guideline for this year. When we have a look on the cash flow, we have a very good cash flow development. Right now, we had last year EUR 58 million operational cash flow. We invested the full amount into software and into new M&A activities. So it was completely invested, as you can see here, and we have EUR 30 million coming from the finance activities. So all in all, our cash increased to EUR 22 million by end of last year. And again, we see a very positive development on this also this year. Yes, last page on this slide is the M&A pipeline. We see good M&A targets coming up to our group and offered to our group. Basically, we see 2 niche platforms operating here in Germany. We expect to make a closing and signing in the next 2 months and also a long-term target, the acquisition platform. It will be done also within the next 2 months. Our financial calendar, it is published, so I don't want to go on with that, and you can see it online on our corporate Investor page. All right. Now we hand over to Christoph Wilhelmy to give you a short update on our software development and also on the project TPG One.

Good morning, right. So we can already start with the first slide of the overview. So this slide you might already know from us, this is the big picture of the TPG One, which shows you how the retailer can connect to our complete system and at the end, end up at one of our storefronts also connect to our marketplace. And I will now show you where we are standing at the moment. Next slide, please. Currently, we talked about in our Capital Markets Day also about our TPG One connector and about the TPG Cloud. So we are currently live with our TPG One connectors and most systems are live already, but this is due to the fact that we have so many ERP systems that we want to connect to. This is a system that we will be growing and growing all the time. But currently, it is live already, so it's all on time developed. And amazing feature here is when -- regardless if you come with a trade bank account or with a channel credit account or a Shopify account as a retailer, you can very easily connect with a couple of numbers you enter. For example, for Shopify, if you retail with Shopify Shop, you just have to enter your Shopify URL, your API credentials and you're ready to go, your products is getting automatically listed in our systems. So you have a couple of steps until you can go live in our systems. This is helping retailers a lot to connect to our systems very, very fast. And the same can be done with the major feed engines like Google feeds or a channel pilot feed or other major channel feed engines with just LEDs on our systems, you can connect to our system from your feeds to this very, very fast for the retailers. Also, we have implemented data enrichment for our category mapping. It means whenever a customer -- sorry, whenever a retailer is connecting to our system, he connects with the current stock list. Our systems are mapping their categories to our categories in a couple of seconds and will enrich the data what is missing of the product descriptions or product types, and it's even able to see out of a picture what kind of materials might be used in this product and will then be enriched in the product data. Also with the TPG One cloud, the major cloud, what we call here in the middle is build out of the PIM and stock pricing, repricing feature. This is still in the building. At the moment, we are rebuilding our print systems. We have already an on print system for this high performance, but we make this much, much more performance. So this is also able to cover the huge amount of millions of SKUs. Next slide, please. This is also where we are working at the moment is our storefront. So we are working with high-performance storefronts. We built an integration layer, commerce layer, as we call it, which will give us the opportunity to also connect our biggest shops like Avocadostore with Fashionet and Winkelstraat, which are complete own build shops to new storefronts. And in these new storefronts, we partially work with the Shopify checkout solutions. And we do this because Shopify is guaranteeing the most performance checkout in the industry currently with over 45,000 checkouts per minute, that is absolutely amazing. And this is guaranteeing us that we can also cover huge load times like Black Friday, Cyber Monday or Christmas season. We're also integrating or have partially integrated already not in our shops, but in most of our shops, we started with the biggest shops retail media. So we started with Fashionette and also with food so that customers can shortly promote their products, mixed customers or retailers, of course. So this means they can book on product at customer audience and audience extensions. This means that they can promote their products if they are brand products or a multi-brand retailer and these promoted products will get displayed on a special area or level on our storefront. This customer can book this with our promotion partner here and can also do it by self-service by booking specific fees. We also integrate and we accept bookings. This means that we are contacting our retailers directly and offer them different kind of solutions like sponsored e-mail campaigns or sponsored banner campaigns or even a branding campaign for their products or their brand, so that they can also reinvest their earnings on our platforms. Next slide, please. One more. We're also working on our retailer portal that our retailers have a better experience when they work with us together. This is a short overview of how it will look in the future. The retailers can, in the future, have a much, much more clearer overview of what the products are listed on our pages, where they're listed, how many orders they had, what other finances are, what they earned on our platforms and they can bring it out, they can export it, and this will give us -- or this especially gives the retailers a much more smarter way and easier way to work with us together. And now we come to our new project, what we mentioned already in the beginning of the year, the TPG Pay. So as you know, we work on our own payment solution. And this will provide for our customers a solution and buy now pay later solutions, what we are offering in all our web shops. Next slide, please. TPG Pay means we will integrate all major payment types in these solutions. And especially, we will offer pay on invoice, pay in installments, monthly invoice and buy now pay later solutions. This means sooner or later, we will be an own buy now later partner for our customers, so they can buy any kind of products with TPG Pay in all of our web shops. And the amazing thing about this is the Yellow customers, what we can see on the next slide. The Yellow customers is a so-called part of the customer range we have, what getting at the moment and we checked by other buy now later solutions. So far, it's just different reasons. For example, when you pay a very high price, it can be that the buy now later solutions we have currently implemented say, now this is too high for us. We cannot offer you buy on invoice or buy on installments. And due to our customer history and the huge shake that we have by our customers, we can cover the risk or take care of the risk and can also offer customers who get rejected by other [indiscernible] and we can offer them and pay in installments or pay in invoice with our own TPG Pay solution. So we are covering here a target group of more than 20% of our current customers, which will also generate an additional income for us. And we will take care that these kind of customers run, of course, risk checks, but of course, through internal sources. The current development of TPG Pay is that we will build an own API for all kind of web shops, but also we will pay -- will build plug-ins for our major shop systems. And we started with the most complex one, this is a tricky one to get. It's the Shopify payment app. And we have the approval of Shopify that we are allowed to build this kind of app. And we are working at the moment in this development part so that we can release this kind of Shopify app internally first for testing and then release it as planned in late 2025. And TPG Pay can later also be published for other companies as well. We have a short demo how it can look in the future. So you can select many kind of products added to the cart. Then in the cart, you can select TPG Pay as a payment solution. Then a short window will open when you click the pay now button, you enter a 10 and then you can select the desired payment solution which you wanted to use for payment direct or instruments or instruments up to 36 months, for example. For timing-wise, we are currently -- we finished the exploration phase. We are in the demo development phase at the moment, and we are planning a first release to our test shops or to our smaller web shops in late summer this year. And also late this year, we will plan to release a complete solution to all our shops. Thanks, that's all from the software update.

Yes. So thank you very much. And now we hand over to the questions from your side.

So thank you so much for your presentation and the update. So we will now move over to Q&A session. [Operator Instructions] We already received the first question from Alexander Rihane. So you should be able to speak now.

First of all, I want to say congratulations on the record results and thank you for the presentation. I've just got 3 questions. First of all, could you tell us how many acquisitions are still planned for 2025? And then of the 4 companies acquired so far, which one was the biggest revenue contributor, which led to you increasing the guidance? And that's actually -- those are the 2 questions actually.

Okay. Thank you very much. And I just go back to the overview on what we did so far this year. You can see that we acquired different companies like Fintus, Firstwire, Joli Closet, Herbertz, Lyra Pet. So all of these acquisitions basically are not big targets. So their revenues is on average below EUR 20 million. So it's not a big relevance for us. And so these are small targets, but strategically very important targets. So basically, we expect 8 acquisitions this year, up to 8 acquisitions. It always depends, of course, if the [indiscernible] due diligence is fine and so on. So yes, so I think I will answer these 2 questions. Small targets, not so relevant for the raising of our forecast or the guidance, but we expect another 4 to 5 acquisitions this year.

Okay. And if I could have another follow-up. Do you plan on tapping the bond again or raising more money for further financing of acquisitions? Or do you plan to finance it from cash flow or the remaining cash?

Well, basically, these targets, which we acquired here, we all take them without any bond tap. And it depends if we get a big target where we say, well, this is worth to think about that, and it's so big, we have to think about bond tap. But right now, from our current perspective, we see no reason, but it really depends if there's a strategic opportunity for a big target, which is worth to do that.

Then we will move on with the person who dialed in with the phone. [Operator Instructions] Unfortunately, we cannot hear you. So then we will move on with [ Frank Liman ]. So he has a question as well. So and then we come back to you.

I have a more conceptual question. You keep on buying companies and that seems to be one of your core competencies, right, Dominik. That's how you define yourself as someone who assembles smaller operators on your platform. You platform operator and you look for those ones to add to. Now in terms of when you purchase them, you also allocate the purchase price determinations. And as a result of these purchase price determinations, you generate other income. Is that going to continue in the way it has been in the past? Or is that basically behind us?

Yes. So thank you very much. And I think when you have a look on our annual report, which is also published today, you can find it on our page. We made a Q&A part with our Head of M&A. So I think he gives you good answers on that. But I can also answer you now. So first, we do not make M&A because we think M&A is attractive. That's not our business. We have a complete different opinion on that. So our opinion is that we want to enter into new industries. So for example, if we think that vintage luxury is a great industry, we are looking if you make a buy thing, so we buy a company or if we go by ourselves and don't make an acquisition. So we do both. In our history, usually, we made only organically to do it by ourselves. But in the last 4 years, when we saw the valuations go down, we thought that, well, maybe it's better and the better efficient way to buy a company in one specific industry and ramp up a platform on that. So for example, this release to that, they have 2,000 partners in the vintage luxury sector, so secondhand luxury, and it's a very good basis. And so it was better to acquire them to pay a fair price, but to work with them now and to expand it, and that's a good opportunity. To answer your second question regarding the PPA effects, we see that, of course, we also have PPA effects. Are they on the same level like last year? I don't know because we have not closed this year. But we expect to have them, of course, in some amount in the double-digit million euro amount this year. And so last year, it was EUR 22.3 million, this PPA effect. And if it's a little bit less this year, I don't know. Of course, we will have some because the PPA effect, covers some of our acquisitions where we pay less than the equity what we get.

And that concept of paying less than the equity you get -- is that a determining factor for the targets you look at? Or would you also play above equity? [indiscernible].

Yes. No, no, no, it's a really good question. The answer is definitely no. Because when you have a look on the annual report and the Q&A part of Mr. Minnier, he's our Head of M&A, you see that the idea is never to buy a company because of the PPA. It's a side effect. It's a side effect where it's nice to have, but it's not relevant for us. So we also buy a company for goodwill if we think the price is reasonable and good. So it's not a question, do we get PPA or not. And that is the reason why we adjust it in a negative way. We put it away from our EBITDA because it's not happening every time. It's not calculating, and we cannot make a forecast on that.

Right. That's what we do, too, and that's what I was basically also looking for the adjustment and whether that will maintain or not because, of course, if you look from the debt side, the EBITDA and the debt relationship are important. And it's a question whether you take the debt and the net debt and then divide it by the reported or by the adjusted one. And I appreciate your transparency. I have one last question, if I may. The own work capitalized, is that basically investments in your software? Or what is that? It's about EUR 6 million a year?

Yes. Yes, exactly. It is 90% of software.

And you then -- you invested in your software, you basically have that booked and then you write it off over 5 years? Or how do you treat that investment then?

Yes, exactly. So we have the typical amortization period between 5 and 8 years. It depends on the software and the layer. So it's on average 5 to 8 years.

So then we will move on with Christian Salis. So you can speak now.

Everyone, can you hear me now?

Yes. Yes.

Okay. Perfect. So I've got three questions, please. So two technical ones and one on the '25, '26 outlook. So first of all, could you maybe talk about the operating cash flow a little bit more? So what is driving really this decrease or what has been driving this decrease year-over-year in the financial year 2024? And maybe could you also talk about the prior year figures because it's much higher than the figure you reported last year. I think last year, you reported something like EUR 70 million, and now the 2023 number is around EUR 100 million. So what is -- yes, could you just explain that a little bit? And then second...

Which number was that? I didn't understand.

So two questions. So first of all, what is driving the decline in operating cash flow year-over-year 2024? And what -- and could you also explain why the prior year figure in terms of operating cash flow significantly differs from the figure you have reported last year in the financial report? Then secondly, on the tax rate. So it's again very, very low. So what should we expect here in terms of sustainable tax rate for the next year and the next years? And then final question on the '25, '26 outlook. So you said you're expecting a 50-50 split between organic growth and inorganic growth. So the midpoint of your guidance now implies 30% growth year-over-year. So if we take your statement, this means you're expecting a mid-teens figure in percent of organic growth. That's significantly above the e-commerce market and other major e-commerce players. So what is really driving this outperformance even though you're spending much less on marketing than a typical e-commerce company? And maybe just a quick follow-up. Can you give us an indication what has been the organic growth figure at the start of the year in Q1, please? Thank you. That's it for me.

Yes. So thank you very much for this. And maybe I'll share this again. So basically, to answer your last question, I think we really made it clear that we do not rely on the industry development. So if you get more partners like retailers in the industry, you get more products. And with the number of products, we increase our revenue, our GMV and our profit. That is the base of our growth. And this is circle. I hope that this is clear. I think it's very clear, but maybe not. So we do not care if the market for shoes, fashionable streets or bikes. It is getting 5% up or down. It's not relevant for us. It is relevant if we get more partners and more products. If these numbers are declining, then we have a problem because when we have less partners, you see the whole turn go down every time, and this is a dangerous development. We had it only one time in the bike industry. It was at COVID times. When the industry went up like this, and we had a crash like this in the bike industry because all the bikes were sold out. So there were no bikes available in the market anymore. And that is a nightmare for a platform like us. That is not good. So again, we are not relying on industry development. We rely on our partner development. Your next question was about the development of the capital cash flow calculation. There's one thing I have to mention. These are all the right numbers from last year. But last year, we had two numbers. We had pro forma and non-pro forma. And this is very important to understand that we decided to better give you understanding of this and last year, we use both here non-pro forma. So both non-pro forma numbers. And the reason for that is very simple. Last year, you know that we have this onetime effect in the cash flow from selling cars. This onetime effect did almost not happen anymore, only a very small number this year in 2024. So this is the only reason for that. If you would eliminate these onetime effects, you will see that we have higher cash flows on that. So we are very happy on this cash flow development. And again, last year, we had a onetime effect, which was the cards in the [ Kazoo Group ]. So -- but what was your first question?

Final question was on the tax rate.

Yes, yes, got it. Sorry, the tax rate. Yes, basically, we have a lot of loss carryforwards. When we acquire companies, some of them, I think, 3 have loss carryforwards. And of course, we use that in a very strategic way. So last year, we had 800,000 tax effectively. And -- but of course, this year, it will be higher. So we have no calculation on that. But in an optimistic case, yes, maybe it's double the number what we seen last year, I don't know.

Okay. And then just maybe a quick indication maybe on the Q1 organic growth run rate.

Yes, growth rate in Q1, we will present you these numbers in a separate call when all final numbers are finalized, but we see an organic growth rate of more than 50% compared to the total growth rate. So we overachieved our internal guidance is 50-50 split.

So now we have 2 questions left in the chat box. So let us cover them quickly. In the H1 2024 report, you reported a negative other result of minus EUR 23.872 million in the change of equity statement. In the annual report 2024, there's 0 other result in the change of the equity statement. Can you please explain the significant switch in the other result in the change of equity statement?

Yes, sure. So together with our auditor, we had a look on the development on the [indiscernible]. And you can see that here, we got some feedback on this issue of other operating income, OCIs, and we decided to make it in a much more transparent way. And there's one guy in the financial industry. He had this idea. And we make here that we put everything with the earn-out valuation report here. So when you look on our notes on Note 30, we clarified that all cash-based earn-out and all share-based earn-out valuations and their impact are completely booked now in the P&A calculation. And that was a feedback from, again, one guy in the financial sector. And we think that this is a good idea, and we use it now in our audit report here. And now you see the total number and the reason why we had this peak at H1 was very simple. It was one company which was very strong outperforming the business plan. And just for this peak, our auditor said, okay, we have to calculate that because it's share-based component. And now we -- last year, we took over the remaining minority shares. So we booked it out at the end and we have total negative valuations of earn-out components of EUR 5.5 million by last year, and this is fully in the P&L calculation.

All right. And the last question, can you comment on what would have been the new guidance without the recent acquisitions since you released your previous guidance?

We have no separate number on that. It would be a little bit lower, but again, the targets what we acquired by beginning of this year were quite small. So they do not have such a big impact on our total guidance.

All right. So it seems all questions are covered. So therefore, we come to the end of today's earnings call. Thank you, everyone, for joining and showing interest in TPG and also a big thank you. Dear Mr. Vitt, Mr. Benner and Mr. Wilhelmy for your presentation. So from my side, I wish you all a lovely short week. And I hand back to you, Dominik for some final remarks.

No, we are fine. Thank you for attending. And if you want to have any additional information, just let us know. We always reach out to you with our Investor Relations page and we are open for one-on-one meetings, if you want any time.