Hypoport Ag

here ladies and gentlemen welcome to the webcast results q2 2023 of hyperport se our customers request this conference will be recorded as a reminder all participants will be in the listen audio mode after the presentation there will be an opportunity to ask questions and now head you over to who will lead you through this conference please go ahead yeah welcome from my side as well to the cute food to the presentation of the q2 numbers of 2033.

As you are aware, we are digitalizing three industries, credit, real estate, and insurance in Germany. Our roots are the German mortgage business, and with the current circumstances, we are in a special market environment. We were talking about this a lot, but be aware, there are other business models. I will talk about the market environment there when I present the numbers of the businesses But let's start to understand what's happening in general. When you look at our group, four segments, the largest one is credit industry. This is called a mortgage business. Private clients is as well a mortgage-linked. Insurance industry is something else, and pretty stable market environment. Real estate is growing, but it's very linked to the housing market in addition to mortgages. overall our group is growing all business models are gaining market share in their markets but the markets are pretty different right now so when we look on the numbers of the different units you can see that credit is performing pretty well in the second quarter plus two percent in revenue private client together with the mortgage market lost some revenue real estate was a negative surprise this quarter. We'll talk about this in more detail. And insurance, here we see a seasonal effect. Overall, it performed pretty well in the second quarter. In total, it meant for the group a decline in revenue, more or less a stable gross profit, but we lost 2 million in gross profit, and this you see in our profitability level. So we kept our cost-based thin and we managed our cost base pretty well but the special circumstances led to a decline in profitability so there is a negative EBIT of 2.5 million unfortunately after a solid black number in the first quarter and so how it happened we will talk about okay let's start with our core topic for how to port the mortgage market and what's going on there because in general this is already good news we see a recovery of the underlying market dynamics so everyone everything indicates that we saw the button in the fourth quarter last year and the recovery of the first quarter continues if not something special would have happened so um Long-term transcript, the German population is growing. In the last 10 years, it was growing from 80 million to 84 million. This year, we see already a net migration again of a couple of hundred thousand people, roughly 200,000 in the first half of the year. At the end of the year, we may end up again with close to half a million net migration and then increased population again. This increases demand for housing. And thanks to German housing construction regulation, we don't build enough. We were up building 300,000 units per year from a depressing 150,000 units 10 years ago. Right now, everything shows down again and the new construction volume is declining. And it's predictable for the next two years already that we will see a declining in finished housing um finished constructions here in germany so the opposite happens to the interest of the people 74 of the whole population of all households would prefer to be property owner um and this compared to just 42 which owns actually their property so there is a 30 uplift that mean um current situation and let's call it wishful thinking of the population. The reason for this is as well linked to the renting market. We see that the regulation of the last 10 years, the interest change and the current direction of regulation squeezes the renting market and there is more or less no supply to the renting market anymore. even an active migration from renting to home ownership, we currently see as a starting effect. So rents increased sharply in the last two years by 90% as an average in the metropolitan areas even more. In Munich or Berlin, we see double-digit rent raises within 12 months now. because of lack of supply and this squeezed market. The overall supply side is down by 30%, but it wasn't already a lot of supply there in 2020. So you can really be sure it's more or less impossible for an average or even high-income household to find an appropriate renting apartment for their needs. On the other side, to acquire home ownership, we have a stable environment recently. Since September last year, the interest rates for 10 years fixed mortgage is stable around 3 to 4%. And since January this year, real estate prices in German average is stable. So in general, the current situation should lead to more and more people acquiring home ownership because of the general environment. But it doesn't happen, and we will come to this why. Okay, first of all, the 74% interest in home ownership is still under representation because 12% say they didn't decide. Only 40% of Germans say renting is my long-term choice. They do this because they are not aware of the risk of renting in the current market environment. The risk of increasing rents is high. The risk of losing your home because of privatization is high. And if you signed a new contract in the last years, the probability that you have an indexed rent and with the current inflation outlook, the fast growth of your current rent is high as well. You can say, if you want to have a nice home in Germany in the next five to 10 years, You need to acquire it. You will not be able to rent it anymore. This was a great time in the past, in the 20s, 10s, that you could rent nice places. In the future, you can only rent if it's fine for you that you just sleep there. That it's just a roof and you can sleep there. If you want a nice home, you will have to buy it because nobody is going to rent you this anymore because it doesn't make sense from a financial perspective. the landlord because of the regulation so in general germans buy because of trigger event the typical trigger event is the expectation of children's or actually the birth of children followed by things like a divorce change of your job in a completely different metropolitan area but these are already minor events core event are children's and When you look on the current development and what's going on in the market, it's relevant to notice that the birth rate is on a higher level than 10 years ago, stable in Germany. Thanks to the net migrations and the migration of especially young people to Germany, we see more births in Germany and with this, more trigger events for families to consider buying something. What is relevant for this market as well is that the boomer generation, so highly skilled workers today 60 plus are systematically leaving the workforce market and enabling additional migration, but as well salary increases for the younger generations. And so we have a pretty low unemployment rate and especially under skilled workers, it's challenging to be unemployed in Germany. and even to fear to get unemployed because of a pretty stable economy and a very attractive labor market. So you have a trigger event, you have a stable income. You see that the renting market is closed so that there's no supply side on the renting market anymore. And for the existing ones, the quality goes down, the prices goes up. Your choice is to consider buying especially when you feel more and more secure. Last year we had a situation where a lot of crises occurred parallel, so the Russian aggression against Ukraine, problems with the energy prices, a sharp increase there, inflation is coming up, interest rates going up, so there was a high level of uncertainty for families. This changed now, so there's more and more of them and checking out what they actually are able to afford. And this is something which is normalizing right now. It will be increasing income level with increasing rent as a, what is it, an alternative in paying for housing. It gets more and more attractive to buy in a stable price market with stable interest rates. Even then it got more expensive than it was a couple of years ago. So talking about affordability in the German housing market, behind us lays a period of extremely high affordability. So housing in Germany was cheap. It was for a long time cheap from the price tag for properties. And it was additionally cheap from the mortgage rates. So we saw mortgage rates of just 1%. and still pretty normal price tags around 2015, 2016. After this, the prices start to rise. And for now, roughly one half a year ago, we saw a sharp jump in interest rates to the current level of 3% to 4%. And with this, affordability changed dramatically in the market. You see the red graph here. what is important to notice and what uh just has to sink in with everyone in this market that the current level of affordability is not super artificial or impossible to um to achieve anymore we had the same level 20 years ago it was just super attractive um in the time in between and it gets more attractive every month and uh yeah let's say housing was always cheap in germany um not always as you see in the 80s and 90s it wasn't so cheap but from the feeling of the current generation it was super cheap earlier um the truth is we had an artificial low interest rate environment and at this time uh who didn't make the decision to acquire something made a mistake pretty simple today it's again an unnecessary a complex decision moving out of your renting space which is too small for your family and accept that the new space you acquire has more rooms but it's not super large like it would have been two or three years ago it's not as central as it could have been two or three years ago but it houses your whole family every child has a room and you don't have a huge stress because you live in an apartment that just doesn't fit the number of uh people in the houses anymore so this adoption adoption uh is happening um yeah but every trigger event uh or every month roughly 50 000 just trigger events from the birthright adds on another 50 000 from other events and uh yeah this this frozen market environment which we saw um especially in the fourth quarter and now slowly recovering in first and second quarter There is still a huge backlog of families which are in this phase of adjusting their wishes to their affordability. And it is just happening. So what came in between? In the second quarter, to see a stronger recovery already, was very heated up discussions in the political environment about a new law restricting the heating with gas and oil in Germany and forcing people to acquire heat pumps. A very tragic way to communicate the new law. A lot of changes in the short period about what is required by whom for what property. and how much subsidies actually the government wants to spend on motivating people and the whole second quarter we had this discussion it was um articles about this topic at the highest click rate here in germany on all news sites and we saw a really divided population on this um the law didn't get effective it was postponed after the summer just it was already quite disarmed from its strength and when it will get effective it will have a period of five years until it really hits the market so really unnecessary uncertainty for the decision makers in this market here and with an unnecessary downturn of the overall um a market for building or reconstructing houses here so this this um delayed the recovery of the market um and we lost the minimum this second quarter and currently in the in the summer time um we see a pretty solid market environment um so not the usual holiday season with a sharp drop in volume um for now um maybe people recover already from all the stress and all this uncertainty and do their decisions because they understood that the law will not be as tough as it sounded in the beginning. Okay, then we are back to this, what in the other macroeconomic key components happens. So you see the interest rate adjustment on the current level. No hope that we will, We see soon a sharp decline again. So we found the new normal this hour, 3% to 4%. We see that properties come to the market. We compare this with the extremely low level 2020, 2021. Everything that came to the market was fast sold. So from there, we are up 50% roughly. This is still not that there's a lot available. But if you search long enough, you will find something that fits your need. And it's good that this recovered and it's necessary for an increasing production volume in this market that there are properties for sale. They are there. Yeah, prices are more or less stable since the beginning of this year after a 10% drop in the autumn and early winter last year. So there is a certain level of normalization, but sellers are not going to reduce their ask prices a lot anymore because they see that the squeeze for the buyer side is huge. nothing which comes to the market if the new construction is slowing down migration is high so the seller side can just wait and they are sitting on a huge unrealized profits which they can just realize as well in a half a year or a year in the moment when someone comes who really wants to buy this because yet for every property you just need one to buy it yeah on the renting side as i said there is no relief if you are triggered and need a new apartment here the amount of properties they are declined this sharp increase in rent okay how that the different segments perform in this market environment we start with the credit platform in the center they are the european system in the center of the european system the mortgage production um but you are aware of this i will talk as well about um personal loan and corporate finance in a moment and say something about this market when i talk about the product on the platform okay so mortgage business in europe the credit side minus three percent more or less stable to the last year last quarter sorry and the new um savings product for a long-term interest rate savings uh down nine percent a quarter to quarter It just doesn't make so much sense anymore in the current interest environment to secure this interest rate level with additional savings plans for long term. Just to give you a feeling, this Bundesbank reported volume of plus 1%, and Europe's minus 3% looks like we didn't actually have the market share gain this quarter. I doubt this. Whomever we talk to in any of the sales segments of Europace tells us that we are outperforming the rest. We see this in the mortgage broker market, which has the major share here. We see that the core competitor, the largest German mortgage broker, struggles with this environment, is not outperforming us. from all what we know and the last numbers they reported was unfortunately last year they were declining more than we did and we don't see that this dynamic changed within the sector of the independent brokers and the underserved market square areas we see that there is certain path to scaling to realize buying synergy by teaming up, emerging or giving up. And that there is, we see that trend to Europe. So we don't feel any loss in volume to all processes or other options. What we see is a positive trend to Europe in this stress environment on the broker side. um in the cooperative banking and civics banks world um the branch networks face a tough challenge to acquire new clients especially because a lot of clients are early online have touchpoint this brokers there and so end up in this first segment of our platform by bank branches um profited from faster execution in the past on more trust and now for consumers the best rate and comparing the best rate and doing this online got more important so they struggled and with our plus five percent in the cooperative banking sector and plus two percent in the sales bank sector we are the growth in the sectors and compensating part of their losses which they see in your business volume so We are absolutely certain in this sector we are, as in the broker sector, we are gaining market share. So the last sector of private banks, let's say that most of them don't disclose their quarterly volume by now. So we can't be certain if there is someone outgrowing us right now, but the ones who are on the platform, who are in talks and negotiations with us about pricing models or migration indicates us that we are performing better than themselves. Good news for us as well, you can call it the Deutsche Bank finally after years of negotiation and more than one and a half year of a project, a huge IT project with a lot of additional interfaces harmonized their mortgage business based on Europace technology and started on 1st of July with migration of the Deutsche Bank branch network after all other sales channels were already operating on Europace. So our market share in the private commercial bank segment is going to grow thanks to the addition of Deutsche Bank branches and so looking forward Commerzbank needs to make a decision at some point, and Unicredit needs to make a decision at one point. This is the major shares of the rest. All this said, we see positive traction in all four segments, and we see an outperformance in the second quarter of the rest of the market. How can it be that Bundesbank is reporting a different perspective? The only explanation that we found by now is that Bundesbank includes in their numbers of new business originations as well. It paid out the payment of so-called Bausparverträge, so these saving products where you secure long-term interest rates, which were closed seven to ten years ago and which are now paid out to the consumer because they are available are included in the new business number. And German Bausparkassen together are a high double-digit creditor. So they represent something around 50 billion in mortgage volume per year. So on such a single quarter, in the current market environment where the whole market is only 40 million, suddenly there are 5 to 10 million per quarter of the benchmark is relevant to the market changes. So saying this, we think that in this current market environment, people use their old contracts and use this money for modernization or paying back of mortgages. This is not new generated mortgage volume, which is in the market right now. And so with this, let's say it's the best explanation that we have why Bundesbank numbers are, let's say it doesn't show that we are gaining traction in all segments. Okay, so next area of product, personal loans. Minus 3% quarter to quarter. Usually the first quarter is, season is stronger in personal loans there are no monthly numbers for this market so we we expect that more or less we we are well positioned right now in this in this market our offering is third-party personal loan aggregation especially for banks which have their own product but their own product not always suits the client demand from a risk or price perspective. So using us, they are able to fulfill needs of clients which they can't serve by themselves. This is a growing market, especially in an environment where everyone is rethinking its position. And with this, we could grow in the last five years. The current dynamic in private banks, in cooperative banks, and savings banks shows us that we are on a growth track and keep growing. Especially positive, our joint venture team back in the cooperative banking sector, Genoflex, after a long period of piloting it last year, we are now in a field rollout and signing up and teaching and training dozens of cooperative banks and bring them on the system so that they are able to not just provide a team bank loans, but as well, third party loans to fulfill the needs of the clients. So last product segment, the corporate business world here in Germany. So in general, you can say since last year, the sentiment in this area is as well weak. German Mittelstand faces a lot of challenges. We had skyrocketing energy prices. We had disrupted value chains or delivery chains. We see in a certain way a credit crunch or sharp rises in short-term credit rates by ECB, plus banks who hesitate to provide new loans. for corporates. This altogether is a challenging environment for an advisory and broker service like RemCapital and funding for this digital version of it. The good news is our sales force is very connected to this German Mittelstand and especially because of the a connection to the subsidized loan and subsidy programs of the government, which RIPE Capital is advising on. There is always a talking point with the business. And if they plan to do something and there are a lot of challenges that they would have to invest money, they are talking with us. So the new project volume was up in the second quarter, as you see in the chart, to half a million, half a billion euro. and this is um this is already a good recovery from the week first quarter the week fourth quarter last year um the problem is that um especially on the subsidy side that could go the current german government still didn't decide on um valid solutions for um a german industry so that's uh it's they discuss multiple options and how to enable the transformation in the energy sector and the heating sector and how to support the German industry in the current tough situation. But they didn't come up with a program for this. So we enable our clients to be well prepared. And as soon as government funding for certain programs is there, we will be able to fast because of this we expect um the recovery recovery in the second half of 2023 and just the government has to act up until then um to realize all these projects which we are preparing here right now for now um i'm careful had a weaker quarter two um what i do but it's not unusual that we have a seasonal business here and typically the projects are finished in the fourth quarter of the year all this said about mortgages personal loans and corporate loans the segment overall performed pretty well given the circling circumstances um up in revenue even slightly stronger and gross profit and the positive ebit contribution to the group And this all before some additional price changes, especially on the European system for the mortgage world. So broker mortgages got roughly 20% more expenses in our fee model, starting on 1st of July. And with this, we would see additional revenue growth, even if there is a stable transaction volume. Be aware that in this 4.3 million euro EBIT contribution, there is still a lot of investment ongoing. In the whole credit segment, we did not shut down a major project during our restructuring end of the last year. So we keep investing here because we see that the current market environment is a huge chance and not a long-term issue for us and for you in the end. Okay, next segment, Private Client. This will be faster, as usual. The Dr. Klein Franchise Network, 200 franchises, lots of branches. We generate online leads of consumers who are interested in mortgage advice. The franchisee is advising them with their people and broker mortgages using the Europace system. Dr. Klein had a small decline in production volume by roughly 9%. Because we don't see any reason why Dr. Klein should underperform the market right now. We are pretty certain that your patient with a 3% decline was gaining massive market share. Because Dr. Klein performed pretty well as well in the second quarter. Consumers tend to search for mortgage products online, for mortgage advice online, because let's say the high cost and the low affordability right now leads them to mortgage brokers online. And Dr. Klein is very, very positioned and outperforming the only real competitor here in the market, which is an ING subsidiary. So with this in mind that even Dr. Klein saw a substantial decline, you understand better why we are confident that your business is gaining market share in reality. Yes, a small negative notice here, minus 4% on the side of loan loan advisors in the in our franchise network yeah so still franchisees feel the pressure that let's say the amount of leads is increasing but the people don't decide fast so this really costly duo and take them long to advise them and this is putting a lot of pressure on their p l and so they are still laying off weaker advisors and they keep just the best advisors in this, in the success rate of converting this online lead business. And so they are optimizing themselves, which is again good and shows the stronghold of this business model. On the other side, when markets recover, it will take us some time to, or will take the franchisees some time to have enough advisors ready for the increasing number of loan applications. Yeah, this said, Dr. Klein had a slightly weaker number for the second quarter, but still stayed profitable. And from all what we know from the market, it's the only larger mortgage advisor organization out there right now, which is profitable in this market environment. You see really the strong efficiency in the franchise system where everyone is able to optimize on its own and all together performing them pretty well. Okay, let's come to the real estate platform. As you are aware, we are serving two-thirds of the markets. The homeowner market with a sales platform and the property variation platform. and the social housing companies which provide roughly one sixth of all housing especially in the lower end of the market with the financing platform and the property management platform here um both markets changed in a second quarter or in both segments we had changes in the second quarter which were in a certain way surprising and affected our a short and mid-term outlook here um yeah let's say yeah once you start with the ones who stayed um or performed pretty well um yeah the sales platform of hio saw an increase in production volume of five percent so these are um especially mortgage real estate agents linked to banks which started to see a growth in their volume again which is good still had a decline in q1 um where we saw them losing market share now i'm not sure if they gained market share but i said they um even they keep uh going uh with our assistance and the digital world and um yeah so let's say they found their button in the first quarter slightly later than everyone else but um it's going up it is good for uh fire because with their solutions um to increase their market share and their revenue share. We need healthy clients as well. So good that they managed to turn us around. Something you can't see still in numbers, but it's getting more and more important is a pretty successful development in the property management platform area. So here we provide an ERP system for housing associations, especially in the social housing environment. and we saw in the both quarters especially in the second quarter a pretty good success rate in signing new larger housing associations up for our platform and they are up for migration just takes a couple of quarters usually they start at the full year so most of them will start on the first of january next year and and with this the payment starts um yeah so it's not relevant for the current numbers but the sales success here makes it a more and more valid um investment case where for a long time we invested money and there we see an upcoming opportunity um yeah yeah i i told you already um yeah yeah we had um unexpected developments in this segment. The first one is the variation platform. So first of all, after a couple of quarters, the declining numbers of new mortgages comes here and we have a sharp decline in numbers of new appraisals that need to be done for banks. In the same moment, the regulator changed let's say, a major product decision in the market, how you have to do the appraisal. They increased the threshold for a lean process from €400,000 to €600,000. With the declining prices and the declining numbers, this massively changed the number of products of appraisals done above €600,000. while it stabilized or even increased the number of appraisers below this benchmark. And so now below 600,000 euro. So while in one product area, we are lacking appraisers to be done. So above 600,000. In the other one, we can't keep track with the service level agreement that we have. because of this. So it's a mess and that this allocation of resources and something which heavily burned money in the second quarter because of this mismatch. Yeah, what can I say? We are working on this. Second time that the regulator didn't help us here. To be fair, we could have been better prepared as an organization as well. We are not good at handling these changes in the last already 18 months here. And this is, it's said to see unnecessary losses here in the period where we turn around every dime in every other business a lot. So up for restructuring again, we see potential on the failed side, activating our strong relations to banks We see a lot of potential in optimizing the match of resources to products. And we just need to take all people with us on the way here. And this is a challenge as well. Okay, third product area, financing of social housing in Germany. Another decline from the already weak numbers of the first quarter. So we're on to 0.1 billion euro per quarter. Our usual run rate is 0.5. So you'll see how weak this product segment is here right now. Yeah, core reasons as well, the intensive discussion about the German energy efficiency of buildings and how certain buildings should be heated. And for this industry, very important, who's going to pay for it and the changes. So how much are they allowed to increase the rent? How much subsidies are provided? And in this whole discussion in the second quarter, the industry stopped executing any project in optimizing building efficiency because there was so much uncertainty about what is allowed, what they need to do, who is going to pay for it, that they simply stopped acting and the volume, even compared to an already weak first quarter, declined further. We are pretty certain that we saw the button here now. We see that... The industry is aware of the huge responsibility it has to increase the energy efficiency and get to net neutral until 2045. And the estimated cost for this industry alone is 500 billion. And they are not rich in capital and they can't fund different than borrowing money from lenders. And with this in mind, there's a lot of mortgages to be protected. And we keep investing here in our sales force. We are digitalizing the process within the housing associations, how they actually plan their future financing with the portfolio management solution. And we develop and roll out a marketplace for the mortgage business with the lenders. This all happens parallel, more or less, um from your site and this unit is going to recover short term and long term has a attractive outlook for the second quarter um the the drop in profits from this unit and the losses in valuation and the heavy investments in the many property management uh platform um makes this our worst quarter for a long time for the segment. So we are actively monitoring here right now what we can do to get out of this pretty negative result of the second quarter. And then we have to climb up here again from a pretty negative performance and do better in the next quarters. So last platform, insurance. Finally, not so much about housing or credit. The insurance market is stable here in Germany. Everything is pretty fixed, which is, let's say, lead us to struggle to bring this industry to some dynamic in the migration path. We changed our strategy multiple times and ended up with three problems in the insurance industry. In each of the segments, we control and marketplace the digital integrated platform solution and add additional services around this to enable partners to interact with our platform. In all three product areas, we saw a good level of success in the second quarter. So in private insurance, we saw in three months increase in migration, migrated volume by 4%, which is an increase in speed compared to the last quarter. And when you see that we heavily restructured this unit here in the end of 2022, this is a pretty positive surprise that migration path accelerated slightly. let's see how this turns out in the next quarter if our clients finally execute the project faster with us would be great because there's still a lot of migration needed when you see that just close to half of all volume which is in our systems already it's migrated to the centralized platform besides this the validation rate is something to look at. This is the other side to the insurers. So 30% of this migrated volume is already linked to a specific insurance contract on the insurer side. So we are able to have a digitalized flow of data between insurer and platform and insurer and the safe equalization so that everyone profits from the added value of a platform and with all the services that we provide. so this is stable right now with 30 as well an area of intensive investment in the last years and still we are keeping to um build interfaces and standardize their communication that we last and the insurance insurance and the more volume we have the more attractive this kind of project gets for the insurers and the beats versa the platform gets more attractive for the sales side because there is more automated data exchange with insurance when this validation ratio goes up second product area is industrial insurances where we are in the development process of an tender platform for non-standardized industrial insurance policies here in germany we work together with all major um brokers in this segment and they are all pretty keen on our development here on the system that we we are developing and take part in this process um will be a very interesting second half of this year if this interest is materializing and we see transactions on the soon to be launched coreify platform if this is happening then um This is a great success and the great opportunity because it's a 30 billion euro market in premiums and the efficiency in this market is lower. The efficiency gain that we provide with this platform transaction based revenue model for us is huge. So fingers crossed that the interest is converting to monetization in the second half of this year. Last segment. yeah pension market especially in combination with employers as well as 20 billion segment of the total german insurance market and something where we are growing double digits on a quarterly basis so pretty successful in the last quarters and we have more and more relevant partners migrating their portfolio to our platform from the industry side, so large groups of corporates which just use the platform to digitalize their contractual database of their pensions of the employees. But there's more and more brokers who join our platform using our platform as their digital backbone. Still in this week, we will announce another large and important German player in this market to launch on e-pension. So this contraction will keep going forward. This is a very nice success for this unit. Yeah, and all in all, with all this incremental gains here in the second quarter, the insurance segment for the first time showed positive EBIT. and is well on track to break even this year this is what they provided in the second quarter and this is a correlation to all the to all our employees here they do a good job right now and they help let's say to stabilize in in general the group this is what they are doing because they are doing something outside of mortgages so total numbers You're aware of this already, so especially because of the declining volumes in valuations and financing of social housing, we saw a decline in our total revenue. We lost probability because of the trouble in this unit. The good news is our core product lines, the core markets are recovering. And so on this current level we are operating still pretty with pretty solid numbers and keep investing on a long-term perspective this is a period of the growth in quality in market share in the declined market volume and in importance in these different markets something that we are working on to materialize as i indicated already price changes is one option to materialize this and be in a constant process of renegotiating our pricing components now with our partners in this market environment. Besides the revenue side, we have a strong grip on our cost side. We reduced our cost base from 60 million in Q3 to 50 million in Q1. It stayed more or less stable in the second quarter. There is some inflation pressure, which we have to struggle with. On the other side, we always find some areas where we are able to realize savings. For instance, reduce the office space that we have by subletting so that we optimize the cash flow for us. But we keep investing in all major platforms and areas where we see positive tensions. If you don't see positive projections anymore, then we will pull the plug of projects. But for now, we see the opportunity to drive with them this market forward in the next couple of years. Talking about this market in the next couple of years, I'm sure you're already aware of this German housing market and the especially the private mortgage market, is defined by trigger events. And people keep getting children, people get triggered. And since summer last year, you can say more and more people are in a distressed situation where their current rented apartment doesn't fit their family needs anymore. And they consider more and more to buy, just they have to adjust to the current situation. They will do this. They will do this in the next quarter. So we are absolutely certain that the transaction market for the existing household stock in apartment and homes will recover in volume. And with this, it will bring the mortgage volume up to a pre-crisis level. We see right now that new construction is still down. and we don't see any recovery there. So we are roughly at just 25% of the new building permits granted to new homeowners than we have been two years ago. This would lead to a sharp drop in new housing construction in Germany. More than 10 years ago, we were roughly at 159,000 permits or finished apartments per year. This increased over a decade to 300,000. And with the current development, we will drop even below this 150,000. When you see a net migration, last year 1.2 million, this year something around half a million people. This is not sufficient. So there must be some relief out of this so construction and the volume of construction needs to increase again from this extremely depressed level where we are right now still no recovery visible but and maybe later than the transaction marks for the existing houses but it needs to be recovered there otherwise it's just a completely mismatch via heating too Yeah, and last but not least, growth will come as well from the necessary energy efficiency increase of the fixing household stock. Good expectations we need for this 20 billion per quarter to reach the 2045 goal of net neutrality for carbon emission. And this all sums up to a market of 75 to 100 billion in this decade. And for this, we are preparing. So the current 40 billion market is fine for us to stay and to keep on a sustainable level investing in our services and growing them. But we are absolutely certain we expect a doubling of this market within this decade. A small part of this is the value recovery in refinancing volume. For a long, long period, we said there is no link between refinancing volume and interest rate in Germany. And for a long, long period, it was true. Just the typical German mortgage fixed interest rate of 10 years climbed up slightly in the last 15 years. and reached an average 14 years a year ago and with this sharp change in interest rate and all mortgages which are longer than 10 years now suddenly stay that long while previously they were renewed after 10 past year thanks to a prepayment option so we are right now in such a valley so we lost roughly 30 billion in market volume from 21 to 23 now because of this longer duration fixed interest rate mortgages and they will come back suddenly in 2027 when the 2012 15 years mortgages get due you can say so be aware of this the current market volume as well of 40 a billion per quarter is in a certain way affected and declined by roughly 8 billion because of this change in the interest rate structure and as long as interest rates stay on the current level it's very predictable in which moment this recovery will happen if interest rate for 10 years plus mortgages goes down this may happen earlier because then your earlier refinance, if your old mortgage has a higher interest rate. But if you stay on this 3% to 4% range, 2027 will be the next good year for refinancing. And we, with the Europace technology, invest heavily in automated solutions for this refinancing process of the future. So this all says, you know already that... We were slightly disappointed with our Q2, especially with this what happened in a real estate platform. We had to adjust our group forecast for this year and our vision level. We expect a significant better second half of this year than the first half was, thanks to a lot of ongoing projects, changes in pricing structure, new clients we gained, and so on. And with this, we give a revised outlook for this year. What is important for you and for us is 2024 and the upcoming years, we will see double-digit growth of Hyperbord. It's really pretty easy in the beginning because of the low baseline of 2023, but we will see with the recovery of the market a strong performance of Hyperbord on the top and bottom line in the next 10 years. So for now, from my side, I hand back to the moderator. And Ivan, please let's check if someone has any questions today in English.

Thank you. We will now begin our question and answer session. If you have a question for our speakers, please dial star 1 1 on your telephone keypad now to enter the queue. Once your name has been announced, you can ask a question. If you find your questions answered before it is your turn to speak, you can dial star 1 1 again to cancel your question. If you're using speaker equipment today, please lift the handset before making your selection. One moment, please, for the first question. There are currently no questions from the audience. For closing remarks, I give back to you.

Yeah, thank you. Okay. We can make a survey here right now. For everyone who listened to this, we consider next time in November to actually do just one call for all participants, Germans and English, in English. So it's your language, but you will have to get up a little bit earlier because we will do this as always at 2 a.m. German time. So please give us a feedback to our industrial relations department if you are fine with this. And then we will have a lot of questions here because the German call is always pretty active from the analyst side. And by joining both calls and doing this just in one language, we may get more interaction with them. So thanks for your feedback. We are now concentrating on the short quarter. Hope to provide a positive development when we publish these numbers in November and that we are able to talk here about a positive trend which continues in this market. Thanks for your attention and see you soon. Bye-bye.

This now concludes our conference call. Thank you all for attending. You may now disconnect your lines.