Hypoport Ag

gentlemen my name is john paul and welcome to the hyperport se q a results um q1 to q3 in 2025 i'm here together with this lovely gentleman ron slapgower ceo here And together we would like to organize this Q&A session. So you have right now the opportunity to raise your question via at least three different ways. You can put this directly into a chat function or you can raise your hand. This is via these three dotted spots on the right side and then click the blue raise your hand button. So I can give you and hand over the mic to you. But however, at least once again, if you want just to write it down, you can write with just bullet points in the Q&A session and the Q&A chat. And we are very happy to wait until the first question on our queue. Three results for the queue. and in the meantime we have decided to start with the question which i got just a few minutes ago via email so maybe this is a good even it's a little bit complicated one it's a good idea to Start with, it is regarding our JV. So at least the question to Mr. Slapke is, could you please explain if Europace has maybe lost market share because of Deutsche Bank issues? So the German mortgage market volume seems to increase more than the Europace volume this year. If Deutsche Bank is priced and sent out of the market, why the German mortgage market volume continues to increase? who is taking over these Deutsche Bank market shares at least. I'm sorry, I forgot to start the record. Should I summarize it again? Okay, sorry for that. Now we are live, or now record has started, we are already live. So, once again, our first question here in our Q&A result is if maybe Europace has lost market share because of Deutsche Bank, because it looks like the German mortgage market is increasing a little bit faster than the Europace volume, and this is because Deutsche Bank is pricing them out of the markets, out of the Europace market. Who is taking over these shares from Deutsche Bank?

Okay, a good question. Let's start with this that in general, we see a healthy market environment right now. So the recovery of the German mortgage market from the crisis in 2022, second half of the year, and 2023 is over and the market is, let's say, coming back. So the speed of this recovery looks slightly different in different areas of the market when you think about what the mortgage is used for, regional differences between metropolises and rural areas, but as well the different market participants perform slightly different in this market. So what we see from the reporting and as well from our numbers and activities, regional banks are pretty successful right now. especially in a year-on-year comparison because they had a weak start in 2024 still. And so they come from a lower base level when you look on the nine-month numbers. So cooperative banks and savings banks are taking market share right now. In a certain level, it may be even in a small level, it may be linked to the rollout of your case and both of their groups and the rollout of a lot of features that we provided to them which improves their competitiveness, their efficiency in the market and as well the conversion rates of their advisors there. So they are performing well. And as you saw already in our results, we are performing well with them as well. So the next group where there are no clear statistics, but where we see that on a, let's say, daily basis that they operate well in the current market environment are mortgage brokers. A group which heavily is using Europace is depending on Europace. And there's only one large German mortgage broker outside of Europace, Interhub Group, as another market participant in this area. For consumers, the interest rate is very important again right now because it has risen from a much lower level in the last 10 years. And on a higher interest rate level, comparing interest rates is something very German and very efficient and creates a huge benefit for the consumer who is comparing. And brokers, thanks to Europace, or in case of to their own system are comparing hundreds of banks and offers them and enabling consumers a great deal at the end. And compared to bank branches, they are usually independent structures. So freelancers working for their own profit, their own benefit. They are much more agile and aggressive and using Europace better in interacting with the clients than the typical bank branch in Germany right now, which is not using Europace. So this free takes market share. And they are all supporting that your pace is growing. And in none of these three sectors we lost a single relevant participant of the market. We just gained structures all the time. So what is certain, and this is the analysis of the one who made the questions right, the private banking sector lost market share in this environment in the last, you can say, two years. And this is, Deutsche Bank plays a role there. They have a strategic goal to reduce their mortgage exposure and reduce their new mortgage volume because of their return on investment requirements. So equity is expensive for Deutsche Bank. She wants to optimize, it wants to optimize its debt term and equity and this leads to a lower new mortgage volume. and the decline in as well, balance sheet for them in this business. So, yeah, all Deutsche Bank business goes for your case. So we see their lower numbers as well, less contribution to our overall numbers. And if you want to just look on the volume, you can say the loss thanks to Deutsche Bank, certain volume in the market. We don't treat this as a market share loss. We know that Deutsche Bank will come back and that the volume in the other markets is as well something that we are, is super successful in getting forward in all other banking groups. So, longer answer to this simple question.

Fair enough, great. Of course, I think it's important, so I appreciate the detail. I received a couple of questions. Let's for a moment stay with real estate and mortgage platforms segment. There's a special, but maybe it fits, because you mentioned the saving banks, Sparkassen. So the question is, could you please tell us a little bit more about project RUUDI, which is with the Sparkassen banks, and how is that impacting FinnMiles market share with internal loan applications? Should we think about Finansinformatik core banking software as a competitor to FinnMiles? Was it a partner? And maybe you can explain a little bit Rudy because an acronym and maybe not everyone is aware. So as a kickoff, maybe to start there.

Yes. Yeah. It's a very good question. So we for 10 years now cooperate with the savings bank sector. And for the last five years, our cooperating partner is Finance Informatik, which is the central IT service provider for the savings banks industry. Rudy, a project started roughly two years ago is, or decided to be started roughly two years ago, better said, and we are working on this now for two years, is a project where we integrate the property as an asset in the mobile app environment of finance informatics so that every of the 30 million users of savings banks in Germany not just see the balance sheet of the current account and the savings products, but as well the worth of his properties and the mortgage loan linked to this. Every day when he opens the app, he's going to see this thanks to Rudy. And behind this, the consumer gets different services around the property and the mortgage provided in the app. Things like renewing the mortgage are possible, or if the mortgage comes from a third party, refinancing this mortgage with a savings bank mortgage. And this is in a rollout process right now, this Rudy project, slightly delayed, should be available, or let's say it's in a process with a focus group already, but the full rollout should happen now in the first half of next year. So this puts your pace at the FinBus features and actually as well the value AG proposition and the automated value model of value AG in a center position in the savings banks industry, which is a great progress. In addition, we work together with Finanze Informatik right now on the deep integration of the EuroPace offers and comparisons and product presentation in the Finanze Informatik system. So should we think of Finanze Informatik as a competitor or a partner? By sure, partner. So we integrate both systems with each other more and more. We replace features out of the... or we add features, we enhance the user experience of the internal system of advanced informatics with Europace features step by step and with this bring more volume to the Europace marketplace. So it's a strong partnership which is driven by making savings banks more competitive and enhancing the user experience if a user is using its savings bank as a mortgage advisor. And this is very successful for all three involved parties for now.

Great, thanks. So for now, let's stay with real estate and mortgage platforms. A short one is what EBIT we expect for this year, next year and medium term. I think it's three to five years roughly for value. So value ID or appraisal service here.

Yeah, okay, so ValueIG is a heavy investment from our side in valuation as a major part of the mortgage process. And to fully automate this and integrate this with the mortgage process, it was necessary to innovate it by ourselves, and this is a long journey for us by now. and linked with huge investments, relevant losses that we had in the last years because of this. So on the loss side, we reduce again this year the investments that we have there and expect for next year that during the year we will turn profitable. So first half of the year still some losses, second half of the year a positive contribution from this side. Why we expect this? We see a very positive traction in the adoption of digital products of Value-AG. I mentioned as an example, cooperative banking sector where we just rolled out an integration solution. We just explained here in the Q&A, Rudy and the role of as well Value-AG there in valuating the properties of the consumers. in a digital way. So we are progressing in all sectors with this, and this gives us a clear path to profitability already. Plus, We see that the efficiency of the whole structure and value, thanks to a stable market environment now is turning profitable. And we see that we can get a fairer pricing from our partners, thanks to the integrated solution that we are offering. So the automation that we bring to the valuation market is huge. So looking forward, it will never be a high margin business evaluation. Let's say never, not in the next five years, this is the horizon. But it's something which together with our offering in, our UPS offering as an automated process for advice and contracting mortgages is a, win-win situation for both products so that the midterm if they expect the growth from on both sides thanks to the integration and we expect the double digit growth from the uag for the upcoming years after turning profitable

Great, thanks. So the next two questions are related to Europace and a little bit more detailed. So it seems investors are pretty good informed about our start of Europace 1, which we start in Q2. Could you please tell us how it is developing so far?

Yes. So first, what is Europace 1? Europace was a free-to-use SaaS solution for now for advisors. We only deal with sales organizations which then provided this to their intermediaries and as well for the sales organization if they were willing to underwrite a certain level of volume, it was free of charge. But we saw that with the heavy investments we do in enhancing the user experience, integrating AI features, we need a different value stream to get a fair share out of the business which we enable and the efficiency and the conversation games that we create with our investments. So we decided to bundle new features which we introduced during the first half of this year to a Europe is One offering where as an advisor you book this as an additional monthly subscription offering from us to enhance your experience. You compare this with the freemium model, which is pretty popular in the mobile world, where the general use of an application of an app is for free. But if you want to use special features, you need to sign up and pay extra. So we had to establish for this, a way to charge advisors we have to establish a legal framework for this and we had to let's say we had to build the features and we had to integrate the features in the bundle so there was a lot of work that had to be done in the first half of this year and since this summer we offer to advisors directly and we have a three-digit number of advisors which signed up by now um We are still in talks with a lot of large organizations, which doesn't allow their single advisors to make this choice. So there's often about integration with their systems. We are partially replacing as well third-party solutions with the features that are part of the bundle. So it is a slightly longer project to agree on the usage of your case one. But let's say with all major partners, we are well on track on getting them signed up as well. So for next year, it will be interesting how the dynamic looks like. In the upcoming years, it will contribute with a seven-digit number to our revenue and profit. But for now, the signing up speed still needs to be improved from our side. But there is a learning path for us because we are

pretty new to this way of doing business with individuals right uh so the next question is regarding one click so it's also it's once again europace but you will place one click the question is uh is there a regulatory hole here and if so how we plan to overcome it yeah so yeah yeah only good questions but i would say so one thing is um yeah the offering on the um

a credit decision side and to the lenders of mortgages where we enable them to have a fully automated mortgage underwriting process. We introduced this in the beginning of 2022 when speed was still very important for consumers. Thanks to the massive changes in the market, the attractiveness of the product was recently less high, you can say. But with the recovery of the market now, the whole offering gets more attractive again as well. for the banks, not just to speed up the process, but as well to save on the costs of labor and to provide the consumer in a digital checkout process equal to this what he knows in other industries. a number of banks which are productive with it and created the regulatory framework necessary to operate with one click under German regulation. But it's a hurdle to take, to be clear, it's a hurdle. We provided as an entry level to this product a solution where you can automatically a score in a consumer without a manual input of data just by using access to the account of the consumer to gather the data. we call this entry your pace entry as a um entry product to one click so the process on the side of the property is not automated but the process of the site of the checking the consumer credit worthiness is fully automated and there the sign up is uh So there's a double digit of banks experimenting with entry and using this already and allowing this and something which we as well heavily promote on the platform because it reduces the work for the advisor to the process and creates a value proposition for everyone. So the transition is ongoing. And we are constantly optimizing the approach to the market to digitalize this mortgage process, even in smaller steps, if necessary. And this is as well, we are talking about the high single-digit percentage of the mortgage volume already generated via entry or one click, but there is still a huge potential going forward, as you can imagine.

Great, thanks. It seems there right now no more questions on real estate and mortgage platforms, but we received a couple of other questions through the other segments, so we switch now to a financing platform. And here's a question, same like where for value AG, so which EBIT we expect for this year, 26, and for the mid-term, three to five years?

Okay, let's say this year at the end of Q3 and so at the beginning or before the final quarter, which is very relevant for the success of this segment, it's difficult to give an exact prognosis. Last quarter is seasonally typically the strongest one. So if it's this year as well, then we will be above last year. So as we run on the nine months right now. But it's going to be decided just in the days around Christmas as every year. Going forward, as I said when I introduced this segment in the first video, we see that there's a huge potential in all three parts of the segment. So housing associations, we are on a a great track of signing up housing associations to our ERP system linked to all the services around a strong proposition in the mortgage market there. So this under-distressed market has a huge potential to grow significantly and part of this recovery would just be to the pre-crisis level when it comes to especially revenues from mortgage brokerage. But overall, we are on track for great success in this industry. Personal business and German Mittelstand both distressed right now. I explained this already. I would say looking forward, these are both markets where we expect normalization. Germany can't stay in a recessive environment much longer than it did already. Otherwise, we will have disruptive political changes here and nobody wants this. So my sense of urgency right now is high and I have the feeling that Bundesregierung So our government got the message after the summer as well. So they see that they need to act to change the trajectory in the market. And with this, we will see a very strong performance of both of these product segments in the upcoming years. So where it can end up, it's linked to the recovery of the German economy.

economy in general you could say the better it goes the more success we can deliver there right so there are no more questions for financing platforms right now but there are two or one or two for insurance so A little bit more on a higher level. If you compare Smart Insure with Europace, what is the penetration of suppliers so far, maybe in percent of the market, that provides their policies through our platform, through SMIT, and where are the challenges and progress to grow that platform? And what is the pricing? Is it the same like Europace, these 11 basis points we charge in average, or how does it look like?

okay this is a i make it short and i would say uh deep dive um this the young later on the upcoming days so in general smart intro is the platform for standardized policies usually for consumers here in germany and the core value proposition is managing the whole information flow along the existence of an insurance contract that being the insurance broker on one side, so this is the usual side, and the insurance company on the other side. It's not a transaction-focused platform. It's whole lifetime of an insurance because this is a core problem in the insurance market that the information flow over the lifetime is very expensive for all parties because of the dysfunctionality and the way how information are transacted via email from one side to the other. So the pricing model is volume-based. So the more volume you manage as a distribution within the platform, the more you pay. So it's a percentage of the premium the consumer pays, and this is your fee for the handling of the whole information flow, as I said, from the beginning of the contract to the end of lifetime of every contract there. The challenge is the necessary adjustments for the IT system on the distribution side. insurance companies, we have established business relations with all of them, but for now, just that some of them are paying if they received the information and are integrated via interfaces. So this is the validation process. So when there is a link between the information and the platform and the insurance company, then there is as well a financial link for us. But still, most of the volume in the platform is not linked to the insurance company. So the insurance company is not paying. Even then you are able to manage this kind of insurances as well as a distribution as a distributor within our system. More details, I would say, Jan in a deep dive.

Sure. The next question, I'm not sure if I got it right, but I mixed it a little bit up, and if I'm wrong, don't hesitate to circle back and correct me. But I've got this question right. It is during Q2 or maybe Q3, we sign some brokers for Corrify, and it took longer than planned, expected. what were the headwinds and are we in talk with additional brokers to launch right now?

Okay, yeah. So, Corrify is our platform offering for the industrial insurance business. We're not a defined tariff and policy is underwritten by thousands of consumers, but in industry, ensures a factory or a fleet of cars or whatever. So where there are only individualized auctioned or tendered insurance policies closed between corporates and insurance companies. So we introduced this marketplace, so the better version in the beginning of last year and see a huge interest in the industry. Industry was part of the development process over the last years and is now steadily signing up and we got additional signatures for the first modules of this marketplace from the industry. There's a long line of the sales funnel of brokers and insurance companies which wants to use this for their interaction with their clients. So the pipeline is well filled looking forward. We just need to see that the contribution is not just intellectually. let's say, mutual, it needs to be as well financially beneficial for us so that our part of the investment incrementally goes down and monetization kicks in and our partners, after signing up as well, are paying the transaction fees linked or usage fees linked. And when we talk about signatures, then we talk about this last step, the monetization, that partners start paying for the benefits which they have using the system. And yes, we saw their progress now finally as well in Q3. And looking forward, we are optimistic that we get Corify up and flying and creating a marketplace effect in the upcoming years as well in this part of the industry.

Great. We have three more questions in line. So once again, if you have any questions, feel free to type it in. The next one is on insurance platform as well. Now on private insurance once again. So the question is, how does your distribution of insurance policy work together, compete with price comparison websites? So, is it a competitor or is it a co-op for us?

Okay, these are different positions in the value chain, so the typical price comparison site for insurance is a perfect client for Smart InsurTech to handle the complete back end process over the whole lifetime of the insurance contract for the comparison site. So here under distribution, you have the insurer app. Pure online insurance brokers use Smart InsurTech as their backend. And we are a great opportunity for them to focus on the consumer front end side and the competition there and not spend IT resources in integrating 200 plus insurance companies and the lifetime of the variety of insurance contracts in their system.

Great. Okay. There are two more questions. One a little bit detailed. The next one a little bit on a higher level on strategic. Let's start with the detailed one. And now it is real estate and mortgage platforms again. We are here with Buffinex. So the question is, how has growth for the number of Buffinex genobator consultants trended so far this year? Are you having success signing up more salespeople at the cooperative banks?

from the corporate banks. So let's say we are active in the corporate banking sector with two brands. So GenoPay is the platform. Baofinex is a joint venture with Baosparkasse Schwäbisch Hall for the activities and so for the third party distribution in this market. The question was specific to Baufinex. Baufinex is very successful using the huge network of cooperative banks across Germany and digitalizing their external relations to local mortgage brokers. real estate developers and so on to provide cooperative mortgages, you can say, to this third-party distribution. And Baofi Next, I would say, is right now the largest mortgage pooling offering in the market. So they surpassed Starpool. and as well the competitor from Interim Group ProHyp and the number one right now. So they are succeeding very well. So together with the success of the corporate banking sector, Bauffinex is very successful on digitalizing their third party relations.

great um so one question left and as a reminder once again don't be shy if you have any questions you can type it in but the next one is a little high level on strategic and maybe on our also a historic and on a shift in our strategic So could you explain the main synergies and potential scale in the interplay of our segments, real estate and mortgage platforms, financing platforms and insurance platforms? Or would you say that these are unconnected segments that have their special B2B platform for the customers?

Okay, I would say the second part answered already something, but I would give you a better perspective on this. So up until two years ago, we developed the Hypoport network, a group of companies and offering in all these three industries, independent and created synergies, usually between two or three of these companies in the group. We restructured to these three segments the network two years ago. So we formed the real estate and mortgage platform just two years ago after seeing where are the strongest connections, where are the highest synergies between daughter companies which needs to be more facilitated and with more management attention and focus on to develop a joint strategy in this market. And with this, the segments were created. In certain areas, we had to even split companies. For instance, the personal loan business, which is now part of the financing platform, was until recently part of the Europace AG development, where as well the mortgage solution was developed. And we have a significant overlap in partner structures there. So even when they are now in different segments and we, from the legal entities, split them, they are using the same technologies and offering to the same partner. So there are interlinks between the segments, even when this is not an interlink. let's say naturally, then you would start the segment independent. So we created synergies in the past between offerings and just because we regrouped this and focus now on these areas of synergies where we see the highest benefit for the network doesn't mean that there are not other synergies. So between each of these three segments there stays certain levels of of synergies alive, but the focus happens within the segment. So the truth is they are less integrated between each other than within each of them, but it's not that there are no synergies between them.

Great, thanks for this, and here's another one. A great English Q&A today, I would say.

Good that we have a full hour.

Yep, we have. So, the next question is, why did the error in revenue recognition, well, long day, Happened because of, so it is regarding Starpool last year, which you had to adjust the numbers and yeah, how it is going to look like forward.

Yeah, okay, I would say a detailed answer in the 2024 annual report. Quick answer, the structure of the business of Starpool changed. over the last year because of the strategic change on our joint venture partner, Deutsche Bank. And because of this, third-party mortgages got more important. And with this, we had to recognize all revenues generated including the commissions which Starpool receives from Deutsche Bank and passes through to Deutsche Bank linked mortgage brokers. So this pass-through of Deutsche Bank commission business, let's say, was not under our control in the last years, let's say, or during the build-up of the startup. a joint venture, but lately because of the shift in the priorities and the shift to mortgage brokerage of other lenders, the situation changed and we had to start to recognize this pass through commissions as group revenue and group cost of revenue so that it inflated and first in 2024 our revenue number and our cost of revenue number just starting at the gross profit, it didn't have an impact anymore.

Great. The next one, it's an interesting question because it seems to me that there are two ways to answer. So I look forward to which is your one. So the question is, where do you see cost reduction potential for the application of AI? And what would your best estimate for the amount?

yeah so oh yeah this ai is a big topic and publicly right now and for us in the last 10 years where we are able to enhance our product using ai so the question focuses on cost reduction And when I hear cost reduction in an organization like us, it's about efficiency gains in, let's say, repetitive processes where we look across the group, especially in the centers where we have processes where we expect that AI can replace them already right now. This is linked to migration cost to systems which provides this because in this area of HR or accounting for ourselves, we will not implement our own algorithms. Another way of cost reduction, I would say more efficiency gain is using AI in the whole software development process. This is an ongoing process now for the last two, three years where our people get more efficient using AI. To be honest, I don't expect that we reduce our costs for software development. What I expect is that we increase the output in volume, in feature volume and in quality. We are willing to invest this money and we focus our people right now in getting better in using AI and getting better in shipping software fast to our platforms. So there is not a focus on cost reduction in this area. It's the focus on efficiency.

Great, and actually these are the two answers I expected. So, at the moment there's no more, looks like there are no more questions, but once again, here's a chance. We've received already a couple of, actually 13, which is good, I think. 45 minutes. And if there are no more questions, maybe I head over to you, Robert, for last wording. Thank you.

Great Q&A today. We will talk again in March next year. vj will chase our 2021 record year and will want to outperform in all top and bottom line numbers next year so i'm looking forward to this race and you get an update where we are there in march next year thank you thanks goodbye