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Good afternoon, everyone, and welcome to Scout24 third quarter and nine month 2023 earnings call. My name is Philipp Lindvall, and I'm vice president group strategy and investor relations at Scout24. With me on the call today are Tobias Hartmann, our CEO, and Dirk Schmelzer, our CFO. Toby will kick off the presentation and Dirk will dive deeper into our third quarter and nine-month 2023 performance. As always, we will conclude the call with a Q&A session. You can find today's presentation on our website under Financial Reports and Presentations. If you are using the web link we provided beforehand, you can follow today's presentation live. This session will be recorded and a replay will be made available as quickly as possible after the event. Please take note of the disclaimer on page two. Tobi, now over to you.

Thank you, Philipp, and welcome everyone. Let's go straight to page three of our presentation and let me summarize the key takeaways from the Q3 and nine month results. I am pleased to announce that our double digit growth trajectory continued in the third quarter as well as for the nine month period in 2023. Our strong results underline the consistent, successful execution of our strategy and prove the resilience of our business in a still challenging macro context and evolving real estate market. In addition, We have advanced the integration of Sprengnetter, which expands our digital ecosystem with the aim of simplifying real estate transactions, opening further areas of attractive growth. Specifically, for the third quarter, including Sprengnetter, revenue growth was 16% year-on-year. Organic revenue growth came in at 10%. The softer growth in the third quarter is due to the tough comparable from last year and is in line with the expectations we communicated during the second quarter earnings call. For the nine months reported, revenue growth was 13% year on year with organic growth at 11%. Growth in the third quarter was driven by continued strong demand for agent membership products and plus subscriptions. We are extremely pleased to continue growing our agent base to almost 22,000 by the end of September. In this challenging market, ImmoScout24 remains the number one go-to marketplace, and we are proud to partner with an ever-increasing agent base with the best products to enable real estate transactions. Growth of plus subscribers also re-accelerated nicely in the third quarter. The transactional market remains quite slow, and while we do believe the market has bottomed out, the recovery will be slow and protracted. Consequently, our leads and transactional assets continue to face soft demand. Growth in ordinary operating EBITDA continues to be very strong, driven by a favorable product mix and tight cost control. we generated 22% growth in ordinary operating EBITDA both for the third quarter and the nine-month period while delivering strong margin expansion. Adjusted EPS reached €1.90 for the first nine months, growing strongly at 36%. To conclude, I would like to provide an update on our fiscal year 2023 financial guidance. Based on the strong operating leverage we are seeing in the business and our communicated preference for profitability over revenue growth this year, we are adjusting our full-year guidance for fiscal year 2023 as follows. We now expect ordinary operating EBITDA growth in a range of 19% to 21% compared to 18% to 19% previously. we are marginally reducing our pace of revenue growth, steering for circa 14% versus the previously communicated guidance of circa 15%. I would like to point out that this has been a deliberate management decision to drive outsized profitability gains versus chasing incremental revenue growth. We are very pleased to upgrade our EBITDA guidance for the second time this year despite the challenging macro and real estate markets and the slower than expected transactional recovery. The upgrade highlights the strong level of operational execution our teams are delivering and the efficiency gains coming out of the organizational update we implemented earlier this year. Now, let's turn our attention to page four of the presentation to look at our third quarter metrics. On a group level, our revenue for the quarter reached 132.8 million euros, including Sprengnetter, representing 15.7% growth year on year. Organic growth was 9.8% for the quarter, driven by continued strong demand for our core products and growth in subscription revenues. Our strong top line growth was partially offset by soft transactional revenues, as well as smaller growth contribution from PPA. The ordinary operating EBITDA of the group came in at 78.1 million euros, up 22.1% year on year. The ordinary operating EBITDA margin for the quarter was 58.8%, a strong increase by 3.1 percentage points. Excluding Sprengnetter, the ordinary operating EBITDA margin would have been even stronger at 60.5%. In the professional segment, subscription revenues increased by 14.1% to 75.6 million euros, driven by continued strong membership growth and the consolidation of Sprengnetter. the continuously growing significance of the ImmoScout24 platform for the German real estate market continues to manifest itself through ongoing customer wins. The number of customers grew by 3.3%, bringing the total number to 21,937. Professional ARPU increased by 10.5% to 1,149 euros. In the private segment, Subscription revenue growth accelerated compared to the second quarter and grew by 19.7% year on year, in line with the expectations we communicated during the Q2 earnings call. The changed subscription tiering, which we implemented in the second quarter, has resonated well, and we feel good about the momentum in the business. We ended the quarter with more than 369,000 subscribers. Turning to page five, let me elaborate briefly on our nine-month results. Group revenues for the first nine months amounted to 376.6 million euros, representing growth of 13.3% year-on-year on a reported basis and 11.3% organic. The ordinary operating EBITDA of the group came in at 224.5 million euros, reflecting a margin of 59.6% and significant OOEBDA growth of 21.6%. Excluding Sprengnetter, the margin would have been even higher at 60.2%. Within the professional segment, subscription revenues grew strongly by 11.8%, totaling 216.6 million euros, driven by membership products and consolidation of Sprengnetter for the third quarter. In the private segment, subscription revenues grew by 20.0% compared to the previous year, reaching 52.7 million euros. This growth was a result of a strong performance in the first and third quarters and a slightly softer second quarter as we implemented the changed subscription tiering. Turning to page six now, which shows an overview of how our value drivers performed for the first nine months of the year. Our professional membership revenue continues to grow well into double digits driven by pricing and new customer wins. I would like to call out how pleased we are with the continued standout performance in our core business, despite the challenging macro and real estate market. Our seller leads business continues to be impacted by the soft transactional market. As we mentioned in a second quarter earnings call, we do believe the market has bottomed out, but at the same time, it is clear that the recovery remains quite slow. Therefore, we do expect the seller leads business to remain under pressure for the rest of the year. And as we have stated previously, we run the business for profitability. Inclusion of parts of Sprengnetter's revenues drives the improved negative growth rate of minus 5.5% for the first nine months. Within other revenues, the trends affecting our mortgage business are similar to our seller leads business. Also here, please note that parts of the Sprengnetter revenues have been included in this line, which is driving the 8.8% growth for the first nine months. Our unique private subscription business continues to exhibit robust growth, and we are well ahead of CAGR targets as communicated during our Capital Markets Day in 2021. Before I hand it over to Dirk for the financial part, I would like to conclude as follows. As you can take away from the strong results and the upgraded EBITDA guidance, we are very pleased how the company is performing. While the transactional market clearly is challenging for agents, we believe the market will gradually improve in 2024. While it's too early to talk in detail about 2024, we feel good about the competitive positioning of the company and the multiple growth levers going into 2024. Our growing customer base, leading product portfolio, and increased relevance of the IS24 platform for all stakeholders provide a very good basis for continued growth. And with our updated organizational model, we have become more agile and efficient. The tight cost control we have demonstrated so far this year will not be a one-off. You can expect this to become a hallmark of Scout24 going forward. And with that, I hand it over to Dirk.

Thank you, Tobi, and welcome, everyone. On slide 7, you see the nine-month 2023 year-on-year revenue growth and ordinary operating EBITDA margins for our three business segments. We are pleased that all segments continue to grow at healthy rates with increasing profitability. On a group level, we deliver a margin of 59.6% for the first nine months while absorbing the dilution from Sprengnetter. This margin step-up highlights the significant efficiency gains we generated earlier this year. The professional segment grew revenues by 11.1% year-on-year, driven by strong performance in core memberships and inclusion of Sprengnetter. Organic growth stood at 8%. The ordinary operating EBITDA margin improved significantly by 5 percentage points to 65.3%. This improvement is due to our favorable product mix and continuous efficiency improvements in our seller leads and mortgage business. In the private segment, we continued to witness strong demand for plus products driven by the rental market conditions. This resulted in a 20.3% increase in revenues. Ordinary operating EBITDA margin for the private segment increased by 0.9 percentage points to 51.2%. Margin expansion in the third quarter was lower as we decided to invest into marketing campaigns to drive growth. The media and other segment experienced a 7.5% increase in revenues. This growth was driven by all three verticals. Our Austrian business, CRM portfolio and third-party advertising. The ordinary operating EBITDA margin for the media and other segment displayed a significant improvement of 9.5 percentage points, reaching 42.2%, linked to the completion of our investment phase in our CRM portfolio. Let's turn to page eight for a closer look at the professional segment. In quarter three, revenue in the professional segment grew by 15.6% year on year, including Sprengnetter. Our organic growth was 6.5%. Organic growth in quarter three was driven by continued double digit growth from our core membership products, which grew by 12.9% year on year in the third quarter. We also managed to continue expanding our agent customer base with year-on-year growth of 3.3%. We are very pleased with the compelling operational execution of our sales force. Demand for seller leads and mortgage remains soft, and the business continued to shrink organically in Q3 2023, although there was an improvement compared to the second quarter this year. As Sprengnetter revenues have been allocated to these business lines, the reported revenues increased by 21.7% and 72.2% respectively. Organic growth for seller leads was minus 11.1% and minus 17.4% for mortgage. In the third quarter, the professional APU increased at an attractive rate of 10.5%, rising from 1,040 to 1,149 euros. The growth rate of the professional pay-per-add revenues turned negative in the third quarter, with a 15.6% decline year-on-year. This is in line with the callout I made during the second quarter earnings call, where we expected revenues to contract as we successfully migrated customers into our core membership products. The impact of the decline on an absolute level is however small. The ordinary operating EBITDA margin improved to 63.7% in the third quarter, up 3.5 percentage points year on year, despite absorbing the dilution from Sprengnetter. the margin excluding Sprengnetter would have been 67%. On page 9, let's take a closer look at the private segment. Overall, in the third quarter, the segment grew by 17.4% year on year, reaching 37.1 million euros, which represents a slight deceleration compared to the second quarter, driven by slower growth in PPA revenues. The gradual normalization of PPA growth rates is something we have flagged in earlier conference calls, and we expect growth rates to continue to normalize in the fourth quarter. Subscription revenues grew by 19.7% in the third quarter, a significant acceleration compared to the second quarter. This growth was driven by an increase in new customer acquisitions. The average number of customers for the third quarter exceeded 369,000, representing a 17% year-on-year increase. The private APU increased slightly by 2.4% in the third quarter. PPA revenues increased by 12.5% in the third quarter, which was an expected slowdown compared to the growth rates in the first half as we began to lap the listing increase that started to build in 2022 and leveled out in the third quarter of 2023. Other revenue grew strongly by 22% in the third quarter driven by demand for credit checks and relocation leads. Our ordinary operating EBITDA margin expanded to 52.1% in the third quarter, up by 0.8 percentage points driven by scale in our subscription business, offset by continued investments to drive growth. Now let's turn to page 10 to review the main ordinary operating items. Our own work capitalized decreased by 27.1% year on year in the third quarter. to 5.3 million euros as we continue to complete various development and integration projects. As a percentage of revenue, we were at 4% in the third quarter and 4.6% for the nine-month period. Operating cost increased by 3.3% in the third quarter, driven by continued operating efficiency, offset by the consolidation of Sprengnetter. For the nine-month period, operating cost remained flat year on year, despite the consolidation of Sprengnetter, including around 200 FTEs. Personal cost increased by 3.2% in Q3 2023. Due to the inclusion of Sprengnetter, pro forma excluding Sprengnetter, personal costs were down year on year. Marketing costs increased by 2.4% in the third quarter as we invested in brand and offline marketing campaigns to drive brand awareness and also celebrate ImmoScout's 25th birthday with our customers. On a nine-month basis, marketing costs are still down 10.3% year-on-year. IT costs decreased by 2.9% year-on-year, remaining at a comparatively low level in the third quarter. Selling costs increased by 23.4% in the third quarter due to continued growth in the private segment and the consolidation of Sprengnetter. The mortgage appraisal business of Sprengnetter primarily operates with freelancers. From a contractual perspective, Sprengnetzer is the main contract partner and passes on the majority of the revenues to freelancers, resulting in a cost of goods sold. Other operating expenses declined by 10.8% in the third quarter as we continue to reduce spending on external vendors and resources. Due to the continued strong revenue momentum, a favorable product mix, and the operating efficiencies I just outlined, ordinary operating EBITDA increased strongly by 22.1% in the third quarter and 21.6% for the first nine months. The ordinary operating EBITDA margin for the third quarter reached 58.8% and 59.6% for the first nine months. As Tobi mentioned earlier, excluding Sprengnetter, the ordinary operating EBITDA margin would have been even stronger at 60.5% for the third quarter and 60.2% for the first nine months. Let's turn to page 11, where you see the items below ordinary operating EBITDA. In the third quarter, non-operating effects amounted to 5.1 million euros, a significant reduction of 50% year-on-year, driven by lower share-based compensation and lower M&A expenses. For the nine months, non-operating effects are still up 31.1% compared to last year due to increased share-based compensation and higher reorganization costs. DNA charges in the third quarter were €9.2 million, increasing by 10.8% compared to the third quarter 2022. The increase in the third quarter is due to purchase price allocation as a part of the acquisition of Sprengnetter. Basic EPS rose by 70.3% to €1.72 for the first nine months and adjusted EPS grew by 35.5% to €1.90. Adjusted EPS for the third quarter was at 67 Eurocent, representing a growth of 31.8%. The number of shares outstanding increased slightly due to the Sprengnetter purchase price, which was partially settled in Scout 24 shares. Turning to page 12, Guidance. To further expand on what Tobi outlined at the beginning of the call, we are pleased to adjust our financial guidance for the full year 2023 to reflect the continued successful execution of the strategy we have previously communicated in our earnings call. To give you some more context, we continue to see healthy operating leverage in our business driving EBITDA outperformance. We continue to prioritize profitability over revenue growth when running our transactional assets. In terms of the macroeconomic environment, we are experiencing a slower transactional recovery in the second half of 2023 than we previously expected and are adjusting our capital allocation accordingly. Based on these points, we are delighted to update our financial guidance for the full year 2023 as follows. Updating consolidated revenue growth from circa 15% to circa 14%, with Sprengnetzer contributing roughly three percentage points. upgrading consolidated ordinary operating EBITDA growth from the range of 18% to 19% to 19% to 21%, with Sprengnetzer contributing roughly one percentage point. I would like to provide you with some further color on the updated guidance and our assumptions for the remainder of the year. The adjusted revenue guidance reflects our deliberate management decisions to drive profitability in a slower than expected transactional market. Our core business continues to perform very well and according to our plans. We are very pleased to be able to deliver a second EBITDA upgrade for this year. As you can imply from the EBITDA growth rates, we expect to lend at around 59% ordinary operating EBITDA margin for financial year 2023, representing a significant margin expansion of circa 3 percentage points, even while accounting for the dilution from Sprengnetter. In terms of key developments for the fourth quarter of 2023, we assume the following. Continued high demand for memberships and private subscriptions. PPA private growth to normalize further compared to the third quarter. PPA professional remains a headwind. Demand for seller and mortgage lead remains soft. In conclusion, as evident from our strong third quarter results and the upgraded EBITDA guidance, We are maintaining a strong level of execution and are confident about the remainder of this year. While it's too early to officially talk about 2024, I would like to reiterate Tobi's comments that we feel good about the momentum we are seeing in the core business and the increased relevance of the ImmoScout24 platform. Based on this, we see continuous scope for healthy revenue growth in 2024 and beyond. Combined with our updated organizational model and tight cost control, we feel good about continuing to expand our profitability. I look forward to provide further updates as part of our Capital Markets Day end of February 2024. With that, let's open the line for questions. We would appreciate if you could limit your questions to two per speaker. Operator, over to you.

Ladies and gentlemen, at this time we will begin the question and answer session. Anyone who wishes to ask a question may press star and 1 or their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. If you are using speaker equipment today, please lift the handset before making your selections. Anyone who has a question may press star followed by 1 at this time. Our first question comes from William Packer from BNP. Please go ahead.

um hi there many thanks for taking my questions and they look like another good set of numbers um firstly could we discuss the potential impact of costar they've been making aggressive noises around the excessive profitability of incumbents across europe and have already announced the acquisition of a uk player and significant marketing firepower there and they've talked to more deals in europe Could you talk us through why you think Scout 24 is well-placed to weather any new competitive pressure? How is the German market different to the U.S. where CoStar has made waves with homes.com and apartments.com? So that's my first question. And secondly, thank you for the initial comments on 2024, which I would sort of summarize as you're feeling good, but at this stage are unwilling to give quantitative guidance. At your last CMD, you talked to 12% revenue growth and 13% EBITDA growth in the medium term, which is broadly where consensus is for 2024. Are you comfortable with that? Thank you very much.

Hi, Will. This is Toby. Thank you for your question. Maybe we'll start with the second question with regards to preliminary thoughts. We just upgraded our EBITDA guidance for the second time. And obviously, we are delivering a very strong fiscal year, 2023. So we are focused on that and providing as much color and context as we can on this call. We also pointed out that we will host a CMD at the end of February, where we will provide, obviously, more guidance on what's there to come. But let me reiterate what Dirk and I just said on the call. As you've seen, we've successfully implemented price increases over the past years. We have a very, very strong foundation with regards to our core membership products. We've also weathered the lower demand for other businesses pretty well. So having said that, as mentioned just in the earnings call earlier, we feel good about our prospects going into 2024. Why do we feel good about that in terms of revenue side? We feel good about our competitive positioning. We feel good about our increased relevance of the platform in Germany. We have various growth levers. We are not dependent on just the sole single one. We have a larger customer base entering 2024 than 2023 or 2022 respectively. And we're continuing to innovate around the product portfolio. And of course we will launch some new features and some really neat things in the next year. On the other side, on the cost side, we also gave you the flavor that we've become more agile and efficient and that we've really managed to have a tight cost control that will continue. It's not a one-off. That's why we did it early enough. I can just reiterate what Dirk mentioned, that we see the foundation for continued healthy growth, obviously both on revenue side and also expanding the margins. The first question with regards to... To CoStar and what you mentioned there, we feel very good about our strategy. And as you know, since we've exchanged thoughts and you've followed us over many years, the strategy didn't come about in a month or so. This was a very comprehensive process. We are executing against that. We have demonstrated that we can execute. We continue to execute. Our product suite is unmatched, and our data pool has improved very nicely also following the Springer acquisition, which we just did earlier this year. Now, as far as we understand, and as far as everyone on this call understands, I guess the UK market is quite different from the German market. Now you take the money pools for agents, the number of transactions, the role of a typical realtor, et cetera, it's all quite different from the German market. So we feel that we are very well positioned to continue to execute our defined ecosystem strategy Now with regards to how we feel about the German market and a couple further thoughts on that Look, I mean we operate the leading platform for real estate related transaction processes as such We operate a three-sided marketplace, which is pretty unique It's a three-sided marketplace against for seekers homeowners and agents where we have very specific and unique products tied to each of the different stakeholder groups and And we are offering much more than a traditional marketplace or a classified business. And so that's why we think that agents turn to Scout24, and that's not going to change. So we feel good about it. Thank you.

Thanks, Michalo.

The next question comes from Christopher Yonan from HSBC. Please go ahead.

yes thanks everyone i appreciate the comments um i think most of that was was very clear i'll still try and apologize for that um you know pick your brain on 2024. um i'm just curious do you think it is fair for us to assume that as we enter the early part of 2024 that another round of terms of service price increases um you know will occur as it has in in the past couple of years i'm just curious

what the argument pro or against that would be if you if you don't want to be too specific um yeah that'll be my first question hey chris uh toby again thank you we have formed over the past couple of years a roadmap how we engage with memberships and agents and professionals We have continued to build more content and features around that. So you should assume that that roadmap will continue in 2024. We've iterated in the past and stressed the importance of it's not a price increase. It's really about what's the content, what's the product, what are the additional features. And we have a very exciting portfolio also given our opportunities with Sprangnetter and products that we've worked behind the scene. So this is going to unfold and this is going to provide even more value to our customers. So yes, we will continue that road.

Great. That's helpful. And then the second question on a competitive environment. I know that's always a difficult one to talk about, you know, how peers are doing. But I'm curious, I mean, how do you currently perceive the Springer assets or Kleinanzeigen in the market, either, let's say, from a product perspective, pricing, sort of aggression towards agents? I'd be curious also, knowing about the CoStar Commons, whether you have any sort of update you can give to us.

Yeah, as you pointed out, we're not in the midst of our competitor strategy, so we don't know what keeps them busy. We are really trying to stay focused on the very initiatives that we are driving. But I'd like to reiterate again why we do feel that the strategy is working and the strategy will work. We are no longer just a pure classifieds business. We have brought up and we have not just recently innovated but now also matured some growth drivers that we believe It will be very hard for any competitor to build. Take our Seeker business. The Seeker business is pivoted and is tailored for a market leader like ImmoScout, and you can't copy 370,000 subscribers if you're number two, three, or whatever you are. Now, that is one wedge we've built, and that is interfering and is becoming more interconnected with other wedges, such as realtors will be able work with the seekers and with the homeowners because we've built a meaningful homeowner hub, as we talked about in the past. So we will continue driving those assets and products, which are not just a peer-to-peer comparison, but which are uniquely tailored to be built and invested by a market leader. So even more so during challenging times, we do feel it's important to deal with a trusted partner if you're a realtor, And I had 24 stands for the most, most trusted platform. And we also know that we bring the best buyer leads, even if it's fewer than in the past, they matter because you just need one buyer lead to sell the property. And that's more so an advantage that we have. So we're committed to further following our strategy and we feel good about that.

Perfect. Thank you very much. That's very clear.

The next question comes from from Morgan Stanley. Please go ahead.

Hey, guys. Thanks for taking my questions. The first one is on for me that you jumped from 1.2 million registered units in Q2 to now 2 million, which is quite a large jump. So if you could tell what has happened there. That would be very helpful. And then the second question is on Bonin Plus or the Living Plus service that you were talking about. Can you please share some comments? Is this like a separate subscription to the Buyer Plus and Tenant Plus? And what are the key reasons for a consumer to subscribe to this? Thanks.

Thanks for the question. It's an effect that we have through the migration of both platform into one platform. As you know, and as we showed you, we have a very good property owner area right now. And in that area, you can use the former ImmoScout services as well as the Formeated services. So the brand Formeated in itself will slowly disappear and it will all sort of be merged into the homeowner area. And that's why we're quite happy with more than 2 million customers on that platform. And we're gaining customers every day in the three-digit area because we provide a lot of value on the portfolio of every landlord and homeowner. On the second piece, we would stay a bit more muted and quiet on what we are planning with regards to WohnenPlus. As we know, competition is watching closely and we feel very comfortable about our product strategy on Bonin and long-term subscription offers for customers going forward. So please excuse us, but we won't share more product information here.

All right, thanks. I might have some more, but I'll jump back to the queue. Thanks.

The next question comes from Lisa Young from GS. Please go ahead.

Yes, hi, thanks for taking my question. The first one is just a clarification on the margin guide. I think it implies for Q4 quite a big range, like 56% to 59%, so the 18% to 9% growth of the year, that's sort of what that's implied for Q4, which is quite a big range. Can you give us a bit more color in terms of where you're going to be tilting more towards the upper end or lower end? What are the assumptions we should be thinking on personal cost and marketing in particular? It's basically the trend in Q3, which is marketing up about two, personal cost up about three. Is that basically the rights of assumptions? And second question is, if you can give us a note to date on capital location and priorities, And on the buyback as well, I think you can do up to 100 million where you are up to on that, because I think in Q2 was quite slow. So is it fair to assume you have picked up and you could potentially do close to 100 for the year? Thank you.

Thanks, Lisa. I start off with the second one. On capital allocation, fortunately or unfortunately, the share buyback in quarter two was a bit muted, given the rising share price of the company. Now that we have seen equity markets coming a bit under pressure over the last innings of Q2, first innings of, sorry, Q3 and first innings of Q4, we see that the share buyback has increased. You can watch that on a daily basis, by the way. We are now at around 50 million of buyback volume and we continue to improve there. And we're happy and very confident that by latest end of this year, I think the 60 million program will be concluded from what we know today. It might be a bit longer, but I think that's where we stand. And then we're going to discuss internally whether we continue with another 40 million share buyback program as we can do from the AGM approval that we have. And that solely depends on our assumptions on a value accretion of any additional share buyback. On the margin range here, you're absolutely right. We have a bit of a tactical marketing spend, I would say, in the fourth quarter. That's why we've been giving a bit more of a range here. To put you into full picture, for example, in October, we spent around $6 million, which is double the usual value of marketing spend, because we had the campaign, as Toby outlined, for the 25 years of Scout, We had a brand campaign on TV, and the metrics that we're seeing there are quite healthy, and we want to keep optionality, whether we're ramping that up a little bit more towards the end of the year. But apart from that, all other levers, especially cost levers, remain under tight control and in the direction that we've seen, which is they either go down on the cost side or they remain roughly stable, but we don't see any increases.

Can I just have a quick follow-up on marketing? How much of your traffic is organic versus paid search? And when you think about your marketing spend, how much is like brand marketing versus paid search and other forms of marketing spend?

I think you can see that from the classical tools that you see from outside. But let me remind you that we have around 4 million app users. So a large chunk of traffic is coming from them. Then for us, it's important with a brand-aided brand awareness of around about 90%. most of the traffic is really organic on the platform. What we are spending on performance marketing, as you will know, Lisa, is mainly what we have when we are coming to valuations and generating seller leads slash mortgage leads.

Okay. Very helpful. Thank you.

The next question comes from Adam Berlin from UBS. Please go ahead.

Yeah. Hi. Thanks for taking the questions. Can you just split the spring net of revenue for us. I think it's about 7 million euros in Q3 between the seller leads and the mortgages, just to make it easier for us to see the underlying trends. That would be very helpful. And the second question is, can you please, I think you said that you still expect to attract customers, professional customers in Q4. Are you trying to guide for further customer growth for Q4? Is that what you intended? Just want to clarify that point. Thanks.

I start with the last one and then hand over to Philip for the first one, Adam. Certainly, I mean, we're in a business of growing and we're also in a business of gaining more and more customer, and in this case, real estate agent attraction. And obviously, this has been quite successful and we don't plan to discontinue that. On the Springletter piece, I hand over to Philip.

Yeah, hi, Adam. I'll step in here, and this will be a one-off disclosure. You can assume it's roughly 50-50, and I think Dirk gave you the organic growth rates in the script as well for the value driver. So I think you should be able to compute it by using that. But going forward, we will not break it out at this level of detail. Thank you.

Thanks very much.

The next question comes from Marcus Debel from JP Morgan. Please go ahead.

Hi, everyone. Two questions. The first one is again on the agents. Could you maybe explain what the lower tier agents are doing? I guess that's the level that's probably most challenged. You commented that you plan to acquire more, but I just want to understand what that level or that tier group of agents is doing. And then the second question is for Dirk. Clearly, we've seen a very strong execution on cost. You commented that this is, in your view, sustainable. Could you give a little bit more color on this? Is that really headcount? Is it pay? Because that's the majority of your cost base, where is really this efficiency coming from? Could you maybe elaborate a little bit more on this? Thank you.

Hi, Michael. It's Toby with regards to the agents. Overall, we know that 2023 is a more challenging year for the agents and also other professional customers such as mortgage brokers and the other professionals in the real estate world. But we've demonstrated that we were able to attract agents as function of where do I get the best return for the money that I spent and where do I have the highest probability and likelihood of finding the buyers and that's where we're growing and it's really across the board there's no real hearing in terms of the only fishing in one pond but it's rather a bigger pond The other thing that's interesting in Germany to see is that there's also a bunch of agents that are becoming more independent. They used to be part of a larger network or franchise network, but they're not seeing the value of getting out of the franchise network anymore, so they decide to go on their own, and then they turn to the market leader, which could be in Moscow 24. So that's really what we're seeing. Having said that, it'll be a modest growth, and we'll probably continue to see some agents hopping onto our platform. And the other question I'd hand over to you, sir.

Markus, happy to give you some more insights into the cost development. And I'm doing that because I think it's also more convenient for you on the organic side, right? And if you look at what we've done there, On the personal cost side, for the first nine months, we see 2.1 percent decreases. If you look just at the third quarter, we see 10 percent decrease of personal cost. And as we have had a merit increase mid of this year of 5 percent, that means that most of it is really headcount driven. As I said, we have merged our tech and product departments, and that has proven very successful, to be honest. Then on the marketing side, for the first nine months, organically, our costs have come down by 10%. On the IT cost side, in a mixture of really tough price negotiations that we had, plus optimization on the AWS cloud, on all other IT, suppliers that we have where we've been very closely looking at the amount of licenses, amount of people necessary to use those licenses, traffic optimizations, everything you can do. So that's against the backdrop of those initiatives where we had around 4 percent price or cost decreases. Other operating expenses have decreased by 14 percent. Organically selling costs have certainly increased. given the growth of the overall business. But that's basically the overall picture that you see and that you will continue to see going into 2024. Certainly not fully in those areas because a lot of that has been used to increase margin this year. But as I said in my speech at the beginning of this call, we feel very comfortable about our cost position and we made good experience with this organization as it's proven to be very efficient.

Okay, thank you.

The next question comes from Jill Thorne from Jefferies. Please go ahead.

Thank you. My first question, I wanted to come back to CoStar. If you listen to their investment case, they're making the point that in Europe it doesn't make sense to have multiple country-level platforms on multiple different tech stacks. Their view is is that setup creates cost and product cadence inefficiencies. They think there should be a regional platform and a single tech stack. And so that's, among many reasons, why they're pushing on the consolidation theme. It'd be interesting, therefore, to hear your view on this regional scale risk as they see it, and how does that make you look at your own competition? Now, Toby, I appreciate you've already given some comments on this call, but your competitors are part of regional groups that will create or have access to regional scale benefits. So it'd just be interesting to hear your thinking on on this type of theme. Second thing was on Sprangnet, a simpler question. Since you've acquired the business, it's been whatever it is now, five or six months almost, it'd be interesting to hear how your commercial strategy has evolved over that period of time. Are there any things that are coming through that are more exciting or less exciting than you thought back in June? Thanks.

Hi, it's Tobi, thank you. So with regards to your first question, which implicitly stated how we were thinking about regional platforms or cross-border platforms. So here are the facts. So far, there is no cross-border platform that's been proven to be successful in Germany. We've just celebrated our 25th anniversary in Germany. We really know how this market operates, and this market is a lot different from any other market that may use the same language across the pond or other similarities. We don't have that in Germany. So it's an untruthful statement. Let's see. But obviously, as you know, we've pushed hard for doing a good job in Germany, and we are convinced that there's more to come that we can do. With regards to Sprengneta, there's no real big surprises, and there shouldn't be any because We've shared with you that we've known this company, we've known Jan Sprengner as a person and his organization. What's really nice to see, though, is that our folks internally are getting more and more excited about not just what they discovered there, they knew that beforehand, but what's happening around us is, you know, the ESG debate is just taking off. You know how complex this world will be. And every month that passes by, there's more and more that we think we can do in that space because it's getting more and more crowded and complex out there. And so I think that's reassuring. And that's also what we'll probably share during our CMD a little bit more in terms of product features and how we intend to tackle that and use that as a growth lever. But yeah, it's been very smooth so far. No major surprises. And we're very happy to have Spring Netter in our family.

Thank you. And just one follow-up on the comment around no regional strategies worked in Germany. That's, of course, right. But the current CEO at Aviv Group only came in a couple of years ago and started pushing it then, and out of interliterary has only just started to push a single platform in Europe as we speak. So while it's not happened, there are changes happening at your competitors to exploit regional benefits. I don't know, what is my question? I guess, how do you deal with those scale benefits as they start to bring them to bear in the market?

Yeah, thanks. As far as I recollect, the assumptions under which this other competitor was formed and did a transaction a few years ago didn't really live up to its potential, so there might be a change what they're going through and now if they're taking private or whatever. So I think Again, nobody has proven to do that successfully. What is proven though is that it's a very local business, it's a very specific business, and that this is a market where you need to act differently in order to be the partner of trust for realness. And I think we've demonstrated that we can do that and that we've also strengthened our position over the past couple of years. And other than that, I think it's great. Competition is great, and we're up for it.

Brilliant. Thank you.

The next question comes from Mariusz Furberg from Goldberg Research. Please go ahead.

Yeah, thanks, too, from my side as well. The first one on your customer side, so when you look at the market and more specifically at your agent base, do you generally observe that the number of agents overall contracted over the past month or was it rather flattish? And the second question, you mentioned your new organizational structure and that you the strong margin should become a hallmark for SCAR24. So should we expect a further margin expansion, which you mentioned obviously, but also in a stronger market recovery, if you would assume that in 2024, or would you then potentially switch to investment mode again, at least for a certain period of time?

Hi, Marius. Thanks. With regards to the customer growth, we don't see any specific deviations. We are adding customers, as we pointed out earlier, and we hope we can add more to come. Again, this will not be the core driver, but this is just a great side effect that we are obviously welcoming and embracing, and we would like to be the home of any future customer who would like to be more efficient in a challenging real estate market. With regards to the org structure and the cost measures we undertook, we said that this was a great foundation that is not a one-off, but this is there to stay because we've adjusted our overall cost framework. We've also adjusted based on the integration of the various companies that we have acquired over the past three to four years. They all, you know, aside from Spengler, came with basically zero revenue and a lot of costs. And we've now absorbed it. We've integrated it. So you will see that reflected going forward. And yes, we also do push for a margin extension in the future, but more to come in 2024. Thanks. Thank you very much.

We have a follow-up question from Pete de Cocuyala. Please go ahead, sir.

Hey guys, it's Pete from Morgan Stanley again. On the agent subscriptions, can you remind us, like, when do you start those pricing discussions so that we can then start pestering you for feedback? And then another question on pricing in general, maybe outside of the core subscriptions, like PPA, whether it's private or professional PPA, private subscriptions. So what are your thoughts on pricing outside of the core subscription bundles? Thanks.

Sorry, these were very valuable and good questions, but please understand that we're not commenting on them because they really go down into our various product strategies. I think you can draw your conclusions from past comments we had on that and past actions we've seen. But apart from that, we wouldn't like to disclose further.

All right. I had to try. Thanks a lot. Thanks.

We have another follow-up question from Matthew Ross from Barclays. Please go ahead.

Hey, guys. I thought I'd just sneak one in at the end. Can I just come back to the position of your agents and maybe try and get a sense of what feedback you're getting from your sales teams who, I guess, are having probably quite regular conversations with your agents and kind of taking their temperature on their tolerance towards taking your product and pricing? there's no kind of numeric answer to this question but broadly is the feedback you're getting from your sales team silver agent health is you know okay like a few months ago or do you think there's been any change given the market is recovering more slowly than perhaps some had hoped hey it's Toby agent health is still okay we're not seeing anything tremendously shifting

There's sub-segments and obviously there's other pieces depending on where you are, whether you're in one of the top seven, top eight, whether you're more from other cities, but by and large, nothing meaningful.

Thanks. The next question comes from Lisa Young from GS. Please go ahead, Manav.

Hi, a very quick follow-up. I think you mentioned you continue to see basically your PPA, professional PPA customers moving on to the core membership. What sort of revenue uplift do you get actually when they make that sort of shift? And how much more room do you think we have basically to migrate those customers onto the core membership? I think you mentioned in the past there was quite a big gray market, which is sort of normalizing. So Just think about the opportunity here. Thank you.

Yeah, Lisa, hi. It's Philipp here. So obviously the purpose with trying to migrate customers is to get them into a recurring membership and to, you know, have a long-term relationship with the client. And, of course, there might be some benefits to that, but that's not something we would disclose here on the call.

Okay, thank you.

The next question comes from from . Please go ahead.

Hi, good afternoon. If I may just squeeze in one small technical question for our modeling. I noticed you had quite a positive swing in the net financial result in the third quarter, but at least so far I haven't found any explanation for that. I just wonder how we should be modeling that out over the next coming quarters. Were there any one-off factors in that? Because actually, if we analyze that figure, it actually becomes quite meaningful for the adjusted EPS calculations. Okay, thank you.

Hi, Craig. It's me, Dirk. Thanks for the question. I knew it was coming and I knew it was coming from you. I think you can normalize it out, Craig. And the effect is mainly driven by basically call options we have on remaining shares. and that those call options for us are not executed at an earlier stage and at better conditions, and that's why we have positive financing costs here. But for the future, I would ask you to model it out and keep it roughly planned.

Okay, very helpful. Thank you.

There are no further questions at this time. I hand back to Filip Lindvall for closing comments.

So thank you all. This concludes today's earnings call. I would like to thank you all for your interest in Scout24 and joining us.