Scout24 SE

XETRA:G24

Q1-2025 Earnings Call

[Operator]

Ladies and gentlemen, welcome to the Scout24 Q1 2025 Results Conference Call. I'm Moritz, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast.

At this time, it's my pleasure to hand over to Filip Lindvall, Vice President, Group Strategy and Investor Relations. Please go ahead.

[Filip Lindvall, executive]

Good afternoon, everyone, and welcome to Scout24 First Quarter 2025 Earnings Call. My name is Filip Lindvall, and I'm Vice President, Group Strategy and Investor Relations at Scout24. With me on the call today are Ralf Weitz, our Chief Executive Officer; and Dirk Schmelzer, our Chief Financial Officer. Ralf will start the presentation with key business highlights, and Dirk will provide a detailed overview of our financial results.

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. 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 2.

Ralf, now over to you.

[Ralf Weitz, executive]

Thank you, Filip, and welcome, everyone. I'm really looking forward to engaging with investors and the analyst community in my new role as CEO of Scout24. As this is my first earnings call as CEO, I would like to start the call by providing you a short introduction of myself. Many of you already know me. For those who don't, I've worked at Scout24 for 17 years, being part of growing the company from when it was just starting out to becoming one of Germany's top tech companies. When I started at Scout24, we made about EUR 100 million revenue. This year, we will make over EUR 600 million. That implies a double-digit CAGR since 2008, a great achievement that we plan to keep building on.

The CEO transition from Tobi to me ensures continuation for the company as we work closely together in shaping our strategic framework over the years, including our Capital Markets Day in 2024. So let me be very clear, I'm 100% committed to our strategy and targets.

Looking at the slide in front of you, let's briefly recap why Scout24 is a very special company. With approximately 20 million unique monthly visitors, we are the clear leader in the German market for real estate classifieds. As we execute our interconnectivity strategy, we are seeing increased traffic and engagement from our seekers.

Our B2B membership business continues to go from strength to strength. We are growing our customer base at impressive levels, and our sustained strong revenue growth reflects willingness to pay for our best-in-class membership products. We have established a unique B2C subscription business with 0.5 million subscribers, something no other classified platform globally has achieved.

The homeowner segment offers tremendous future upside potential. With our 2024 Capital Markets Day storyline to merge data and classifieds, we are pioneering a unique strategy, which will differentiate us from traditional classifieds platforms. So where are we on the journey to execute our 2024 Capital Markets Day strategy? Well, we are well on track.

Without going too much into detail, I would like to mention a couple of points. On the product and tech side, we have laid the groundwork to interconnect our product suite, and we are seeing customers consuming more and more of our product universe with Scout24 taking a more proactive role in driving personalized product recommendations. With our growing collection of acquired data assets, we have strengthened our data capabilities meaningfully since the CMD.

Momentum on the homeowner side is good. Our property hub keeps on evolving as we are growing users and logistics objects. And finally, we are accelerating the digitization of real estate transactions through technology and AI implementation across the company.

From a financial perspective, we are doing well. In 2024, we outperformed our CMD targets. And assuming we can achieve our 2025 guidance, we are well set up to meet or exceed all of our CMD targets.

My focus areas as CEO will center on the following: expanding our data assets, building towards our vision of providing unlimited Scout24 owned content for every real estate property in Germany, as I outlined at last year's Capital Markets Day; accelerating innovation; leveraging our merged tech and product teams to maintain first-mover advantage while preserving our start-up like agility; strengthening product leadership; delivering the most innovative solutions across our ecosystem for agents, seekers and homeowners; and driving operational efficiency, balancing our growth mindset with internal interconnectivity and simplification will lead to operating leverage.

To wrap it up, I'm incredibly excited to take over as CEO from Tobi to lead this fantastic company through the next phase of our development and to continue to position Scout24 at the forefront of the industry.

So with the CEO update now behind us, let's review the key highlights of the first quarter of 2025. We are off to a great start in 2025. Despite all the uncertainty out there right now, we delivered a strong quarter on both top and bottom line. With 16% revenue growth, 18% growth in ordinary operating EBITDA and adjusted EPS, 29% growth on reported EPS, this has truly been a fantastic quarter for Scout24. Organic growth accelerated to 12%, driven by continued strong performance in our core business and improving momentum in our transaction enablement business. Our recent acquisitions also performed well.

As I mentioned in my opening remarks, we are making good progress on our interconnectivity strategy and on merging data and classifieds. We recently acquired 2 data assets in Austria, which will help us mirror what we have achieved in Germany so far. Based on the strong start into the year, we are pleased to confidently reaffirm our guidance for 2025.

Let's move to Page 6 for an update on our customer base. In the first quarter of 2025, both of our Professional and Private segments continue to gain customers at an impressive rate. Starting with Professional. Total customer growth for the quarter was very strong at 5.9%, exceeding the already impressive growth of the fourth quarter last year. Customer count reached 25,600 in the first quarter.

Growth was driven by the continued strong development in Germany and the integration of neubau kompass, somewhat offset by the continued challenging market environment in Austria, Organic customer growth in Germany was impressive at 5.7%. Beyond superior buyer leads, agents favor Scout24 for our unique and comprehensive product suite offering turnkey solutions for their daily tasks.

Turning to the Private segment. We grew our subscriber base by 19.8%, reaching 495,200 users. Despite slight deceleration compared to the previous quarter, all products continued to grow nicely, Tenet+, Buyer+ and Living+. At the end of March, we crossed the milestone of 500,000 subscribers, an amazing achievement, driven by our best-in-class teams working on these products. And it really highlights the level of innovation at Scout24 and that we are a special company.

Turning to Page 7. Let me provide you with an update on the German real estate market. Our Scout24 Transaction Momentum index shows continued recovery in the number of transactions in the first quarter. However, rising mortgage rates following the German government's investment program may lead to declining momentum in the second quarter as buyers adopt a wait-and-see approach.

We have added a listing index to the chart as well, showing growing content on our platform since interest rates increased, supported by a decline in the gray market. The growing listings on our platform provide more choices for users and drive traffic growth. The lower graph shows that interest to buy remained high in the first quarter. It remains to be seen how this will develop over the next couple of quarters given the increased mortgage rates.

Turning to Page 8. I would like to provide an update on how we are progressing with the execution of our product and innovation strategy. On the left, you see our new search, which we launched in April 2025. This significant platform upgrade combines hybrid map search with AI features for more personalized experiences, integrating interactive maps with property information for efficient comparison. Early user testing shows that these innovations are driving significant engagement increases. These results validate our AI-first approach and demonstrate how our interconnectivity strategy creates tangible business value while enhancing the user experience.

At our Capital Markets Day last year, we stated that we have a strong track record of turning products and engagement into subscriptions. Our new subscription in the Private segment, Living+ is a perfect example for just that. We launched the product at the end of 2023. And in the first quarter of 2025, we have close to 30,000 subscribers already. While still early, the momentum demonstrates customer demand and willingness to pay for bundled tenant services in an accessible format.

We are also seeing substantial expansion in our homeowner ecosystem, which creates a powerful foundation for future monetization opportunities. Since Capital Markets Day in 2024, we achieved strong growth with homeowner registrations surging from 1.2 million to 2.1 million, while objects under management expanded from 2.0 million to 2.8 million. This expanding homeowner base is a strategic asset positioning us at the beginning of future transactions and extending our reach beyond active market participants.

Let me conclude my prepared remarks with some key takeaways. As a management team, we are 100% committed to the existing strategic framework and financial targets. We are off to a good start in 2025 with accelerating organic growth. While we face tougher year-on-year comparison for the remaining quarters of the year and the macro situation in Germany is challenging, the first quarter still provides a good basis for us to achieve our guidance.

Amid the current economic volatility, Scout24's business model is operating entirely within domestic markets and shields us from international tariff concerns and related trade uncertainties. In addition, it's worthwhile to recap that more than 70% of our business is recurring in nature, and we have high visibility on revenues and profitability for the next couple of quarters.

Finally, we are executing well on our interconnectivity strategy, focusing on innovation and operational efficiency to strengthen our market position. This approach continues generating benefits through customer growth, traffic increases, strong product demand and homeowner expansion. Execution of our strategy will continue to generate strong financial results. We are in a good position to meet or exceed our CMD targets.

With that, I will hand over to Dirk, who will walk you through our financial results in more detail.

[Dirk Schmelzer, executive]

Thank you, Ralf, and welcome, everyone. Let's move to the financial section of our presentation. On Page 11, you can see a dashboard of our key takeaways in Q1 2025, showing our strong start into the year. First quarter revenue reached EUR 157.6 million, delivering impressive 15.8% year-over-year growth with organic growth accelerating to 12.1%. This robust performance was driven by continued strength in our subscription businesses, healthy growth in transaction enablement and recent acquisitions also performing well.

Our ordinary operating EBITDA accelerated as well, growing 17.9%, reaching EUR 93.7 million, with margins expanding by a full percentage point to 59.5%. This margin improvement is particularly impressive given the integration of recent acquisitions with lower profitability profiles, demonstrating the scalability of our interconnectivity strategy and growing PMI capability.

Adjusted EPS increased by 17.9% to EUR 0.79, while reported EPS showed an even stronger growth of 28.6%, reaching EUR 0.69, benefiting from significantly reduced nonoperating costs, which fell by 35.1% year-over-year. Operating cash flow came in at EUR 58.4 million, 3% lower, primarily due to timing effects in working capital movements.

Turning to Page 12 for a closer look at our Professional segment. Revenue in our Professional segment grew by 16.2% in Q1 2025, reaching EUR 115.3 million. This growth was driven by strong performance in our subscription and transaction enablement business. Our subscription business grew strongly by 15% to EUR 82.8 million, with organic growth contributing 12%. This represents a nice acceleration compared to 2024 quarterly growth levels and highlights how we have permanently improved this business.

Our professional customer base expanded by 5.9% to 25,601, showing continued strong momentum. Organic customer growth was 5.7%. ARPU increased by 8.6% to EUR 1,078. Growth with residential real estate agents remained dynamic, partially offset by softer growth dynamics with commercial customers.

Transaction enablement revenue grew 25.4%, fueled by M&A, reaching EUR 27.2 million. Organic growth was 12.2%, representing a slight acceleration compared to the fourth quarter of 2024, benefiting from the slow but gradual market recovery and strong demand for valuation services, CRM and ESG products. Ordinary operating EBITDA grew by 14.4% to EUR 68.8 million with a margin of 59.7%. The slight margin decline of 0.9 percentage points year-on-year reflects the integration of recent acquisitions with lower margin profiles.

Turning to the Private segment on Page 13. Let's review the results for the first quarter of 2025. The Private segment delivered strong performance in Q1 2025, achieving 14.9% revenue growth, reaching EUR 42.3 million. Growth was driven by continued high demand for our Plus subscription products, which continued its mid-20s growth rate, increasing by 26.3% to EUR 25.8 million. All products contributed to this growth momentum.

Total subscriber count grew by 19.8% year-over-year, bringing the total to 495,150 customers in Q1 2025. While this represents a slight deceleration from the previous quarter, it was offset by stronger ARPU growth of 5.4%. ARPU growth is driven by improved unit economics due to our multi-vendor strategy for credit checks. Listing volume in the paper ad business remained stable compared to the prior year period, maintaining high levels in Q1 2025.

Other revenue from credit checks also remained consistent year-on-year. Ordinary operating EBITDA increased by an impressive 28.6% to EUR 24.9 million in Q1 2025, reflecting the strong scalability of our subscription-based business model. As a result, the Private segment's ordinary operating EBITDA margin expanded substantially to 58.9% in Q1 2025, marking a significant increase of 6.3 percentage points compared to the prior year.

Turning to Page 14. Let's take a closer look at the main ordinary operating items. Our own work capitalized decreased by 4.3% year-on-year to EUR 5.1 million. This is due to the completion of various development and integration projects. As a percentage of revenue, we stood at around 3.2% for the quarter, down 0.7 percentage points from Q1 2024. Operating expenses for the first quarter of the year 2025 increased by 11.4% compared to the previous year, growing at a moderate pace relative to revenue. This reflects the positive impact of Scout's interconnectivity strategy and our ability to efficiently integrate acquisitions.

Personnel costs increased by 11.6% due to salary adjustments and recent acquisitions. Organic personnel cost base was virtually flat year-on-year. Marketing expenses decreased by 2.5% as our interconnectivity strategy leads to more efficient performance marketing. Selling costs increased by 26.5%, driven by the recovery in our transaction business and integration of acquisitions. IT expenses grew by 16.6% in Q1 2025, primarily driven by higher AWS costs, AI integration and contributions from recent acquisitions. Other operating expenses rose by 12.9%, driven by increased spend on external IT service providers and higher allowances for bad debt.

Putting all of this together, ordinary operating EBITDA grew by 17.9% in the first quarter of 2025. accelerating nicely compared to the already strong 2024 levels. This resulted in a 1 percentage point improvement in the ordinary operating EBITDA margin, which reached 59.5% in the quarter. Adjusting for the recent M&A, organic margin expansion would have been even higher at 61.1%.

Turning to Page 15, where we show the items below ordinary operating EBITDA. Nonoperating effects decreased significantly by 35.1% to EUR 7.8 million in the first quarter. This resulted from significantly lower expenses for share-based compensation as well as reduced costs for reorganization measures, partly offset by higher M&A expenses driven by recent acquisitions. As a result, reported EBITDA grew strongly by 27.4% to EUR 85.9 million, benefiting from the reduction in nonoperating effects.

Now turning to the items below reported EBITDA. D&A amounted to EUR 12 million, reflecting an increase of 25.5% in Q1 2025. This increase was driven by 2 main factors: firstly, scheduled depreciation on newly capitalized intangible assets following the completion of IT projects and platform developments; and secondly, PPA amortization related to recent acquisitions. The financial result declined compared to the previous year, decreasing by 86% to EUR 1.9 million. This was primarily due to negative foreign exchange hedging effects resulting from the strengthening of the euro. Income taxes increased by 26.4% to EUR 22 million, representing an effective tax rate of 30.6%.

Putting all of this together, reported net income increased strongly by 26.7% to EUR 50 million. Basic EPS amounted to EUR 0.69, reflecting a strong year-on-year increase of 28.6%. Adjusted net income, which normalizes for certain nonoperating effects, grew by 16.2% to EUR 57.1 million, while adjusted EPS increased by 17.9% to EUR 0.79, growing in line with ordinary operating EBITDA.

Turning to Page 16. Let's review the adjustment items between reported and adjusted net income for the first quarter. Nonoperating effects, excluding share-based compensation amounted to EUR 4 million, representing an increase of 36.3% compared to the same period last year. This was driven by higher M&A expenses due to recent acquisitions, partly offset by reduced reorganization measures.

Share-based compensation decreased significantly to EUR 3.8 million, representing a 58% reduction compared to the previous year. PPA and D&A effects related to intangibles from acquisitions contributed EUR 2.4 million to the adjustment, representing a step-up of 18% compared to Q4 2024, driven by recent acquisitions.

Turning now to Page 17 and cash flow. Free cash flow remained strong at EUR 50.9 million in the first quarter, down just slightly by 2.6% year-on-year, with working capital having an EUR 8.5 million negative impact. Conversion ratios remain strong with free cash flow representing 89% of adjusted net income and 54% of ordinary operating EBITDA. These robust conversion rates demonstrate our continued ability to effectively turn revenue growth into cash generation, supporting our shareholder returns through dividends and share buybacks.

Turning to Page 18 to leverage and capital allocation. Our leverage ratio improved to 0.42x at the end of Q1 2025, down from 0.47x at year-end 2024. In the first quarter, we continued our active capital return program, allocating EUR 23.5 million to share repurchases. I'm also pleased to announce that we've expanded our buyback program with a second EUR 100 million share repurchase tranche, extending from April 2025 through June 2026. This combination of recent strategic M&A, consistent share repurchases and our proposed 10% dividend increase highlights our balanced capital allocation approach that creates long-term shareholder value.

Moving to the guidance on Page 19. Based on the strong first quarter, we are pleased to reiterate our full year guidance of 12% to 14% revenue growth and expansion of our ordinary operating EBITDA margin of up to 50 basis points. With this guidance, we are targeting our fifth consecutive year of double-digit growth and third consecutive year with expanding ordinary operating EBITDA margin.

As the first quarter revenue growth rate is above the current guidance range, let me provide some additional context around that. As a reminder, we do face tougher quarterly year-on-year comparisons for the remainder of the year, in particular, the second and fourth quarter. The same is true on the level of ordinary operating EBITDA margin. We are facing tougher comps. And on top of that, we have to absorb the impact from the acquisitions.

As mortgage rates have increased, there is a possibility that transactions might slow down in the second quarter. While we do not expect any impact on our core business in the near term, it could potentially impact expected growth trajectory in our transaction enablement businesses. General global uncertainties could affect interest rates, consumer confidence and overall real estate market dynamics in Germany for the remainder of the year.

Based on these developments and still 3 quarters to go, we reconfirm the current guidance and remain very confident to achieve our targets for the remainder of the year. We will provide the next update during Q2 H1 2025 earnings call on August 7, 2025.

And with that, let's open the line for questions. We would appreciate if you could limit your questions to 2 per speaker. Operator, over to you.

[Operator]

And the first question comes from Andrew Ross from Barclays.

[Andrew Ross, analyst]

My first one is about the Homeowner Hub, 2.8 million objects under management is quite a big number. Can you talk about your plan to monetize that over time? That's the first question. And then the second one is, I guess, on the same kind of theme, which is to give us an update on the new bronze, silver, gold membership tiers. I think the migration was at about 50% last time we spoke, but curious as to how that's evolved.

And I guess, bigger picture for you, Ralf, it would be helpful to get a bit more detail about your vision as to how you drive kind of multiyear ARPU growth with your customers through bundling, adding in products, pricing, just to kind of really understand your vision as to how you drive that.

[Ralf Weitz, executive]

This is Ralf speaking. I'm happy to take the first question regarding the Homeowner Hub. As you know, I mean, we invested heavily into the Homeowner Hub and we said we would like to see some traction in the product first before we are starting to monetize. This is still the plan. Nevertheless, we are testing around the monetization here and there, some products. Of course, I mean, homeowner, and we said that in the call, has some potential because if you have the homeowner, then this will be the future mandate for the agent side and along our strategy where we want to interconnect the different customer groups, so the homeowners and the agents.

So you can imagine that Homeowner Hub is able to generate seller leads to the agents. So -- and that's, for instance, one indirect monetization product we are able to offer. But there are also others. I cannot really disclose that here, but we are working on the monetization. But first of all, we are quite happy that we see so much traction in the product, and that's a good signal.

[Dirk Schmelzer, executive]

Andrew, from my side, you were asking about the migration into the new memberships from the old 3-tier membership scheme that we had with the base, the acquisition of the Image Edition to now the bronze, silver and gold, we can confirm that it's beyond 50% as we speak. We're migrating customers.

Moving on from that, your question was how does that monetize basically into ARPU growth. As you could see from the first quarter, ARPU growth was quite healthy. So membership revenue growth was driven 2/3 by ARPU growth and an additional 1/3 by the impressive 5.9% membership growth that we've been seeing. So that will continue over the years to come. And we believe that we will be able to monetize on the pricing strategy that we laid out, which is consisting of terms and condition price increases, win-back measures, migration within the different tiers and upsell within the different tiers. And that's what we will continue. And this will, as we said, continue to the fact that we consider ourselves a double-digit growth company.

[Operator]

And the next question comes from William Packer from BNP Paribas Exane.

[William Packer, analyst]

Firstly, it's another strong quarter for private subscription momentum with 20% growth in subscribers. Is this still primarily a story of the imbalance in the rental market driving adoption of the Tenant+ product? And then looking forward, could you just remind us on how you're thinking about the long-term TAM and how that's evolved since the CMD?

And then in terms of the second topic, you delivered very strong agent membership growth at 6%, which is well ahead of the international peers. Could you help us think through the constituent drivers? How much is market growth? How much is the upgrade of small agents to full contracts? How much is agents switching to Scout? Any color there would be helpful.

[Ralf Weitz, executive]

This is Ralf speaking. I can take the first question regarding the subscriptions. Yes, I think it's not because of the -- it's not just because of the market. I think market, of course, has always impact, but it's also the fact that the Plus product now becomes a commodity product here in the market that -- because it's not just giving access to listings, the main value of the product is that we prequalify tenants or seekers, potential tenants for the landlords, and that's highly valued by the landlords and by the agents, and that's core of the product.

So -- and with the commodity status now, it's clear if you're looking for an apartment here in Germany, it doesn't matter if it in the city or is it on the country side, you need to have Plus in order to be a potential applicant for the apartment for the home. So that's the main driver here. And we think that will continue if we see the numbers. So we have different levers for growing the numbers. So one we can win customers, but the other one is we can extend the lifetime. And that's actually we're working on to make the product better, to add more value and to expand the lifetime of the product. And we've been quite successful on this side of the initiatives. So we were able to expand the lifetime from -- I remember we had at the beginning 3 months, now we are close to 6 months now, and that's also the reason why we were able to drive the numbers so powerful.

The other question, would you...

[Dirk Schmelzer, executive]

Yes. To complement on what Ralf said on the private customer side, I think this is the first quarter where we can report more than 50,000 customers in other subscription, private subscription models than Rental+. So you know our Living+ offer, our Buyer+ offer, they're obviously gaining momentum.

On the agent membership growth, I think it is -- and I mentioned it in my first answer, it is quite impressive to see 5.9% growth. What is the main reason for that? The main reason is that we have been able to shape attractive entry offers for new agents. You see that reflected in our ARPU growth, which is around 8% and the customer growth, which is around 6%. That shows you that we gain a lot of customers in the lower tier segments. But as Germany and our business model is a subscription-based business model, that is long-term potential that we are seeing with the new customers coming on board, and with the -- answering Andrew's question in the beginning, with the measures we are having in place to migrate them into higher tiers and grow together with our new customers. Hence, we believe this is the right strategy. And obviously, the customer growth proves us right on that end.

[William Packer, analyst]

Thanks for the color. Just to come back on the addressable market in the private subscription side. Has there been any evolution in your thinking after some impressive quarters versus the CMD last year?

[Dirk Schmelzer, executive]

No, we don't -- as you know -- well, we have discussions around that. There has not been a market for that product in the past, so 5, 6 years ago before we invented the product. And it's tough to say. What we can say is that, obviously, there is a high demand for that product in the market. With the upcoming CMD early next year, we will give you additional targets, or with the next CMD, we will give you additional targets around that product. But we are happy that we are now reaching around about 500,000 customers, and that's quite nice, and that's what we're seeing here.

[Ralf Weitz, executive]

I mean, in theory, the TAM is 3.4 million in movers every year. So we have 4 million moving households every year, 600,000 buying transactions, so 3.4 million rent transactions. So that shows a bit what the potential is. But as Dirk mentioned, right, the product was not out there before. So we are still making the market here, and we have to be careful also, and we want to have high customer happiness. And so therefore, we're doing it steady Eddie. And as more -- the product becomes commodity and it's more -- the value is well perceived by the consumers, in particular, we will see continuing success.

[Operator]

Then the next question comes from Christopher Johnen from HSBC.

[Christopher Johnen, analyst]

First, coming back to the guidance and the M&A contribution. Obviously, you kept that at 2 percentage points within the revenue part of the guidance. I understand that in the comments you made that there is some potential uncertainty around the rest of the year from a macro perspective. But if I'm not mistaken, you've added both IMMOunited and EXPLOREAL to the mix after the guidance was set, correct me if I'm wrong, which means -- and then for the first quarter, I think the contribution is almost double what you've guided for the full year. I know there's maybe some seasonality mix impact on that. But just thinking about the clear M&A contribution, should that not have been updated already given the incremental M&A?

And then second question, is it possible to get a bit of color on how the 2 leads businesses are doing? I think you mentioned the organic improvement within the transaction enablement segment, but maybe you can spill out a little bit more is that mortgage driven? Is that seller leads business-driven? That would be interesting.

[Dirk Schmelzer, executive]

Thanks, Chris. I'll start with the first question. Yes, you are absolutely right, when we did our guidance in February this year, we included all the companies that you are seeing now that is bulwiengesa, neubau kompass and EXPLOREAL. And it's true that the assets that we acquired, we closed neubau kompass in December last year, as you know, and bulwiengesa in January, plus EXPLOREAL in January, they have performed quite well, which is good. They have performed slightly ahead of our expectations that we had when we acquired the companies. But we have to say that both assets operate in the commercial, respectively, developer markets, which are still challenging, as you know.

So we would like to look how the integration process is working, how the post-merger integration is progressing, and that might impact our revenue trajectory for the end of the year as we move throughout the year. So at this point in time, with the group guidance, we feel very good about the guidance, but give us a couple of more months before we consider any changes around that. But the key message remains, start has been quite good with those newly acquired assets.

[Ralf Weitz, executive]

I'm happy to take the second question regarding the lead businesses. I mean, there's a mixed picture for those businesses. I mean, for the seller lead business, we were struggling with those businesses last year because of the cooldown in the transaction field. This is something we see to recover. We had a really strong start here in those seller lead businesses we run.

On the mortgage lead business side, there's -- those businesses are more flattish than growing, but we see also slight recovery here and there, but also the nature of the business has changed a bit. So we are working on alternative products here, yes. So mixed picture in some here.

[Christopher Johnen, analyst]

If I can follow up on that, alternative products in mortgage means you're tackling that part of the business again, getting a bigger part of the pie on that one? Or am I reading too much into this?

[Ralf Weitz, executive]

Alternative products means that we have -- for instance, we are shifting from a lead -- pay-per lead model into a membership model on the mortgage side here. Actually, the product is more or less the same. We're testing different pricings and also different partnerships with our lead buyers. So it's not that we are changing our approach here. For instance, we don't want to become a mortgage broker here or so. We are sticking to our lead business, but in a different pricing approach.

[Operator]

And the next question comes from Ed Young from Morgan Stanley.

[Edward Young, analyst]

The first one is on -- just a follow-up on the acquisitions point. You were just talking about the integration of those businesses a second ago. I wonder if you could just give a bit of commentary on thinking about the cost synergies or the margin accretion you might see in those businesses over the year or more broadly put, the gap between the organic adjusted EBITDA margin you're reporting and the sort of headline number as you go through the year?

And then second of all, to follow up on the professional customer base. As you noted, it's been accelerating sequentially and continues to accelerate. Do you think that can continue for the remainder of the year or certainly through the next quarter? Or do you expect growth here to normalize? It sounded like you were talking to several factors there that should endure. So just interested in any color there.

[Dirk Schmelzer, executive]

Ed, this is Dirk. Let me start with the first part of your question on M&A. I said at other occasions that the assets we acquired are coming in with a very dilutive margin. Depending on the asset, we're looking at between 10% and 20%. We have shown our ability to improve margin with newly acquired assets lately with Sprengnetter that is now running at a very healthy margin. And we are also considering the same strategy for bulwiengesa, EXPLOREAL and neubau kompass. We're making good progress. You can see and you will see that we are closing the gap to a target margin of 30% to 35%, depending on the asset over the course of the year. And I will give some commentary over the course of the year, but I would not want to comment on each single asset that we acquired. I think you will see our overall performance and our overall margin. But I can confirm that we are making quite good progress also on margin development with the new assets.

On the professional customer base growth trajectory, you might have heard me in the recent quarterly calls being a bit more conservative on that. You might have heard me today being a bit more optimistic on that since we have very attractive entry offers for the customers. I would think that we will be able to continue to grow our customer base over the course of the next quarters. If that will remain in a 6% growth rate or if that might drop a little bit, that might be seen. But of course, in our guidance that we reconfirmed today, there is a customer growth included, and you don't see us and you don't hear us nervous here.

[Operator]

And the next question comes from Marcus Diebel from JPMorgan.

[Marcus Diebel, analyst]

Two questions left from my side. The first one is on ARPU in Private. Ralf, how do you think about this, about price increases? It seems that, obviously, you highlighted a 5% increase in ARPU. But given the strong acceptance and customer numbers, when do you think it's actually the right time to be a bit more aggressive on pricing? I understand that we talk about relatively low absolute numbers in terms of the price, particularly for Tenant+. So how shall we think about this?

And then the other question, just on other revenue as well, went backwards. Is it just general fatigue on advertising trends? Or is there anything else to factor in? Is it just the paper ad meaningfully falling as well? Just how to read the minus 4.8% in Professional?

[Ralf Weitz, executive]

Okay. I'll take the first question on the ARPU increase on the Private side. I think as I described before a bit, I mean, it's also -- it's not just about acceptance and commodity in the market. It's also that we -- the TAM is still big enough in order to grow. So it's not necessary that we push price increases through even if the ARPU looks low here. So we believe it's better to grow the acceptance of the product and the reach of the product into the TAM, we see. I mentioned it before, EUR 3.4 million on the Tenant side. So therefore, given that we grow quite heavily in this business still, I would -- I'm not seeing or we are not seeing further price increases in the short-term price increases on this side.

[Dirk Schmelzer, executive]

Marcus, also welcome from my side. I see where you're pointing to the third-party media business has been quarter-on-quarter going down roughly 24%. However, if you compare it to the Q3 numbers last year and Q4 numbers, you see a roughly flattish business of EUR 1.9 million per quarter, and that's going to roughly remain for the overall year. I think we highlighted roughly 2 years ago that third-party media is a business that we are still following, but it's not a business that we continue to focus on because we wanted to make our inventory available to real estate agents in all the membership additions that we are offering, and we will continue to do so.

So third-party media, don't get me wrong here, is a good business for us, but we want to have more ad places for our real estate agents in our core products. And that's why third-party media is, so to say, second in line. And there is nothing specific to mention around the development here in Q1.

[Operator]

And the next question comes from Lisa Yang from Goldman Sachs.

[Lisa Yang, analyst]

A lot of my questions have been asked already. But just to come back on M&A. I understand you said there's some uncertainty around the commercial risk market for the remainder of the year. But given the trends you are seeing so far, like for Q2, should we expect similar contribution on the top line and therefore, on the margin to Q1? So basically, 4 percentage point contribution from M&A. Should we basically keep that for Q2 as well? And I think the margin drag was about 160 basis points in Q1. Is that the sort of level of drag in Q2 as well? And as the margin of the acquired businesses improve in H2, then we should maybe move more towards 100 basis point dilution for the full year?

And I think the second question is again on the full year guidance. So you started the year with 16% top line growth. Could you maybe just help us understand like the moving parts to get to 12% to 14%? Where are you assuming basically a slowdown? It looks like it's mostly in transaction enablement. But are you also basically baking in some slowdown in sort of Professional and Private as well to get to that guidance? That would be helpful.

[Dirk Schmelzer, executive]

Thanks, Lisa. I will try to get a bit more color around the M&A piece here. So first of all, the second part of your question, you have seen, I think, 14.5% roughly quarter-on-quarter growth in 2024. So that is the reason why we are seeing tougher comps for Q2. And you have seen, I think, around 11% growth in Q4 this year -- last year, 2024. So also Q4 will provide us with a bit of tougher comps. That is the first reason.

The second reason is a bit the uncertainty around mortgage rates. We're seeing 3% to 3.5% mortgage rates as we speak. A rise in that, as Ralf mentioned in the beginning, might also lead to a lower transaction momentum in the German market and with that impacting our transaction enablement business. We have sort of global uncertainties. We don't know what's happening for the remainder of the year. But these are basically the main factors that believe -- make us believe that with 12% and 14% range, we are quite well placed in the market.

Now on the margin side, I think you have seen that for Q1, we've been quite happy with that, especially with regards to M&A, the first part of your question. So we've been able to make those businesses more -- faster profitable than originally envisioned. And so for the remainder of the year, I think we will continue to do so. We will see personnel costs organically roughly flat. They have been roughly flat in Q1, and we show that this will continue over the course of the year. We are very disciplined on our marketing cost development for the remainder of the year.

Integrating the acquisitions, as I said, there will be additional scopes for cost savings. So generally, we are scaling very well, and that's why we feel comfortable with the EBITDA guidance. And on the revenue side, professional subscriptions, I think that's quite easy to forecast. Basically, we started well. We're migrating the customers well. We're having good products out there. So we're seeing a little bit tougher comps in the second half, but no surprises on that end, I would think.

Transaction enablement, I outlined. Second quarter could be a little bit lower. And on Private subscription, I think we started well, and we believe that we have a very good product in place, which enables us also to grow now on the Living+ side and on the Buyer+ side. So putting it all together, Lisa, I think reconfirming our guidance is the right thing to do at the current point in time, and we're looking forward to our developments in the second and further quarters.

[Lisa Yang, analyst]

May I just have a quick follow-up. Like how sustainable do you think is that sort of marketing cost sort of down 2.5%? I know you're leveraging a lot of the data you're collecting internally, but you still have 2 other competitors. So just wondering -- yes, is there further room to bring that down? Or at some point, you will have to go up again?

[Dirk Schmelzer, executive]

It's not only sustainable, it's a core part of our strategy, Lisa. That's what we've been working on for the past 3 to 4 years. And that's what -- exactly what we guided a few years ago in our last Capital Markets Day, where we said we will invest into certain product elements, and we will invest with marketing and selling costs, and we have done that, and we have managed to get the customers into our ecosystem. We have managed to grow our organic traffic. We have managed to grow on the SEO side. And hence, we are less relying and less depending on marketing spend.

[Operator]

And the next question comes from Nizla Naizer from Deutsche Bank.

[Fathima-Nizla Naizer, analyst]

I just have two small questions remaining. The first is actually a follow-up on the private subscribers. It's great to see the Living+ number reach 30,000 subscribers. My question is, are you seeing Tenant+ subscribers sort of migrate to Living+ once they found a place to rent, et cetera? So in other words, is churn reducing in the Tenant+ category because these subscribers are moving to Living+? And is this part of your plan to sort of extend the lifetime at which they stay with you? Some color there would be great.

And second, on the acquisitions that you've done, quite nice to see the development there. Are you planning to be acquisitive in the rest of the year as well? In other words, are there other targets out there in Germany and Austria that you have an eye on, which may be an interesting part of your ecosystem going forward? Some color on how you're thinking of future acquisitions would be great.

[Ralf Weitz, executive]

I'm happy to take both questions. On the subscriber side, I think you got the strategy. But I mean, of course, it's our plan to expand lifetime while offering them additional products. I mean, if you found an apartment, obviously, you don't need Plus anymore. So then the question is what could be the next Plus product. And therefore, we created the Living+ product. We need to add more value here in order to push the numbers further. But actually, that's a strategy to migrate customers who have been before in the Tenant+ into the Living+.

So question number two is we've been quite active in the bolt-on acquisitions. And yes, we are looking into many opportunities. So this will probably continue if it makes sense. But if it makes sense, that's an important part of the sentence. So there are still targets out there who could be an addition to our ecosystem. And so we are following our strategy here. And just to be clear, I mean, the acquisitions we did, right, we did them in order to add value to our ecosystem, in particular on the data side. So they are more -- so there have to be synergies and otherwise, an acquisition makes no sense and that is also our grit if we are looking into M&A opportunities.

[Fathima-Nizla Naizer, analyst]

Maybe just following up on that, is there a target leverage that you wouldn't want to cross when you think of your budget for going out there looking for acquisitions? Some color there would be great.

[Dirk Schmelzer, executive]

No. Nizla, there's always been the question of a target leverage, and I always try to answer it in a way that I say if -- we're currently at a leverage of 0.42, and we're having that leverage because we're doing share buybacks. And we feel comfortable with that leverage because share buybacks help us to be value-accretive on capital allocation. If there is a target coming up, of course, this company with the cash generation it has, has the ability to lever up to 3, 4, 5x. But I'm just mentioning these as examples. It's nothing that is in scope or in any planning that we are having. Of course, we're having that ability, but I don't think that there will be a situation where this will be necessary.

[Operator]

Ladies and gentlemen, this was the last question. I would now like to turn the conference back over to Filip Lindvall for any closing remarks.

[Filip Lindvall, executive]

Thank you. This concludes today's call. Thank you for joining and your interest in Scout24.

[Operator]

Ladies and gentlemen, the conference has now concluded, and you may disconnect. Thank you for joining, and have a pleasant day. Goodbye.