Scout24 SE

XETRA:G24

Q2-2025 Earnings Call

[Operator]

Ladies and gentlemen, welcome to the Scout24 H1 Q2 2025 Results Conference Call. I'm Vicki, 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 Second Quarter and First Half 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 & 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. Let's move to Page 4 of our presentation and review the key highlights of the second quarter and first half. We are very pleased with our second quarter performance, which was strong across the board and continues to build on our excellent first quarter results.

Second quarter revenue grew 15.1% with organic growth remaining strong at 11.1%. For the first half, we delivered total revenue growth of 15.5%. Revenue growth was driven by our 2 great core businesses, which continue to deliver impressive customer growth. Our B2B business is now approaching 26,000 customers. And our B2C segment surpassed the significant milestone of 500,000 subscribers in the second quarter.

PPA Private was a bright spot in the quarter with 10.9% growth, driven by increased listing volumes and marketing activities. Transaction enablement showed more modest expansion in the second quarter due to lower transaction volumes. We continue to generate operating leverage as we drive interconnectivity and simplify our organization.

Ordinary operating EBITDA grew 16.9%, marking another strong quarter. For the first half, we delivered 1 percentage point of margin expansion year-on-year, which is impressive as we are integrating several acquisitions with lower margin profiles.

Adjusted EPS continued to grow impressively by 23.6% in Q2. The strength of our platform is becoming increasingly evident. The number of B2B customers using multiple products in our ecosystem grew 15% quarter-on-quarter, a healthy sign that our interconnectivity strategy is working. Listings increased by 12.8%, and homeowner registrations grew by 57.7% in Q2.

We are seeing deeper engagement across all market participants. This creates compounding value as more agents, property owners and home seekers connect through our ecosystem. We are creating value for all our stakeholders by integrating AI solutions across our entire enterprise from consumer products and professional tools to internal operations.

As I highlighted in the first quarter earnings call, innovation remains central to how we serve customers. I will provide details on this and the innovation update later.

Based on the strong business performance during the first half of the year and the outlook of the remainder of the year, we upgraded our guidance for 2025, as you might have seen from Tuesday's ad hoc release. Our upgraded guidance reflects a strong business momentum we are seeing in our core operations. We now expect revenue growth of 14% to 15% and ordinary operating EBITDA margin expansion of up to 70 basis points.

Let's move to Page 5 for an update on our customer base. In the first half of 2025, both our Professional and Private segments reached record customer numbers. Starting with Professional. The Professional segment accelerated from already fantastic Q1 levels while continuing to gain market share. We are approaching 26,000 customers with growth accelerating again to 6.1% in Q2, building on the already strong 5.9% growth in Q1.

This was driven by continued robust performance in Germany, including neubau kompass. The Austrian real estate market has started to recover, and our customer base grew every month in the second quarter. Our customer growth in Germany stands out both domestically and globally within the classified sector.

It is worth taking a moment to acknowledge where these customers are coming from. Firstly, we are gaining market share among smaller customers through our Bronze membership, an accessible entry-level product. Secondly, we are benefiting from new business transformations. And thirdly, we are seeing our large customers expand their franchises. Our strong product offering and responsible approach to pricing are the reasons why we are winning in the market.

Turning to the Private segment. We sustained healthy expansion after last year's exceptional growth. We crossed the 0.5 million subscriber milestone in the second quarter, reaching 502,000 subscribers, a 15.3% year-on-year increase. So we achieved our Capital Markets Day target of 500,000 subscribers significantly ahead of schedule. While growth has moderated from last year's exceptional levels, this represents healthy expansion on an increasingly large base and follows normal seasonal patterns.

Regarding our consumer portfolio, we have rebranded Tenant+ and Buyer+, into Search+. Living+ remains unchanged. All consumer products continue to deliver strong growth and value to our users. Search+ for buy is experiencing impressive year-on-year growth of 38%. Living+ has doubled its customer base compared to last year, showing how we can bring innovative new products to the vendor market and create new addressable markets.

Looking at Page 6, I would like to share the German real estate market dynamics in the second quarter. The German residential real estate market continues to be healthy with strong underlying fundamentals. As mentioned in our Q1 earnings call, the sales market experienced a temporary slowdown in April and May following the German government's investment program announcement, which resulted in higher mortgage rates. This decline is reflected in our Scout24 transaction momentum index, which showed a slight downturn in Q2. Since then, mortgage rates have stabilized after recent volatility, supporting buyer confidence in market activity.

Demand for real estate purchases remained strong, with sellers willing to engage as prices remain high. The rental market continues to see robust interest while contact requests stayed on high levels. The listings index continue to climb in Q2 with more new listings hitting the market and faster turnover times, demonstrating robust selling interest and market activity.

The German government's Bau-Turbo initiative and broader investment program and positive signals for the medium to long term. And these measures will stimulate housing market activity and increased demand for our platform services.

Moving to Page 7. I would like to share with you how AI is transforming every part of our business. As we promised at our Capital Markets Day 2024. And as I emphasized in my first earnings call as CEO in May, we are committed to being the technology and product leader in our market. To achieve this, we continue to invest heavily in product innovation for our customers. We are now in a phase where we are integrating AI across all of our products.

Let me give you a few examples. Moving to Propstack AI, one of our professional tools. This is transforming how our professional customers create property listings. Here is how powerful this is. Agents simply select a few photos and within seconds, Propstack AI automatically creates a professional property video, integrating compelling voice narratives and highlighting key selling points. This represents an enormous efficiency and cost advantage. Tasks that traditionally required expensive video production and hours of editing, now happen instantly. Agents save significant time and money while ensuring consistent high-quality listings across our platform. And the market response has been great so far.

Propstack is growing over 40% year-on-year in customers and contributing 60% more listings to our platform compared to last year, while revenue is surging over 50%. In July, almost 2/3 of our upsell revenue came from Propstack. We have been winning customers from competitors. Every single month for over a year now. Why? Because we have built the most intuitive and powerful and innovative HCM software in the market. We are now taking Propstack to the next level with AI, representing our commitment to innovation and our focus on delivering tools that truly transform how agents work.

Now turning to the consumer side. Our HeyImmo feature represents the next evolution in property search. Users can prospectively search in a conversational manner. For example, simply asking for a 3-bathroom apartment in Munich under EUR 2,500 with good transport links or the best investment opportunities in Berlin. We are developing an AI search assistant that enhances the consumer search experience.

HeyImmo provides conversation and search capabilities while leveraging our proprietary and exclusive data assets. This unique data integration creates a differentiated offering that positions the platform to deliver a superior real estate search experience compared to existing AI assistants in the market.

While traditional search will likely remain the primary access point for several years, we are launching the next level search now. This gives consumer choice and ensures we have the best product available during the transition period as consumers search expectations evolve with AI. Currently, conversational search is in beta. We will be rolling out fully on all devices in H2. We have also partnered with Anthropic to integrate Claude AI because we want to embrace AI productivity benefits internally throughout the organization.

Every employee now has their own AI assistant to work with. This provides our teams the sophisticated support for everything from data analysis to content creation. We expect that over time, both employees and processes becoming more efficient, enhancing our internal operations and productivity. We are moving full steam ahead on these AI initiatives. It is still early days, and we remain humble about the journey, but our goal is to provide choice for our customers and deliver the real benefits of AI and automation.

Let me conclude with some key takeaways on Page 8. Firstly, we delivered a strong financial performance that enabled us to upgrade our full year guidance. Revenue grew 15% with margin expansion, even while integrating acquisitions, proving we can execute growth and efficiency at the same time.

Secondly, we are winning in the market with record customer metrics. We now approach 26,000 professional customers and have crossed 500,000 private subscribers. Our product-led strategy and responsible pricing is clearly resonating. We are taking share from competitors and expanding our reach into new customer segments.

Thirdly, our AI transformation is accelerating. Propstack AI is already live. HeyImmo will be launched in H2 this year, and we have deployed Claude across the organization. We are not just experimenting with AI, we are implementing it at scale to drive real business results.

And lastly, our platform is generating powerful network effects. Multiproduct adoption increased, while listing volumes are expanding, and our interconnected ecosystem is creating compounding value. These results confirm that our strategy is working, and we are well positioned for continued success.

Now I will hand over to Dirk.

[Dirk Schmelzer, executive]

Thank you, Ralf, and welcome, everyone. Let's move to the financial section of our presentation. On Page 10, you will find our Q2 and first half financial highlights. Building on strong Q1 momentum, Q2 delivered another solid quarter, resulting in an impressive first half that reflects continued strength across our business. Group revenue in the second quarter reached EUR 160.6 million, up 15.1% year-on-year with organic growth contributing a healthy 11.1%.

This performance reflects strength across our core business. Subscription services maintained momentum, while recent acquisitions are already contributing meaningfully. For the first half, revenue totaled EUR 318.2 million, representing 15.5% growth with organic growth accelerating to 11.6%.

Turning to profitability. Second quarter ordinary operating EBITDA increased 16.9% to EUR 101.7 million, marking the first time our quarterly ordinary operating EBITDA has reached 9 digits with margins expanding 90 basis points to 63.3%. For the first half, ordinary operating EBITDA reached EUR 195.4 million, up 17.3%, resulting in a margin of 61.4%. This margin expansion is particularly strong as we are integrating acquisitions that carry lower profitability profiles.

Reported EPS increased by 15% to EUR 0.54, while adjusted EPS showed even stronger growth of 23.6%, reaching EUR 0.87. Operating cash flow came in at EUR 133.5 million, 11% higher year-on-year.

Turning to Page 11 for a closer look at our Professional segment. Revenue in our Professional segment grew by 14.5% in Q2, reaching EUR 115.7 million. For the first half, we delivered strong growth of 15.3%, driven by robust performance across both subscriptions and transaction enablement.

Our Subscription business grew 14.8% to EUR 84.2 million, with double-digit organic growth of 11.7%. We are clearly winning in the market, capturing share from competitors, benefiting from healthy business formation and expanding in the rural parts of Germany with accessible products like the Bronze addition.

Professional customers expanded 6.1% to nearly 26,000, with organic growth at 5.6% in Germany, excluding neubau kompass. ARPU grew 8.3% to EUR 1,082 driven by strong performance with our residential agents, offset by more moderate growth among our commercial customers. Transaction enablement grew 18.4% to EUR 26.4 million, driven by acquisitions and 4% organic growth. The lower organic growth reflects reduced transaction volumes and reduced capital allocation into our leads business as part of our interactivity strategy.

Demand for data and valuation and agent CRM products remains strong. Ordinary operating EBITDA grew by 14.3% to EUR 73.1 million with a margin of 63.1%. Ordinary operating EBITDA increased by 14.3% to EUR 73.1 million, achieving a 63.1% margin. The 0.5 percentage point year-on-year margin compression in half year 1 reflects the dilutive effect of recent acquisitions.

Turning to the Private segment on Page 12. Let's review the results for the second quarter of 2025. Private segment growth picked up momentum in Q2, accelerating to 16.8% revenue growth and EUR 44.9 million. The stronger second quarter lifted first half revenues to EUR 87.2 million, up 15.9% year-on-year.

Performance was driven by our Plus subscription products, which delivered strong growth of 22.2% in the quarter, while PPA revenues also surprised on the upside with 10.9% growth. We reached 502,000 subscribers in Q2, up 15.3% year-on-year. This strength spans our entire portfolio. Search+ Buy surged 38% driven by high purchase demand. Living+ doubled its customer base, creating new rental markets. And Search+ Rent maintained consistent growth. ARPU increased 6% to EUR 17.7 driven by improved unit economics from our multi-vendor credit check strategy.

Our PPA business grew 10.9% in Q2, driven by strength in both sales and rental listings. Improving market conditions and rate stabilization boosted sales, while rental PPA remained robust. Our targeted marketing campaigns are resonating with sellers and landlords. Ordinary operating EBITDA surged 23.9% to EUR 28.6 million in Q2 with margins expanding 370 basis points to 63.7%. For the first half, ordinary operating EBITDA reached EUR 53.5 million with margins at 61.4%, up 500 basis points year-on-year.

Turning to Page 13. Let's take a closer look at the main ordinary operating items in Q2. Own work capitalized decreased 9.4% to EUR 4.9 million, reflecting the completion of various development and integration projects. As a percentage of revenue, this represents approximately 3.1%.

Operating expenses increased 10.2% year-on-year, growing below our revenue growth rates. This reflects the positive impact of our interconnectivity strategy, efficient acquisition integration and our continued efforts to simplify the organization. On an organic basis, operating expenses were up just 3.6%.

Personnel costs rose by 7.8% to EUR 28 million, primarily driven by M&A integration and regular salary adjustments. On an organic basis, personnel costs remained nearly flat. Marketing expenses increased marginally by 3.9% to EUR 10.4 million as our interconnectivity strategy continues to enhance performance marketing efficiency.

IT cost increased 19.4% to EUR 5.6 million, primarily driven by higher AWS costs from migrating acquisitions to our cloud infrastructure and increased data lake volumes. Additional factors include ongoing AI investments and the integration of recent acquisitions.

Selling costs increased 33.5% to EUR 11.2 million, driven by stronger demand for data and valuation services. This increased activity led to higher third-party costs at Sprengnetter and bulwiengesa. Ordinary operating EBITDA grew strongly by 16.9% in Q2 with margins expanding 90 basis points to 63.3%.

For the first half, we achieved impressive results with 17.3% ordinary operating EBITDA growth and 100 basis points of margin improvement. On an organic basis, margins would have reached 64.4% in Q2 and 62.8% for the first half, demonstrating our underlying operational strength. This strong performance demonstrates our ability to balance multiple priorities, investing into product and innovation, organizational simplification, integration of acquisitions and investing in our people.

Turning to Page 14, where we show the items below ordinary operating EBITDA. Non-operating effects increased 78.8% in Q2 due to our strong share price and Sprengnetter business performance. I will comment on these positions on the next page. For the first half, reported EBITDA increased 15% to EUR 159.8 million. Along with the decrease in own work capitalized, D&A decreased 12.8% year-on-year in Q2, primarily driven by the completion of IT projects and platform developments. For the first half, D&A totaled EUR 24.2 million, a flattish development of 2.8%. The mix has shifted with PPA amortization from recent acquisitions increasing to EUR 4.8 million in half year 1, while other scheduled depreciation remained stable.

The financial result improved year-on-year to negative EUR 6.1 million in Q2, a 28.5% improvement driven by lower one-off impacts compared to last year. We also incurred EUR 1.4 million in foreign exchange losses. I will walk through more of the specifics on the following slide.

Income taxes increased to EUR 16.6 million in Q2, up 14% with an effective tax rate of approximately 30%. Despite all one-offs in Q2, we still managed to grow basic EPS by 15%, leading to strong growth in half year 1 2025 of 22.3% to EUR 1.23. Net income for the first half increased 20.5% to EUR 89 million, a solid bottom line expansion despite Q2's temporary impacts.

Adjusted EPS, which excludes all one-offs, was strong in both quarters, up 23.6% in Q2, leading to half year 1 2025 growth of 20.8% to EUR 1.65. The fact that we delivered over 20% growth in both reported and adjusted metrics for half year 1 2025 truly demonstrates our underlying business momentum and margin expansion capabilities.

Let's turn to Page 15 for the bridge from reported net income to adjusted net income for Q2 2025. Non-operating effects increased by 78.8% year-on-year in Q2 of 2025 due to the following successful business outcomes. Share-based compensation increased significantly due to our share price overperformance, up around 40% year-to-date compared to our mid-teens share price growth assumptions, leading to higher provisions. Non-operating effects, excluding share-based compensation came in at EUR 9.8 million. Thereof, M&A-related costs totaled EUR 8.2 million in Q2 driven by EUR 8 million increased provision for Sprengnetter earn-out due to the strong EBITDA performance in 2024.

The adjustment of the financial result included EUR 4.9 million from purchase price liability remeasurements, including EUR 1.4 million for the remaining 25% Sprengnetter stake and EUR 3.5 million for neubau kompass and EXPLOREAL earn-outs. These impacts were partially offset by favorable fair value adjustments on our venture capital investments of EUR 700,000. We do, however, not see a material cash impact from these non-operating costs in 2025.

Turning to Page 16 and cash flow. Free cash flow for the first half reached EUR 118.1 million, up 15% year-on-year. The improvement was driven by our strong operating performance as well as positive working capital impact from the non-cash nature of the non-operating costs. Our conversion ratios remain excellent. Free cash flow representing 99% of adjusted net income and 60% of ordinary operating EBITDA, demonstrating strong cash generation.

Turning to Page 17 to leverage and capital allocation. Our leverage ratio increased to 0.53x at the end of Q2 2025, up from 0.42x in Q1 due to higher credit facility utilization and share buyback program commitments. This temporary increase reflects the typical seasonality of Q2 when we pay our annual dividend.

In the second quarter, we allocated EUR 14.8 million to share repurchases, bringing total buybacks for the first half of the year to EUR 38.3 million. Total shareholder returns in Q2 amounted to EUR 110.2 million, primarily driven by a dividend distribution of EUR 95.4 million, following the 10% increase in the annual dividend to EUR 1.32 per share.

Moving to the guidance on Page 18. Based on our strong first half performance, we upgraded our full year guidance to 14% to 15% revenue growth, including approximately 3 percentage points of inorganic contribution and expansion of our ordinary operating EBITDA margin of up to 70 basis points. We are well on track to deliver our fifth consecutive year of double-digit growth and third consecutive year of margin expansion.

Let me provide some context around our guidance upgrade and outlook for the remainder of the year. The upgrade reflects our strong execution in the first half and confidence in the underlying business momentum in our core membership and private subscription business. Based on the second quarter revenue run rate for transaction enablement, we believe our upgraded revenue guidance range represents a good outcome for the full year and leaves us enough flexibility to balance between profitability and growth.

In terms of quarterly cadence, I would like to remind you that the third quarter will likely show lower revenue growth and then accelerate again in the fourth quarter. We expect a similar trend for ordinary operating EBITDA growth and margin. Overall, we feel very good about the momentum in the business, which is reflected in our upgraded guidance.

We will provide the next update during our Q3 9 months 2025 earnings call on October 30, 2025. And with that, let's open the line for questions. We would appreciate if you could limit your questions to two per speaker.

[Operator]

[Operator Instructions] The first question from Craig Abbott, Kepler Cheuvreux.

[Craig Abbott, analyst]

I have two questions for now, please. One is just some early thoughts on the run rate heading into 2026 and in particular, thinking about the components of that continued growth. I'm thinking about things like the new AI tools, of course, continued trade-ups in the -- amongst your membership packages, scaling up at neubau and bulwiengesa. If you could just maybe give us some early thoughts at this stage on how we should think about that going into '26 when you're going to be obviously going up against quite a high competitive base? And then I'll ask my second question.

[Dirk Schmelzer, executive]

Craig, it's me, Dirk. Maybe I'll start before I hand over to Ralf. Of course, you can see us preparing our growth levers for 2026 already. And as you rightly pointed out, it will be a mixture between continued growth in the professional membership, which is driven by ARPU increases based on our new acquisitions as well as our product rollouts that we're having. And secondly, of course, also by continued growth in our private segment with regards to subscriber growth. You might have seen that we are seeing a nice tick up in the buy product as well, not only in the rental product. We are scaling beyond 500,000 as we speak, and we also believe that there is room to grow in the next year on private as well as professional.

And you've also seen the nice tick up that we're having on our PPA business in Private. And that will be added by additional growth in the transaction enablement business because we think that the transactions in the German real estate market will start picking up again in 2026. As you might have read this morning, the numbers in the German real estate market look quite good for the second half as well as for 2026 coming in. We're seeing a slight uptick in prices for houses. We're seeing a similar, but only half of that, roughly 1% quarter-on-quarter price uptick for apartments. So all in all, we believe that the transaction environment overall for next year will light up. So you can see us in Q1 with a good mix between professional growth, private growth and transaction enablement growth.

[Ralf Weitz, executive]

Yes. Actually, not much to add, Dirk. Ralf speaking here. So what I can add maybe it's helpful that there's still room to grow in the new membership additions, right? Just 12,500 customers are migrated so far. So there's still a lot of potential. And as you know, we are not foreseeing customers into the new memberships. We are only doing them in if they see the value and also we do the price enforcement for the new memberships, and that's guaranteeing an uplift in terms of revenue if new customers -- if the customers are migrated in the new membership additions. That's all.

[Craig Abbott, analyst]

Okay. Sorry, Ralf, I didn't quite get the number you said that had migrated, sorry?

[Ralf Weitz, executive]

12,500 customers have migrated, the new membership.

[Craig Abbott, analyst]

Okay. And my second question, and I'll get back. Dirk, you mentioned the private PPA number having picked up quite strongly in Q2. I mean, obviously, it's high-margin products. So -- and you talked about some targeted marketing measures having impacted that. A, could you maybe elaborate on that? And secondly, are you seeing this trend in growth in PPA continue in Q3?

[Dirk Schmelzer, executive]

No, we didn't have specifically a large number of targeted campaigns around that. What you can see is what I mentioned when we come to tends for 2026 is that the transaction market is slightly picking up again, and that's also reflected in our private PPA numbers. On the professional side, you don't see those numbers picking up in the same order, simply because of the fact that we are trying to get more and more customers into our starting addition, the Bronze addition, and that is reflected in the more than 5% customer growth organically in the second quarter that you are seeing.

So overall, I think the PPA business is also a testament to our product offering, which is right in time for a market uptick in the second quarter as well as in 2026.

[Operator]

Next question from Ed Young, Morgan Stanley.

[Edward Young, analyst]

My first one is just if you could give a bit more color on the sort of temporary impact you spoke about around transactional enablement in Q2 and how we should think about that in H2, a broader commentary on the broader macro? And then the second question was around Propstack. It's very interesting, you speaking about that. Can you give a bit more color around the upsell in terms of which packages it incorporated into? I think in Austria, it's in all of them, but I might be mistaken. But how do you think about the dynamics around upsell for that product? That would be interesting to hear.

[Ralf Weitz, executive]

Maybe we start with the Propstack question. Yes, I can -- I mean, what we see in Propstack is that the customers really appreciate the new features we built in, in particular, the AI features are well received by the customers. And with the package we are offering to the market, I think we are winning, at the moment, market share. Why is it important for us because as you can see that with customers using Propstack, we can increase our listing share against the competition. So we have an interest that more and more of our customers using Propstack. So therefore, we are upselling actively Propstack to our membership customers. And I think, in the highest edition or in the highest edition, there's also a Propstack product included, but not the full-fledged product. So that gives us actually also upsell potential. But as I said, the strategic interest is that our customers using Propstack, our CRM solutions, and they benefit from additional features and also from better placements they get because the product, of course, Propstack is better integrated than we could do with other external CRM systems.

Dirk, the first question?

[Dirk Schmelzer, executive]

Ed, your first question was with regards to transaction enablement. I think I answered the part of that when Craig was asking the same question, but let me repeat it here again. I think what we have seen in the first half was a modest growth amidst macro headwinds that we were seeing. Mortgage and relocation -- and our media business was a bit weaker, but that was fully substituted by the homeowner leads business, and that was doing quite okay.

And what we are seeing and what is a testament to our strategy, I think, is that we are seeing a very strong demand for data valuation and CRM services. And for the remainder of the year, I would expect similar trends. We are also expecting the leads business to pick up a bit again versus the first half, and we are seeing quite healthy incoming interest into our data valuation business and as Ralf outlined, on the CRM side. So overall, moderate picture for transaction enablement for the first half. But the early signs we're seeing in the second quarter, I think we're going into a very good second half of the year with transaction enablement.

[Operator]

The next question is from Andrew Ross, Barclays.

[Andrew Ross, analyst]

I've got two on numbers. First one is on the share-based comp, which obviously was higher in Q2, I think, largely because of the share price going up a lot. Can you just give us a guidance as to what you expect for share-based comps the rest of 2025 and also for 2026, I guess, on an assumption of kind of more normal share price appreciation? That's the first question.

Then the second one is just to follow up on your comment, Dirk, on outlook where you said you'd expect Q3 to be a bit slow and then to reaccelerate in Q4. And I was just kind of checking the transcript on the Q1 call, and I think you spoke about tougher comps in Q2 and then in Q4 back then. And just kind of looking at it, the comp actually looks a bit easier in Q3. So just help us understand why growth is going to slow in Q3 before it reaccelerates.

[Dirk Schmelzer, executive]

Andrew, thanks. Let me start with share-based compensation. To give you a bit of more color around that. So the programs we have out there are split into basically 2 line items. One is the Executive Board and the second part is the leadership team. They both amount to an annual value of around about 9%, so slightly below 10% of our overall personnel costs. Over the past 4 years, the performance period of all programs has basically been ramping up. So when you look at our balance sheet, what you see is a reflection of liabilities on the company towards employees of around EUR 54 million, EUR 55 million. And that is due to the fact that on the one hand, we have performed quite well versus our performance targets. And the second piece is, as Filip outlined already, that we have seen a pickup in the share price. So around about 30%, 40% since beginning of the year. And those effects had to be reflected in share-based compensation.

So to do the math, if you think about roughly a EUR 40 million liability on our balance sheet, and the share price increases by 30% based on constant performance metrics, you will need to increase that liability by EUR 12 million per quarter. So that's the way the metrics work. If you look into the next year, you will see more of a normalization because next year payout periods are starting. So we are taking liabilities away with cash from the balance sheet. And we are only adding additional liabilities to the new consecutive programs coming through. And we think about those programs in the area, which I outlined in the beginning, so EUR 8 million to EUR 9 million year-on-year. And that was also the basis which I gave you at the beginning or end of last year when it came to 2025, not having in mind that the share price, which showed such a positive reaction.

So I hope that helps a bit, Andrew, to give you a flavor and an idea on where this metric will develop in the next years. But it will, of course, be a tailwind for us that we start converting liabilities into cash.

Second part of your question was around comps in Q3. You're absolutely right. When we were talking in the Q1 about Q2 and Q3, we actually haven't expected a very positive development in Q2 that was -- especially with regards to the new customer acquisitions on the professional side as well as on the private side. And that was also the reason why we increased guidance, as you've seen. And against that guidance, I would think that the Q3 revenue growth will be slightly lower than in the first half. And what you have traditionally seen in our business is an acceleration in the fourth quarter.

So transaction enablement, we see a slightly softer organic growth before it picks up in Q4, as I said. First numbers we are seeing at the end of Q2 are quite encouraging. Then we are starting to let ARPU benefit from our multi-vendor credit check strategy in private and we expect transaction enablement to grow in Q4, as I just said, a bit quicker. So for EBITDA, we see basically the same trend, tough comp with the 63% we saw last year. But overall, I would reiterate that the fourth quarter is usually a strong one for us on profitability as well as on growth. So we expect the same for the Q4 2025, and that's why we felt quite optimistic with regards to our target for the second half with the phasing I just outlined between Q3 and Q4.

[Andrew Ross, analyst]

If I could just follow up on the stock-based comp point. That was helpful color. I guess, to kind of summarize it, when we kind of think about the overall P&L charge that we should be putting into our numbers for the second half of '25 into '26, what would be a kind of sensible assumption? Are you kind of saying we're going back to mid-teens run rate annualized from here? Or have I misunderstood that?

[Dirk Schmelzer, executive]

I think in the future, what you will see is rather a range from us than anything else. I outlined that we will always be around 10% of our overall personnel costs. And what you're currently seeing is around, I think, Filip, EUR 30 million that we have for provision for share-based comp for this year versus the EUR 15 million. I wouldn't think that we will materially go beyond EUR 30 million for the full year 2025.

[Operator]

The next question from Will Packer, BNP Paribas Exane.

[William Packer, analyst]

Firstly, very good customer add numbers again. Could you help us think through the drivers of that, gaining share of small agents, new formation, market share gains versus peers? And should we think these positive trends could extend into 2026 and remain a growth driver? And then secondly, in the last 12 to 18 months, there's obviously been a fair bit of change around your competitive environment in terms of ownership. At the coalface, are you seeing any evolution in pricing strategies, marketing strategies and any potential new competition in areas like Tenant+?

[Ralf Weitz, executive]

I'm happy to take the first question regarding customer numbers. I think what we see is that the structure of the market or the nature of the market is quite robust. What it means is that there are this dynamic in the market. So they are -- there are new starters. There are also consolidations in the market. The franchise companies, they are also growing in terms of customer numbers. And we are benefiting from that. So market actually is quite healthy, and we believe we can -- we will also see that in 2026. So there's no reason why there should be a change, let's say, in the nature of the market.

So why we are benefiting is also because we have quite an attractive product if it comes to smaller customers, in particular. So we can actually offer a new starters a really good package, not just a listing product. Also, they get more. They get kind of CRM systems from us, better CRM systems from us. They get support if it comes to energy certificates, for instance. So for new starters, in particular, it makes sense to start with us if you are new to the market.

We also offer some trainings to new starters. So we are building a kind of loyalty to new starters and that helps us also to upgrading those customers later on from a Bronze addition into a higher membership tier. So therefore, we are starting quite early on the customer journey, and we are successful. That's also a bit different to competitors where you have a hurdle of price often and you need to hit this hurdle first before you can get a member or a real customer of the platform business. So that's different to how we approach the market. And I think we are quite successful here. So therefore, we think this will remain a driver for next year for sure.

So second question, Dirk?

[Dirk Schmelzer, executive]

I think the second question, well, thanks for that, was around the competitive environment. To be honest, we haven't seen so much difference in our competitive strategy over the past 12 months. And we continue to see very healthy metrics on our side. So when I look at, for example, listing development, we've been adding 13% listings to more than 560,000 listings on the platform as we speak. In Q2 and overall, in the first half, listings were added by 11%. We see an uptick in objects. We see an uptick in homeowners that are registering objects on our platform. We have more than 3 million objects on the platform as we speak.

So why do I mention those numbers because they give you a good indication on the relevance of our platform in the market and how is that taken. Object uptick, customer uptick is obviously driven by the fact that a lot of our B2B customers take objects away from the market, from the competition to our platform. And a lot of the private customers are taking their objects on our platform because they see us as a clear market leader.

So in total, I would think, yes, we're still heading for tough competition in the German market as always. But the strategy that we are following and that interconnected strategy really helps us to gain value to customers, and that's been showing in the nonfinancial KPIs, I just outlined to you.

[William Packer, analyst]

Very helpful. Just one minor follow-up. In terms of the underlying number of estate agent branches in Germany. Does your 6% benefit from underlying growth in that number? Or is it more just accessing some of these smaller agents, et cetera? What do you think the market growth in agency branches is?

[Dirk Schmelzer, executive]

I'll start. We were just discussing it, sorry, Will. I'll start off with that. I think -- and Ralf will answer the question in more detail. But I think what we have seen here is growth in the Bronze addition, which points you to the agents that are coming on to the platform, which are rather small agents. We don't see a huge uptick in the overall amount of agents. But on the other side, I think, Ralf, we're also seeing more agent conglomerate coming onto the platform with additional districts.

[Ralf Weitz, executive]

Yes. I mean I think that what I outlined before, I think the dynamic is quite good in the market. So the question is how many agents do you need for such a dynamic. And as you know, there are no barriers in Germany to become an agent. So it's actually quite attractive at the moment to become an agent because there is some liquidity in the market as it comes to objects. And so therefore, what we see is that our customers are growing. So the franchise groups are growing in terms of agents, and it's also more attractive to enter the market. So we see new starters. And we see that for agents who are just with the competition, it makes no sense because the dominance of Scout is we increased our dominance, so they have to move to us as well.

So what we saw in the past that some of the agents in Germany, they had a one-portal strategy either with us or with the competition, they also move over to us. So -- and that's all supporting the customer number growth you can see. And we think that will continue. I mean you see it also in the car classified business at the moment in Germany. So the #1 is eating market share from #2 and also partially from #3. So I think we believe that's also true then for next year.

[Operator]

The next question from Nizla Naizer, Deutsche Bank.

[Fathima-Nizla Naizer, analyst]

I have two questions as well. The first one is on the guidance for 2025. You've now said that you're guiding for a 70 basis point margin improvement for the full year. But given margins already expanded by around 100 bps in H1, just curious to understand if there's some conservatism baked into H2, or is there some incremental investments you've specifically got in mind. Some color there would be great on the thinking.

And second, on leverage being sort of 0.5x, how you're thinking about future M&A as a use of cash as well maybe beyond Germany because there's been a lot of consolidation and activity in other markets as well. So just curious to see how you think of that opportunity for maybe more aggressive inorganic growth.

[Dirk Schmelzer, executive]

Nizla, thanks for the questions, to the point as always. So on your first question with regards to margin guidance, of course, we want to leave a little bit headroom and flexibility for the remainder of the year. And if you followed our half year 1 guidance -- or sorry, our half year 1 results, you can see that we still have to add more than 80 basis points to come to the target margin until the end of the year. We feel comfortable around that, I have to say, but we also want to keep up flexibility and we want to keep our powder dry in order to support growth for the remainder of the year. That was the first part.

And the second part is around M&A. I mean, we haven't materially changed and we won't materially change our capital allocation strategy. You know that we are paying and we continue to pay dividends. We are doing share buybacks and the remainder we are using for M&A, all along the strategy, which we laid out at the Capital Markets Day, which is around interconnectivity. So nothing to add to that and no changes around that.

[Operator]

The next question from is Giles Thorne, Jefferies.

[Giles Thorne, analyst]

The first question is back on competition. We've seen Kleinanzeigen bring in a big new external hire to lead the property vertical back in April. He's been quite vocal on where he sees the opportunity, specifically in giving the market a consumer-centric platform rather than the professional-centric platforms like ImmoScout and Immowelt. And given Kleinanzeigen is very big in C2C, that makes a lot of sense, but it would be useful to hear your thoughts on the direction Kleinanzeigen is moving in and how you might respond if you need to respond at all?

And then the second question was on the private business, and it'd be useful to hear what plans you have to drive up the cross-sell rate from Search+ Rent as it is now known to Living+. If I'm not getting it wrong, that cross-sell rate currently is very, very low.

[Ralf Weitz, executive]

Yes. Maybe should I start with the first question? Okay. So I think you referred to the interview from the Kleinanzeigen CEO, right? I mean, so far, we haven't seen any activity in terms of that they founded or that they started an own vertical for real estate. It might come, who knows. I mean, it could be. What we are seeing at the moment is that the traction they get is not high, and they are mainly winning shares or market share from the #2. That's what I mentioned before that Immowelt is a bit in the middle here. So what I can say if it comes to consumers, I mean, Kleinanzeigen, of course, is quite effective for consumers, but we are also attractive. Why? Because we try to position ourselves as the trusted platform out there, and there's a lot of fraud in the market. So if you want to sell your property seriously, then I think we are the best place to go to. And that's what we are also communicating to the market. And you can see it in the private listing numbers that this is -- the strategy is working.

If it comes to rent listings, there's still a way to go, but we are also investing heavily into our homeowner strategy and homeowners are also landlords, as you know, and this is quite unique listing content for us. And by the way, it's quite hard to monetize on the listing side, at least rent listing. So I mean, those listings are for free in Kleinanzeigen. So the economical impact will be low here. But of course, this content is quite attractive. So therefore, we are investing so heavily into our homeowner strategy.

So as it comes to cross-selling, I mean, as you know, our strategy is to expand the lifetime of Plus subscriber, right, because that's also the value driver for us. So ideally, the consumers, they start with a Plus subscription if it comes to Search and then they convert into our Living+. So we are experimenting still with Living+. You are right. I mean, the conversion could be higher, but we see progress in the product here. And so -- and if you take the stand-alone growth numbers of Living+ and if you compare it with the growth numbers we had in Search+ as we started 10 years ago, I think we can be quite happy, right? And the good thing here is that the Living+ subscribers, they are coming out of the product, right? So we have a clear funnel where we start on the Search+ products, and then we are going -- we are migrating those customers on to Living+. I would see it as a big opportunity and potential rather than that we are not successful here.

[Dirk Schmelzer, executive]

And maybe complementing on what Ralf just said with a few numbers, Giles. What you need to keep in mind that the Search+ customer base is roughly 6% of our overall rental search base, right? So there isn't much to cross-sell at the moment. Plus, if you look at the average customer lifetime on the Rental+ product, you can fish per month out of a pool of, say, 60,000, 70,000 customers. So that's all going to be more integrated, and there will be more cross-sell in the future. But at the moment, I would think that our full focus is on those customers that have a real search need for buying a real estate. And with 30,000 customers, we're really, really happy.

[Operator]

That was the last question. I would like to turn the conference back over to Mr. Lindvall for any closing remarks. Thank you.

[Filip Lindvall, executive]

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

[Operator]

Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.