Scout24 SE

XETRA:G24

Q3-2025 Earnings Call

[Operator]

Ladies and gentlemen, welcome to the Scout24 9 Months Q3 2025 Results Conference Call. I am Shari, 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 Mr. Filip Lindvall, Vice President, Group Strategy and Investor Relations. Please go ahead.

[Filip Lindvall, executive]

Good afternoon, everyone, and welcome to Scout24 Third Quarter and 9 Months 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.

Ralph 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 to everyone joining us today. Let's turn to Page 4, where I will walk you through the key highlights for the third quarter and first 9 months of 2025. Building on the already strong first half results, we continued to deliver a strong financial performance in the third quarter. Revenue increased by 15%, bringing our 9-month growth to 15.3%.

Importantly, we continue to deliver consistent strong double-digit organic growth. Our product and tech strategy is working. We are winning customers with AI-powered tools, better data and improved platform features. Consequently, this drives higher revenue per customer. Our ecosystem keeps growing, more agents, more private customers, more content and engagement. As customers use more of our products, our margins naturally expand. We are also running the company more efficiently with AI. This allowed us to expand our ordinary operating EBITDA margin over the 9 months, even by investing in innovation and integrating acquisitions with lower margins.

Our core businesses both continue to perform strongly. B2B memberships delivered industry-leading revenue and customer growth with revenue up 16.7%, driven by our comprehensive product offerings. Private subscriptions maintained high teens momentum at 17.8%. On innovation, we are leading with product and technology.

Last quarter, I said we would launch HeyImmo, our AI chatbot. It's now live, giving users intelligent property search assistance. We are not stopping there. We are bringing AI to more parts of our platform. This makes agents more productive and helps property seekers find their homes faster. On M&A, we announced Photocasa and Habitacle in Spain, an investment at an attractive price. Spain is one of Europe's most dynamic real estate markets with strong German buyer interest. We will apply our playbook, improving their B2B business, enhancing platform and user experience, implementing AI and adding Spanish listings to our German platform.

Over time, this acquisition will strengthen our German B2B membership products even further. giving our agents access to the Spanish market. Our M&A strategy has not changed. Our focus remains Germany. However, this acquisition was a great opportunity, and we took it. Our priority for the foreseeable future is executing this playbook on Spain, while Germany remains our core with substantial runway.

Finally, on our 2025 guidance, we are narrowing guidance based on strong 9-month results and clear Q4 visibility. We now expect the upper end for EBITDA margin and the mid- to upper end for revenue growth. This will be our fifth straight year of double-digit growth. It shows Scout24's quality as a compounder executing our strategy consistently. Let's turn to Page 5 for an update on our customer base development. Starting with our Professional segment. We now serve more than 26,100 customers, representing 5.7% year-over-year growth. In Austria, our customer base returned to growth in Q3, a clear sign that the market is stabilizing and our product continues resonating with customers there. This customer growth is a result of market share gains and our comprehensive product portfolio. We offer CRM, marketing, valuation and data tools that cover the full agent workflow.

Our responsible pricing approach creates trust and predictability, minimizing churn. Turning to our Private segment. We have surpassed 526,000 subscribers, up 14.5% year-over-year. This includes impressive net adds of 24,000 in Q3, representing 4.9% quarter-on-quarter growth, consistent with 2024's strong quarterly performance. 2024 growth benefited from our March 2023 shift from 2-month to 3-month minimum subscriptions. This drove lifetime extensions and revenue growth throughout 2024. We have now let that benefit, so our current mid-teens growth reflects the underlying strength of our Plus product.

On the homeowner side, we now have 2.4 million homeowner registrations, up over 60% year-over-year and 3.5 million objects under management, up 51% year-over-year. Looking at Page 6. I would like to share the German real estate market dynamics in the third quarter. The German residential real estate market remains healthy. Transactions are taking place and agents are making good business. Our Scout24 transaction Momentum Index reached 92 in Q3, confirming this positive momentum.

Moving to content. Our listings index surpassed 149 in Q3. We now have over 600,000 high-quality listings on the ImmoScout24 platform. Sellers and landlords choose us because of our brand trust, reach and ability to connect them with the best buyers and renters. Demand indicators remain strong. Contact requests for rental properties stand at 175, maintaining elevated levels throughout the year. On the buy side, the index reached 130, showing resilient buyer interest.

Let me conclude with some key takeaways on Page 7. Our results show consistent execution. We are proving that we can innovate, grow double digits, integrate M&A and expand margins at the same time. This is powered by our product strategy. Customers choose us for best-in-class products, workflow tools for agents and valuable services for property seekers. This drives strong revenue and customer growth across both segments. We are implementing AI like Hemo powered by our unique data. We have unmatched property data through Sprengnetter and Bolvinggesa plus unique user profiles and over 2 million registered homeowners. AI enables us to deliver next-level experiences competitors can't match. It's our advantage, not a threat. German market fundamentals remain strong, and Scout24 is extremely well positioned to capture this opportunity, giving us confidence in long-term B2B and B2C growth in 2026 and beyond.

On B2B, Germany's agent market is highly fragmented, giving us a huge customer base to distribute our workflow products to. Agent work is complex with limited data access. So our products help digitizing and simplifying their business. Agents earn strong commissions, but current online take rates offer significant upside potential for us. We position ourselves as partners through transparent responsible pricing.

On B2C, Germany has over 3 million annual rental transactions, a massive market. Scout24 offers products for the entire journey, renting, buying and living. These fundamentals give us clear visibility for sustained growth as we expand. As I said earlier, our focus remains Germany. However, our Spain acquisition represents a great opportunity where we can bring our B2B and B2C knowledge to improve their operations and expand our footprint. This also strengthens our German B2B membership products by giving agents access to the Spanish market. Based on our strong 9-month results and clear visibility into Q4, we are narrowing our full year guidance. We now expect to achieve the upper end of our EBITDA margin guidance and the mid- to upper end of the revenue growth range, our fifth consecutive year of double-digit growth.

We are also confident about carrying this momentum from our core business into 2026, where we expect double-digit organic revenue growth again.

Now I hand over to Dirk.

[Dirk Schmelzer, executive]

Thank you, Ralph, and welcome, everyone. Let's move to the financial section of our presentation on Page 9. Q3 was another strong quarter mid-teens revenue and ordinary operating EBITDA growth, double-digit organic growth and 20% adjusted EPS growth.

Cash flow continues to grow impressively in line with EBITDA. Revenue grew 15% in both Q3 and 9 months. Our core subscription business maintained momentum while acquisitions contributed meaningfully. On profitability, 9-month ordinary operating EBITDA margin reached 61.9%, 60 basis points of expansion despite integrating lower-margin acquisitions. Adjusted EPS for the 9-month period also grew 20%. Turning to Page 10, our Professional segment, which delivered another outstanding quarter. Revenue grew 15.1% in Q3 to EUR 119 million, maintaining our exceptional momentum with 15.2% growth for the 9 months.

Our subscription business keeps delivering strong results. At 16.7% growth in Q3, this is a truly remarkable achievement. On an organic basis, we are still delivering robust 13.3% growth, demonstrating the fundamental strength of our membership model. What makes this performance even more impressive is our customer growth, up 5.7% to an average of 26,100 in Q3, with organic growth of 5% in Germany, excluding Nebo Compass. We are capturing share and expanding our customer base at a pace rarely seen in established markets.

Notably, Austria has also returned to customer growth in Q3. We are now seeing ARPU acceleration as well, up 10.4% in Q3 compared to 8.3% in Q2. This acceleration is primarily driven by strong adoption of new products at Nebo Compass. So we have both customer growth and accelerating revenue per customer, a powerful combination. Transaction enablement revenue reflects a mixed performance across business lines. The CRM business delivered the strongest growth and demand for data and valuation services remained robust. While homeowner leads showed stable development, demand for mortgage, ESG and relocation leads remained soft.

Ordinary operating EBITDA for 9 months increased 14.1% to EUR 216.5 million. The segment margin came in at 61.8%, down 60 basis points year-over-year, primarily due to the dilutive impact from integrating recent acquisitions with lower initial margin profiles.

Turning to the Private segment on Page 11. We delivered another impressive performance in Q3. Private segment revenue grew 14.7% to EUR 46.7 million in Q3 with 9-month revenues reaching EUR 133.8 million, up 15.5%. Our Plus subscription products remained the growth engine, delivering robust 17.8% growth in the quarter. We reached 527,000 subscribers on average during Q3, adding 24,000 net subscribers versus Q2, representing strong quarter-on-quarter growth of 4.9%.

ARPU increased 2.9% to EUR 17.6 in Q3. The lower growth compared to the first 2 quarters reflects the year-on-year increased base effect due to last year's introduction of the dual vendor strategy for credit checks. Our PPA business showed acceleration, growing 15.1% in Q3 to EUR 15 million, a clear step-up from Q2. This acceleration reflects 3 factors: improving market dynamics in the sales market, our product simplification efforts and the continued strength of our brand. Ordinary operating EBITDA increased 23.3% for the 9 months to EUR 83.1 million, with margins expanding 400 basis points to 62.1%. This outperformance was driven by the strongly growing subscription business, higher PPA bookings and the scalability and operational excellence of our business model.

Turning to Page 12. Let's take a closer look at the main ordinary operating items for Q3 and the 9-month period. Due to the completion of projects, own work capitalized decreased 20.3% in Q3, representing approximately 2.7% of revenue. Operating expenses grew 11.8% in Q3 and 11.1% for 9 months, substantially below our 15% revenue growth, creating strong operating leverage. On an organic basis, this discipline is even more impressive. Expenses rose only mid-single digits. Personnel costs remained stable on an organic basis. The 10.2% increase for the third quarter period reflects the consolidation of new companies into our scope. Looking at marketing expenses, you will see a slight increase in Q3. What's important to note is that on an organic basis, our marketing costs actually declined. This reflects the continued efficiency gains we are achieving in our leads business through our interconnectivity strategy. We have been able to reinvest a portion of these savings back into brand marketing, which positions us well for sustained growth going forward.

IT costs rose 15.8% in Q3, driven by cloud infrastructure expansion, AI capabilities and new ERP system implementation alongside acquisition integrations. These investments are already improving operational efficiency through infrastructure standardization while ensuring scalability. Purchasing costs increased 20.2% in the quarter, reflecting higher demand for third-party valuation services due to the growth at Sprengnetter and Bola. Ordinary operating EBITDA grew strongly in Q3, with margins remaining resilient year-over-year. For the 9 months, ordinary operating EBITDA increased significantly, delivering 60 basis points of margin expansion to 61.9% despite integrating acquisitions with lower initial margin profiles.

On an organic basis, margins reached 64% in Q3 and 63.2% for the 9 months, demonstrating our underlying operational strength and the scalability of our business model. This strong performance demonstrates our ability to balance multiple priorities, investing in product innovation, integrating acquisitions and using AI to simplify operations. As our ecosystem grows with more customers and interconnections, we gain natural operating leverage.

Turning to Page 13, where we show the items below ordinary operating EBITDA. Nonoperating effects were higher year-to-date but moderated significantly in Q3 compared to Q2. The 9-month increase reflects M&A costs from a Sprengnetter, earn-out revaluation and advisory fees related to the Spain acquisition. Share-based compensation normalized after an elevated Q2. D&A increased slightly in Q3, driven by acquisition-related purchase price amortization. The financial result improved in both periods, primarily driven by the lower expenses from M&A purchase price liability revaluations and reduced interest expenses. This was partially offset by foreign exchange impacts as the dollar weakened against the euro. On taxes, Q3 benefited from a EUR 43 million onetime gain.

On July 11, the German Federal Council passed legislation gradually reducing corporate tax rates starting in 2028. This required us to revalue our deferred tax positions at the future lower rates, creating a onetime benefit that significantly boosted Q3 net income. This gain will have a cash impact on the operative businesses 2028 going forward. For the full year 2025, we now expect an income tax rate of approximately 15%. Excluding this onetime benefit around 30% Net income for Q3 more than doubled to EUR 101.5 million, reflecting both the strong operational performance and this onetime tax gain. Basic EPS reached EUR 1.41 in Q3 and EUR 2.64 for the 9-month period, up 55.9%.

Adjusted net income and adjusted EPS, which exclude all one-offs like this tax benefit, showed strong underlying performance. Adjusted EPS grew 19.3% in Q3 to EUR 0.90 and 20.3% for the 9 months to EUR 2.55.

Let's turn to Page 14 for the bridge from reported net income to adjusted net income for Q3 2025. Nonoperating effects, excluding share buyback totaled EUR 5.8 million. This was driven by an increased earn-out valuation for Sprengnetter and M&A-related advisory fees. Share-based compensation returned to normal levels in Q3 after the exceptionally high Q2. The large tax deduction in the bridge represents the reversal of the onetime tax gain. Importantly, the majority of nonoperating effects in Q3 will have no cash impact in 2025.

Turning now to Page 15 and cash flow. Free cash flow for the 9 months reached EUR 202.4 million, up 17% year-on-year, outpacing both revenue and ordinary operating EBITDA growth. This was driven by strong operating performance and positive working capital effects from noncash nonoperating costs. Our conversion ratios remain excellent. Free cash flow representing 110% of adjusted net income and 68% of ordinary operating EBITDA, demonstrating strong cash conversion.

Turning to Page 16 to leverage and capital allocation. Our leverage ratio decreased to 0.38x at the end of Q3 2025, driven by strong cash generation and in line with the typical seasonality of Q3. In the third quarter, we allocated EUR 36.6 million to share repurchases, bringing total buybacks for the 9-month period to EUR 74.9 million. We increased our buyback volumes in Q3, taking advantage of the share price decline during the quarter to repurchase more stock at what we view as very attractive valuations. Importantly, the Fotocasa and Habitaclia acquisition does not change our capital allocation policy. We will continue our share buyback program and progressive dividend policy. For M&A, our near-term focus is executing the Spain playbook. We remain open to German bolt-on opportunities when they arise, but international expansion is not on the agenda for the foreseeable future. We continue executing on all organic growth investments within our current operating expense base.

Moving to the guidance on Page 17. Based on our strong 9-month performance and continued momentum, we are narrowing our full year guidance as follows: revenue growth, mid- to upper end of our 14% to 15% range. Ordinary operating EBITDA margin, upper end of our guidance. As a reminder, we guided for up to 70 basis points of margin expansion. With this guidance, we are on track to deliver our fifth consecutive year of double-digit revenue growth and third consecutive year of margin expansion.

Let me highlight what is embedded in our Q4 outlook. In Professional Memberships, we will start lapping strong prior year customer growth that accelerated in Q4 2024. In private subscriptions, we expect the typical Q4 seasonality with lower Sika activity towards year-end. In addition, we will continue to lap the dual vendor credit check ARPU benefit. We expect growth in transaction enablement to remain at current levels. Given these factors, we expect Q4 revenue growth to be lower than previous quarters this year. And here are some early thoughts for 2026. We have high level of confidence in maintaining the strong growth dynamics of our core business going into 2026.

We expect 2026 to be another year of double-digit organic growth for Scout24. In terms of ordinary operating EBITDA margin, we expect at least 63% for our existing business, excluding Photocasa and Habitacliia. Photocasa and Habitacliia will dilute group reported ordinary operating EBITDA margin by low single digits in 2026. By 2027, we anticipate these Spanish assets becoming accretive to Scout's ordinary operating EBITDA growth with group margin expansion resuming as we apply our proven playbook. And finally, on taxes, the German corporate tax rate will gradually decline from 30% today to around 25% by 2032, roughly 1 percentage point annually starting in 2028. This represents a meaningful structural tailwind to our cash generation that is worth incorporating into your long-term valuations. We are delivering strong results and have narrowed our full year guidance towards the upper end of our ranges. This positions us for our fifth consecutive year of double-digit growth with momentum continuing into 2026. We will provide our next update during the Q4 and full year 2025 earnings call on February 26, 2026.

With that, let's open for questions. Please limit to 2 questions per speaker. Operator, over to you.

[Operator]

[Operator Instructions] The first question comes from the line of Will Packer, BNP Exane.

[William Packer, analyst]

So as I'm sure you're aware, Gen AI has become a more prominent investor concern, dragging on some classified share prices, including arguably Scout. There are various concerns such as weekly network effects, Gen AI search or disruption via Identity AI. So there's kind of 2 specific things I want to ask regarding.

Firstly, can you sufficiently invest in your tech stack and consumer offering in the context of these fast-moving developments within the envelope of the margin expansion you have outlined in your CMD, for example, sufficiently invest in prompt-based search or new Gen AI expertise with 100 basis points of margin expansion for 2026? And then secondly, Zillow has integrated their offering into ChatGPT. The U.S. is pretty unique with MLSs, high competitive intensity. But what do you think about that? Would you consider something similar? And then in the hypothetical that Immowelt put their inventory on Google or OpenAI agentic search, would that impact your calculation?

[Ralf Weitz, executive]

Bill, this speaking. I'm happy to take your questions. I will start and then Auk will add on the numbers something. So on Gen AI, I think we are, in general, well prepared. So we started, as you know, quite early to invest into AI, but also to implement AI deeply into the company. So it's not just offering -- not just adding AI to our product suite, it's also adding AI to the organization. Why is it important? Because we need to shift internally costs from, let's say, from personal -- from the personal side into the tech side because tech costs are increasing because of AI, and we need to afford that. And we want to avoid that this will have an impact on our margin plans.

That's number one. Do we see it as a threat? Actually, at the moment, what we see is that, that's for us more an opportunity than a threat. I mean, we launched a couple of products on the Seeker side, a couple of products on the B side as well, and we see that the engagement is going up. And we also see that with more visibility we are gaining into AI models that we are also getting more traffic also from those channels. And therefore, it's more important to stay up to date here as a company as a classified business so that you follow the development, for instance, whether the app SDK from OpenAI will land in Europe. I mean there's still a question mark on it. We expect that this will come over to Europe as well. Zillow cannot cover this. So -- and we also believe it makes sense to partner up with those companies as well. And then, of course, OpenAI can decide whether they want to choose Immowvate or the market leader. I think market leaders in general, number one, they have good position to engage with those tech giants from the U.S. So therefore, we are in deep contact with them, and I'm more positive now than I was 3 months before with that.

So -- and we see really good traction on our own AI products. We recently launched HeyImmo, which is an AI chatbot. We built that together with OpenAI. And we see a high usage rate already. So what we also see is that the people are using it for search mainly, but they are also using it secondly then for data consumption. And that's helping us actually to connect our ecosystem better because, as you know, before, we had Spgnetter All what we have as a company now is integrated in our Hemo product, and we continue to do this. And so therefore, from the user experience side, I think we're making progress, and we are really, really positive.

[Dirk Schmelzer, executive]

Yes. And let me take the first part of your question, Will. I think it was around do we have enough money to invest into AI to cope with the challenges we are seeing there. And as Ralf outlined, I mean, for us, it's rather an opportunity than a challenge. And you can imagine that when guiding 2026, we've been discussing this a lot. And we've been discussing this rather in the context of our financial means and basically a reallocation of the financial means we have in our P&L. And if you look at our P&L for 2025, we have around EUR 20 million in CapEx spend that we spent on own work capitalized.

We have another 300 engineers in our organization, and we have a bucket of EUR 45 million of marketing spend. So if I sort of take that all together, for us, investing into AI is rather a question of reallocating certain amounts in our spend than spending on top of that or in addition to that. So to give you an example, if we do AI-based search, we will certainly cut back our investment needs in SEA. And similar examples with regards to implementing HeyImmo, of course, we do that with the help of ChatGPT, but we also do that with the help of our own engineers. And as we outlined in our previous call, we also invested a lot into our employees and people to cope with AI, and we see very good developments there. So to sum it up, on the cost side, I think we have the necessary means in our P&L to cope with AI and see this rather as an opportunity than a challenge.

[Operator]

The next question comes from the line of Ed Young, Morgan Stanley.

[Edward Young, analyst]

My first is to help frame that AI opportunity as you see it, I wonder if you could help us with an indication of your direct or app mix to help us understand the context a bit better. And then the second is on the Spanish acquisitions. I think on our math, that involves a ramp-up in the admittedly very low starting point on margins in that business to get to the 3 percentage points of dilution. Can you sort of just outline what the main drivers of that are, how you balance investment versus efficiencies in that business and perhaps give us some indication of where you think margins in that business can get to on, say, a 3-year view?

[Dirk Schmelzer, executive]

Okay. Thanks, Ed. I will start before I hand over with regards to AI to Ralf. I think when you look at our traffic stats, you see that with regards to the brand awareness we're having, most of our traffic is really direct. We have around 4.5 million app downloads. We have 4.2 million active app users, and that's growing 6% year-on-year. And also, if you see the monthly website users of 15 million, around about 80% of that traffic is really organic and o generated rather than performance related with regards to traffic that we need to buy.

If you look at the overall traffic metric that's coming from AI at the moment, you can imagine with other classifieds, that's rather that's rather a limited amount of overall traffic. I think it's in the 1.5% to 2% area or something. And then I would also comment a little bit on Spain with regards to the margin and on the strategic aspects of AI and Spain, Ralph will take over then. With regards to the margin, I mean, what we have seen and why we have executed on Spain, as we outlined earlier on, was we saw it as a fantastic opportunity to buy an asset at a reasonable valuation. And reasonable valuation means for us, on the other side, that this is an asset where we think we can improve the value in a decent amount of time. Improving the value means applying our German playbook and improving the value means also improving the margin in that business. And we believe that we can stop margin dilution in 2027.

You just heard me saying that. and we will increase the margin of that business to, I would think, the lower end of a good classified margin, which should be in the area of somewhere between 50% and 60%. And Ralf, maybe you want to say something with regards to AI traffic and usage and what you already outlined with regards to Will's question.

[Ralf Weitz, executive]

So what we see in our own AI products is the usage rate is going up. At the moment, on HeyImmo, we are more than doubling every month the usage of the product, which is great. We have a month, just to give you a number, more than 100,000 already, and this product is live for less than a month.

So we are really, really happy. The usage rate in the other AI products, for instance, the features we implemented in Poxec, as I said, I mean, they are doubling every month. This is great. So we are seeing that our customers there adopting the products we are bringing in the market. And that's also what's important for market leaders that we are shaping at the end, the way how people consume products. And that will help us to maintain our market leadership position.

And back on what Dirk mentioned regarding Spain, I think we are at the forefront when it comes to AI. I mean probably you have seen this on the conference in Madrid. I mean, there were a couple of comparison between industry leaders and what they are doing regarding AI. And I mean, unformed they mentioned us as one of the leaders here, and that should give us an advantage also in Spain, we believe, because we know what's working and what's not working. So -- and we would like to bring it over without losing the focus on our German business. And that's really the good thing with AI technology is easily to integrate those, let's say, models into different back-end systems, for instance, [indiscernible]. And in the past, it was always a discussion about, oh, you need to have one back end and maybe -- and then you can serve different countries. We never believed in this approach, to be honest. What we can imagine is that on the interface, user interface side, there will be a kind of consolidation because the AI tech companies they are shaping at the moment the way how we will search in the future. And this is where we have to adapt to. And that's actually what Zillow showed in their keynote -- what Zillow showed in the cooperation with OpenAI that you need to be visible in those models. And so it makes no sense to, let's say, defend, let's say, your product against OpenAI.

It makes no sense. It is a bit like the discussion we had at Apple launched the App Store, where we also had internal the discussion about whether we should launch an own app in the App Store of Apple, and we decided actively to do it to partner up with Apple and iOS at that time. So -- and I think that's also what we would like to do with AI models. And important is that we have proprietary data. And that's -- if you use HeyImmo -- for instance, with our data and you compare the output with what you are getting if you are just using ChatGPT, there is a difference. And that's what the people have to learn. If they -- as deeper they go into their own real estate search, it's more it makes sense to engage with a specialist website. And that's for what we stand for. We stand for the -- being the expert in this field, and that's what we would like to defend.

And yes. So what's defining our position here is actually the unique data, as I said, the exclusive content we have that everything is deep integrated into our system, and we have the brand on top. And that's what Om and the other models at the moment cannot provide is the trusted brand element, and that's a big, big benefit.

[Operator]

The next question comes from Craig Abbott, Kepler Cheuvreux.

[Craig Abbott, analyst]

Obviously, my questions are also going to be around AI, and you've obviously provided us a lot there already. I guess the follow-ups on my side will be on the one hand, obviously, you can't run any potential deal you might be working on. But I mean, is it fair to assume that you are proactively trying to negotiate to be integrated on these models? That would be the one thing. And the second thing is just getting back to the cost factor. On the one hand, you said you're happy with the traffic origination trends so far, but yet there is still a very small share.

And then you also mentioned that you'll be over time, reallocating costs, for instance, away from SEO search to further development of your AI tools. But isn't there a potential that you might be running double costs for some time as you can't afford, obviously, that will fall off in your SEO-generated traffic whilst you're seeing traffic flows start to shift toward the Gen AI models? Those are my questions.

[Dirk Schmelzer, executive]

Maybe I start off once again. Craig, thanks for your questions. So I start with the latter one. Will there be a substitution of SEO and AI-generated traffic? I certainly believe so, but I don't see us running into double cost here.

As Ralf said earlier on, we have quite a cutting-edge organization here that is able to see where the developments are going, which AI engines are creating, which amount of traffic, how that traffic converts and how we integrate that into our traffic mix. So I'm not really worried about that part of the equation. I'm also not worried about the part of the equation when it comes to us being the go-to portal in Germany with regards to real estate because we're currently putting AI on top of it, right? So we will not only be the go-to place for real estate search and data search, we'll also be the go-to portal when it comes to AI-based real estate search. If you look at the functionalities that Ralph just outlined with regards to HeyImmo, yes, there is quite low usage at the moment. We're seeing around 120,000 conversations, but they are growing at around 300% month-on-month. We see out of that numbers, we see 60% really property searches. The rest is valuations and investment topics around real estate. So we are moving beyond Chat to agentic capabilities. We see consumers, users saving their searches. We see object creation via AI. So there's a lot of opportunities in AI. And hence, I believe that we will also be able to substitute parts of our cost that I just outlined in the answer I gave to Will with existing costs that we have on the P&L at the moment. And I don't see a margin dilution there. I don't see a reason for margin dilution there.

[Ralf Weitz, executive]

I mean at the end, and that we are doing this since since last year already, we said, look, I mean, we cannot increase the costs on the marketing side, we cannot increase the cost on the personnel side further. So we need to change the structure of the business.

Therefore, we implemented AI into the company. And AI will drive, let's say, efficiency in different dimensions, not just for our customers, also for us as a company. If it comes for, let's say, SEO content production is something we automated completely. So we don't need the resources there anymore for producing the content. We acquire data with the data, we can also generate exclusive content, nobody else can. So there is a big advantage sitting in, let's say, in the assets of Scout, we just need to connect this with AI technology. That's what we are doing at the moment. So I'm with Dirk.

Let's say, we would be able to connect the different products better via AI. We would be able to generate more organic traffic also because as more of the customer groups are connected in our 3-sided marketplace, there's more engagement we are creating and there's more traffic we will generate. So -- and therefore, we feel -- actually, we feel well prepared. Nobody knows what will happen. I mean I cannot promise you, but what we see at the moment is that we are able to adjust our business model really in a way that there is no margin impact. That's good for us.

[Operator]

Next question is from Nizla Naizer, Deutsche Bank.

[Fathima-Nizla Naizer, analyst]

My 2 questions move away from AI a bit, and it's more on the near-term guidance as well. So you've kept the guidance at the upper half of the growth range for the full year. This does imply, according to my math, maybe growth of around 13% in Q4, correct me if I'm wrong. Just wanted to understand, does it still include M&A contributions of around 5 to 6 percentage points? Because clearly, these new acquisitions that you've done this year seem to have been doing maybe better than expected in terms of revenue contribution.

So some color there would be great. And linked to that as well, could you maybe remind us what the margins of these businesses were when you acquired them versus how they're trending now? For us, I think it would be interesting to see when you talk about the Spanish acquisitions, your track record of improving margins would be an interesting data point to sort of understand. So any color there would be great.

[Dirk Schmelzer, executive]

Thanks, Nizla. This is Dirk. First of all, your math is correct. It should be around 13% growth in Q4. Don't forget that in Q4 2024, we already had 1 month of Nebo Compass included, which is, I think, a EUR 1 million revenue figure that we put in, in that month.

So when it comes to Q4, we have a very strong comparable with regards to last year. So there, we saw 11% organic growth, and it was the strongest quarter in 2024. Q3, as you maybe recall my remarks on the half year call, I was a bit more toned down with regards to Q3 growth, but it came out stronger than we thought. So we saw a quarter-on-quarter growth of 3% and the effects we are expecting for the fourth quarter is we're having around 4% customer growth lapping into the fourth quarter.

Transaction enablement will continue to grow at the current pace and private, we will see similar trends. Here, you have to see that usually in December, we're seeing a slight slowdown with regards to private searches for rent. And all in all, I think that translates into the figure you just outlined, 12.5%, 13% growth for the fourth quarter, maybe a bit a notch on top of it. And all in all, I think that is what has been guiding us. And when it came to your question with regards to margin, in the past, I mentioned that when we acquired Sprengnetter, they came in with a 10% margin. Now if you look at the business stand-alone, which is difficult after we integrated everything. But today, Sprengnetter is running at 30-plus percent margin. We see other businesses like Bolingesa, like Neva Compass and all the others, they are now running beyond 20% margins, and we believe we can continue to make those businesses much more efficient by growing them through integration on the one hand, but also by applying top-notch technology to those businesses. And I hope that answered your questions.

[Operator]

The next question comes from Joseph Barnet-Lamb...

[Joseph Barnet-Lamb, analyst]

Whilst I started with 6 AI-related questions, you'll be happy to know they've all been answered. So just one big picture one left for me. I was wondering if you could update us on how you're strategically viewing the Tenant Plus opportunity. You've previously spoken about how you were focused on trying to evolve the product offering to elongate listing duration sort of beyond the transactionary period. How has subscription duration increased? And how do you weigh up that opportunity versus pushing underlying pricing as well?

[Ralf Weitz, executive]

I'm happy to take this. This is Ralf. Yes, I mean, I think we discussed it in one of the last calls already, there is a big opportunity because the market is still bigger than what we have at the moment in terms of subscriber numbers. So in theory, there is a huge potential. So the question is how to unlock this potential. And you need to consider different factors here.

One is that there is a significant part of the overall market and the we call it gray market. So these are transactions never coming to online portals. So -- and we are working on products where we give access to -- where we give consumers or seekers access to this kind of gray market. And we will launch or we are going to launch a couple of products here. And hopefully, this will help us also to extend the lifetime of our existing Tenemplus products. And what you said is also correct that we are adding to Tenant+ also elements as the people staying in the system.

So we call it Living Plus. So at the end, that should lead to a longer lifetime. We're seeing that actually clearly because the number of Living Plus subscribers is constantly growing, which is good. And so therefore, this will also have an impact on revenue growth, and that's what we see as a factor for continuing the growth story of Tenant+. So -- but we need to do our homework, as I said, in particular, on the gray market topic, we are on it, and we see there the biggest potential for Tenant+ and also for the lifetime of the product.

[Operator]

That was the last question.

[Dirk Schmelzer, executive]

Thanks a lot, everyone, for your questions, and thanks a lot for listening in. And to those of you that were interested in AI, keep your eyes open. There will be some new and innovative products coming to our portal in the fourth quarter this year, and we are pretty thrilled about it. With that, I would leave it up to you. Have a nice afternoon, and speak soon. Bye-bye.

[Operator]

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