DGAP-News: Scout24 AG / Key word(s): Half Year Results
Scout24 AG hits another quarter of healthy year-on-year revenue and profitability growth and continues success story in the first half of 2018
According to the unaudited, yet reviewed by the auditor, consolidated financial statements, Group revenues for the first half-year 2018 increased by 9.7% to EUR 251.2 million. Group ordinary operating EBITDA improved at a disproportionately higher rate of 13.0% to EUR 138.8 million, yielding a margin of 55.3% (up 1.6pp). Cash contribution increased by 6.3% against the comparable period in 2017, offset as expected by higher levels of capital expenditure in the first half of 2018, related to product development activities and taking into account the extraordinary investment related to the office relocation in Munich.
"We have seen continued momentum across all three verticals in the first half of 2018 and have built a strong base to grow further from in the second half of 2018. We are especially happy with the performance in ImmobilienScout24. We now expect to reach revenue growth levels in ImmobilienScout24 at the upper end of the range of the full year guidance we gave to the market at the beginning of the year. With all businesses on track, we continue to focus on delivering on our strategy of enhancing our market network, improving consumer experience and participating in more steps along the consumer journey in the digital world. We recently did a strategic acquisition to this end by buying FINANZCHECK.de, a leading German fintech company. A perfect fit to our Consumer Services business." said Greg Ellis, CEO of Scout24 AG.
1 Ordinary operating EBITDA represents EBITDA adjusted for non-operating and special effects; These include primarily expenses for reorganisation, expenses in connection with the capital structure of the Company and company acquisitions (realised and unrealised) as well as effects from share-based compensation programs recognized in income. The ordinary operating EBITDA-margin of a segment is defined as ordinary operating EBITDA as a percentage of external segment revenues.
The Group increased its external revenues by 9.7% to EUR 251.2 million in the first half of 2018 (H1 2017: EUR 228.9 million).
Building on the good scalability of the Scout24 business model and a disproportionally lower cost growth, ordinary operating Group EBITDA in the first half of 2018 improved with a disproportionately high rate of 13.0% year-on-year to EUR 138.8 million, which corresponds to a margin of 55.3% (H1 2017: 53.7%).
Reported Group EBITDA grew to EUR 131.0 million in the reporting period, up 16.9 % compared with the first half of 2017 (H1 2017: EUR 112.1 million). This includes a total of EUR 7.8 million of non-operating costs (H1 2017: EUR 10.7 million). These costs are related to M&A activities including post-merger integration as well as personnel costs, mainly for share-based compensation and reorganisation measures implemented. In the first half of 2018, non-operating cost were mainly comprised of personnel costs in the amount of EUR 4.9 million, of which EUR 3.5 million for share-based compensation, and costs related to M&A activities (EUR 3.2 million). Moreover, an additional EUR 0.9 million was related to the relocation of the Munich office in March 2018. The non-operating costs were partly offset by extraordinary income of EUR 1.6 million for the sale of the trademark rights of "JobScout24" Switzerland. Consolidated earnings after tax, completely attributable to our shareholders, for the first half of 2018 amounted to EUR 66.4 million (H1 2017: EUR 54.9 million), equivalent to EUR 0.62 of earnings per share (H1 2017: EUR 0.51).
The cash contribution in the first half of 2018, adjusted for the effects of the first-time application of IFRS 16, was up by EUR 7.2 million to EUR 120.7 million from EUR 113.5 million in H12017. The cash conversion rate of 87%, based on ordinary operating EBITDA, was down compared to the first half-year 2017 (92 %), due to higher capital expenditure levels, as previously forecast. Cash and cash equivalents amounted to EUR 33.6 million as of June 30, 2018 (31 December 2017: EUR 56.7 million). Net financial debt (nominal value of interest bearing liabilities less cash and cash equivalents) stood at EUR 581.1 million, compared with EUR 560.9 million as of 31 December 2017 (30 June 2017: EUR 614.7 million). The ratio of net debt to ordinary operating EBITDA over the last 12 months was stable at 2.2:1 (31 December 2017: 2.2:1, 30 June 2017: 2.6:1).
** Provided on a half-yearly basis only.
IS24 continued to expand its leading market position during the first half of 2018 and managed to increase its competitive lead in terms of both listings, despite the market trend of decreasing average durations of listings, and traffic share compared to the first half of 2017.
** Provided on a half-yearly basis only.
Based on the number of listings, AS24 is still the market leader in Belgium (including Luxembourg), the Netherlands, Italy and Austria. In Germany, AS24 recorded its listings inventory at a constantly high level of more than one million listings per month on average and continues to work towards closing the gap to the closest competitor.
The increase in segment revenues in H1 2018 was mainly driven by Services Revenue and Revenue with Finance Partners. In particular, Services Revenue showed a positive boost on the back of the success of the Premium Membership product. 3rd Party Display Revenue also grew significantly and showed a recovery from a slower first half 2017.
The online advertising outlook in Germany and Europe remains positive as both consumers and customers become increasingly digital. Scout24 is well positioned to benefit from this structural shift due to the market leading positions of its ImmobilienScout24 and AutoScout24 platforms, with both divisions benefiting from the shift of marketing budgets from traditional marketing channels to online. Scout24 Consumer Services takes this trend and the increasing expectations of the partners and users of Scout24 regarding digitisation along the whole process of buying or selling real estate and cars into account. Due to the intensive usage of the marketplaces IS24 and AS24 and also on the back of the synergies between IS24 and AS24, Scout24 is well positioned to further exploit the potential in this area as well and to position Scout24 as a market network around real estate and automotive in Germany and in Europe. The Group's profitable growth is especially driven by revenues from agent and dealer partners and as well by revenues from increasing consumer monetisation along the value chain of real estate or automotive.
The Management is confident that this momentum will continue in the second half 2018 and expects Group revenue to record a growth rate between 9% and 11% for the full year, as previously guided for. Reflecting the scalable nature of the business model, the total cost base should grow at a disproportionally lower rate than revenues. Management anticipates, that total cost base should grow at a lower rate in the second half of 2018 on a full-year comparison and is therefore confident to reach an ordinary operating EBITDA margin between 56.0% and 57.5%.
On the back of the positive development in H1 2018, Management refines its full-year guidance for IS24 and expects IS24 to reach a revenue growth between 5.0% and 6.0% (previous guidance: 4.0% to 6.0%), driven mainly by an ARPU increase of our Residential Real Estate Partners as well as Business Real Estate Partners, as well as on the basis of low churn and stable customer regain and new acquisition rates in H2 2018. For the ordinary operating EBITDA, driven by disproportional lower cost growth, Management expects a slightly higher growth rate. Ordinary operating EBITDA margin should therefore come in at least at 68.0%, as seen already in the first half of 2018 (margin H1 2018: 68.4%).
In H1 2018, revenue in the AS24 segment grew 15.4%, which is in line with the outlook of a revenue growth of around 14% against the previous year. For the second half of 2018, Management remains confident to achieve a revenue growth of this proportion and expects revenues of at least EUR 180.5 million for the full year 2018, based on a continued ARPU increase of our Dealer Partners, especially in Germany, Belgium, the Netherlands, Italy and Austria. Ordinary operating EBITDA-margin was 49.8% in the first half of 2018 and 54.3% in the second quarter 2018. Especially the development in the second quarter confirms Management's confidence that the margin should yield at around 52.0% for the full financial year 2018.
Scout24 Consumer Services recorded 12% higher revenues of EUR 42.0 million for the first half of 2018, which is fully in line with the growth expectations (adjusted for the new accounting regulations) of around 12.0%. Revenue growth was driven mainly by an increased usage of our offerings along the value chains of real estate and automotive, for example mortgage and car financing lead generation, credit checks, Premium Membership as well as sale of display-advertisements. Management expects this development to continue into the second half of 2018, so that a similar revenue growth rate to be achieved. Management is therefore confident to mark revenues of at least EUR 87.0 million for the full year 2018 (Without taking FINANZCHECK.de into consideration). In the first half of 2018, ordinary operating EBITDA-margin stood at 37.6%, a 1.1 percentage point increase compared to the first half of 2017. Management expects this development to continue and confirms the outlook of an increase in ordinary operating EBITDA margin (without taking FINANZCHECK.de into consideration) of at least one percentage point for the financial year 2018.
In the first half of 2018, non-operating cost amounting to EUR 7.8 million occurred. For the full financial year 2018 non-operating cost is expected between EUR 14.5 and EUR 16.5 million, higher than previously guided for, on the basis of higher personnel costs in the first half of 2018 related to share based compensation on the back of the dynamic share price development as well as increased M&A activities.
Management continues to expect capital expenditure for the full financial year 2018 (adjusted for the balance-sheet extension due to IFRS 16) to sum up to around EUR 34.0 million. This includes a non-recurring investment related to the new office space in Munich of around EUR 8.0 million.
On 18 July 2018, Scout24 signed an agreement to acquire all shares of FFG FINANZCHECK Finanzportale GmbH ("FINANZCHECK.de"), a German online comparison portal for consumer loans. A consolidation of FINANZCHECK.de as of 1 September 2018 into the Scout24 Group, which is subject to anti-trust approval anticipated for September 2018, would have the following effects on the outlook described above: Group revenues for financial year 2018 would increase by another around EUR 12 million, bringing the anticipated growth rate to 11.5% to 13.5%. Due to a negative contribution of FINANZCHECK.de of a low single digit Euro million figure to ordinary operating EBITDA, the ordinary operating EBITDA-margin range would be lowered to 54.5% and 56.0% for the full year 2018. Furthermore, additional costs related to post-merger integration would occur.
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The information contained in this release is subject to amendment, revision and updating. Certain statements, beliefs and opinions in this document are forward-looking, which reflect the Company's or, as appropriate, senior management's current expectations and projections about future events. By their nature, forward-looking statements involve a number of risks, uncertainties and assumptions that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements. These risks, uncertainties and assumptions could adversely affect the outcome and financial effects of the plans and events described herein. Statements contained in this document regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. The Company does not undertake any obligation to update or revise any information contained in this press release (including forward-looking statements), whether as a result of new information, future events or otherwise. You should not place undue reliance on forward-looking statements, which speak only as of the date of this document.
Scout24 also uses alternative performance measures, not defined by IFRS, to describe the Scout24 Group's results of operations. These should not be viewed in isolation, but treated as supplementary information. The special items used to calculate some alternative performance measures arise from the integration of acquired businesses, restructuring measures, impairments, gains or losses resulting from divestitures and sales of shareholdings, and other material expenses and income that generally do not arise in conjunction with Scout24's ordinary business activities. Alternative performance measures used by Scout24 are defined in the "Glossary" section of Scout24's Group Interim Report 2018 which is available atwww.scout24.com/financial-reports.
Due to rounding, numbers presented throughout this statement may not add up precisely to the totals indicated, and percentages may not precisely reflect the absolute figures for the same reason.
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