Good afternoon. This is the conference operator. Welcome, and thank you for joining the presentation of Moltiply Group First Quarter 2022 Results Conference Call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Marco Pescarmona, Chairman, Mr. Alessandro Fracassi, CEO, and Mr. Francesco Masciandaro, CFO of Moltiply Group. Please go ahead, gentlemen.
Thank you, and welcome everybody to our call. As usual, we will rely on the presentation that is available on our website. We assume that you have it in front of you, and we go to page 17 of the presentation with the Q1 highlights. In the first quarter of 2022, revenues are EUR 77.9 million, and that's down 0.5% year-over-year. The mix of revenues is 44% from the broking division and 56% from the BPO division. The operating income, the EBIT, is EUR 16.5 million, which is a 3.1% year-over-year, and that is 64% from the broking division and 36% from the BPO division.
You have to keep in mind that the BPO division is affected by the effect of PPA amortization. The actual performance, we think, is more reflected by the EBITDA. The EBITDA, in fact, is EUR 21.4 million in the first quarter of 2022. That's down 2.9% year-on-year. It accounts for 58% from the broking division and 42%. The EBITDA margin is 27.4%, and that compares to 28.1% for the same period of the previous year. In terms of net income, in Q1 2022, we have EUR 11.6 million, and that's down 11.5% compared to the EUR 13.1 million of Q1 of the previous year.
The difference, if you look at the results of Q1 2021, is from a financial item. It's not from an operational item and not from taxation either. This is the overall performance in the quarter. Which by the way is, we would say overall, broadly speaking, in line with the expectations that we stated, and also I think the expectations of the analysts. What is important this time is the update on the evolution of the Italian residential mortgage market. Also because this has been the main driver of our performance in the last two quarters, and is likely to be relevant also for the coming couple of quarters.
This is because, as you know, there is an adjustment taking place there in remortgages. In particular, in terms of recent evolution, you know, we had the contraction of the market also in Q1 2022 on a year-on-year basis. This is because of a strong decline in remortgages while purchase mortgages have been growing. This is, as you said, in line with expectations and is also consistent with the previous quarter. If we look at market data, Assofin, the Lenders Association, reports declining origination flows in January by 14.9%, in February by just 0.3%, and in March by 5.4%.
For the entire Q1, the origination flows, the gross flows are down year-on-year overall by 6.4%. This comes from the drop of 73.1% of remortgages and the growth of purchase mortgages by 9.5%. This growth of purchase mortgages is coming in part from the growth in the number of contracts, which were up 5.6%, so more mortgages. For 3.9%, comes from the increase in the average amounts, which is also something that was very much expected.
If you look at the data from CRIF, which are basically forward-looking data, you see a picture of a drop of credit report inquiries of 28.2% in January. They didn't publish the figure for February. 25.8% for March and 24.3% still year-on-year for April. This would point to a contraction of the market. I would say, based on, let's say what we are seeing is these demand figures, especially the CRIF data that are not particularly exciting, but also we know that there is increasing geopolitical and economic uncertainty. This has not had probably a terrible impact, but still, you know, it affects consumers' propensity to do things.
We're seeing rising interest rates. This is also by itself not such a big factor, but still it is relevant because it makes mortgages a bit more expensive. Also it is important to mention, which was discussed in the last one or two weeks in Italian newspapers, is that there are some issues with a segment of the mortgage market in the current interest rate environment. Let me explain. There is a portion of mortgages, I would say they are maybe, I don't know, 20% of the market at most, but say 10%-20% of the market that are sort of facilitated or subsidized mortgages for young people.
Basically, it's a scheme that was introduced a year ago, more or less, to help people below 36 years of age to buy a property. Basically, they can buy a property with lower transaction costs, so it's lower stamp duty and so on. Also, they're entitled to a state guarantee on the mortgage that makes it possible to get higher Loan-to-value and basically reduces the risk for the lenders. This is an attractive combination of facilitations. It's no surprise that people are using this. Maybe people that would have bought a property anyway are now using this product.
The problem is that because this is a product with some state help or guarantee, the state basically put a condition on the cost of this product. Basically, the condition is that the rate charged on these mortgages should not be higher than the average, the market rates. The idea is, you know, this shouldn't cost more than the average of the market. The problem is that the way the regulation is written, this is looking at past averages. For fixed rate products, basically, you know, for a mortgage to be eligible for this, its rate should not be above the average of, I think, the previous quarter, something like that.
Of course, in a situation in which interest rates are increasing, which is the situation of the first months of 2022, it's, you know, if your cap is the average market rate of the previous quarter, it's impossible to be profitable for a bank. Almost all the banks have temporarily pulled these products from the market. People that qualify for these are potentially waiting. Some are taking different products, but many of them are most likely to wait. There are people working on fixing the regulation because this was not an intended effect. But still, it's creating a temporary supply issue. Which shows that even
Which shows that even if a government is led by a former central banker, regulation on interest rates on mortgage can be not exactly in line. Just as a side comment.
Yeah, I mean, overall, it's a good setup and so on, but no one had noticed this issue. We hadn't noticed it ourselves either, and we just found out when the product started disappearing, and also the banks were puzzled that, you know, they could no longer do them. Everybody is scrambling to try to get this fixed. Of course, this fixes itself if interest rates are stable or slightly increasing. Today, you know, with the steeper increase in recent weeks, this is an issue.
This is also affecting, let's say, the shorter-term outlook in a way that was impossible to anticipate, even a month ago. Based on this, you know, we, I would say our outlook is slightly worsened for the mortgage market, and it's quite likely the market itself will contract also in Q2, but potentially even in Q3. It would be, you know, I would say deeper contraction. Now Q2, we still have an impact from remortgages. Then, you know, depending also on how things evolve, but also Q3 could be negative for the market. This is the thing to keep in mind in general.
In terms of the performance of our divisions, on page 19 we have the figures of the broking division. The broking division actually had revenues of EUR 34.3 million, which is up 6.7% year-on-year compared to EUR 31.9 million in the same period of 2021. This is, I would say, slightly surprising, because of course we suffer from the decline in the mortgage business, and that's still our biggest business. What really helped us here was an exceptional performance for energy contracts, and I'll comment about this later, which was a bit of a surprise in terms of its strength.
Both the EBITDA and the EBIT are negative, flat year-over-year. EBITDA is at EUR 12.3 million, and EBIT is at EUR 10.5 million. That's flat year-over-year. Of course, what is shrinking is the mortgage business where we, with higher margins and on the other businesses that have nice margins but not as high as mortgages are, compensating. That's why, despite growing revenues, you see flat profitability. In terms of the details of where the performance of the broking division comes from, well, first of all, the performance was very much in line with expectations of what we said in the past.
It comes from mortgage broking mostly, you know. Remortgage volumes are strongly down year-over-year, and you know, let's say, you know, let's take the market as a reference for the type of contraction we could have seen, but you know, we have a higher market share in remortgages than in purchase mortgages, so this is having a heavier impact on us than it has on the average of the market. Of course, we also saw growing volumes of purchase mortgages.
Again, you know, because as a proportion remortgages are more important for us than for the market, the negative impact, I would say, was bigger than that on the market overall. I would say now we see, as we observe not only in the figures as I said before, but also in what we see, we observe a slowdown, starting from Q2, compared to our previous expectations, which were of growth of purchase mortgages. This is in part certain because of this supply issue and in part by the general geopolitical and economic conditions and so on.
I would say now, you know, instead of saying as before that we should expect growth of purchase mortgages for the rest of the year, we should assume probably or at least it's prudent to assume stable or slightly declining volumes of purchase mortgages brokered by us in the coming months. We still really have to see the impact and understand the impact also in terms of substitution of these subsidized mortgages if people are taking different products instead, or if they're waiting, and if they're waiting, maybe, you know, we have a weaker couple of months, and then this is compensated later. We still don't really know.
Overall, I would say it's prudent not to assume growth in the coming months or couple of quarters. The final quarter of mortgages would be much less relevant in the overall picture. For now, you know, it's important to consider this change in expectations. I mean, not catastrophic, but still relevant change in expectations. Instead, more positively, we are seeing solid year-on-year growth in insurance broking and consumer loan broking and in e-commerce price comparison. We expect this to continue. Actually, yeah, we don't see any particular issue. Also from a competitive standpoint, I think we are doing pretty well.
Finally, it's worth mentioning in more detail telco and energy comparison. I mean, telco was not nothing special, but energy was very strong, especially in March. We have seen energy prices really skyrocketing, and people realized that, and they were looking for alternatives. For a while, especially in March, you had a combination of high energy prices that people could see from their bills and still some fixed price products that you know were quite attractive. So it was a crazy. However, what happened is that there was a restriction on the supply. Basically, the energy companies are still all in business, so they're all in different shape.
There are no issues there in terms of, you know, their ability to be on the market, but they no longer offer fixed price products, and so they are all index products. At present, these index products are just marginally cheaper than, you know, there is like a sort of administered tariff. In Italy, it's called Servizio di Maggior Tutela, which is, like, set by the state, which still represented different proportion of the market. So it's difficult to beat this. Switching is less interesting for people in terms of alternative. I mean, there is a lot of interest in comparing prices, in finding alternatives, but, you know, unless you
I mean, if you do mis-selling, of course, you could do a lot of volumes because there is interest. If you do things in a proper way, it's very difficult to find something that is really interesting for the consumer. We see a rapid normalization of volumes starting from April. We are, let's say, back to normal, no longer this spike for the reasons that I've mentioned. Alessandro, do you want to continue with the BPO division?
Yeah. Yeah. I hope everyone can hear me well, and I'll continue as long as you can hear me. The BPO division performance saw a reduction in revenues. If you saw, basically, we went down EUR 3 million in revenues, and EBITDA also was reduced basically in a proportional way. EBITDA margin in terms of percentage has basically remained unchanged. Just a slight reduction, but which is more linked to one-off effects than anything else. As Marco already commented, the EBIT margin has improved, but this is really not connected to operating considerations.
That is just a reduction in amortization that is linked to previous acquisitions, and we're basically seeing some of that price amortization declining, and so that's why EBIT margin is improving. In terms of commenting what has happened in these three months, you know, we had a very significant impact obviously of that minus 74% that Marco commented on the reduction in refinancing, and especially the para-notary services that are linked to refinancing.
This appears particularly penalizing in these first three months as the first quarter of 2021 was a peak period, and therefore, you know, the comparison appears particularly bad in these first three months. Anyway, this reduction would have been much. The impact of this reduction on the results of the division was basically reduced by a half, thanks to the performance of the other business line. Instead of EUR 3 million, we probably would have lost something like EUR 6 million in revenues if we were just looking at the mortgage BPO.
The business lines in BPO that has basically counterbalanced, but not obviously, totally, the reduction in mortgages are investment services BPO, which grew double-digit, insurance BPO, which grew high single-digit, and the real estate services BPO, which also grew double-digit. Here, it's not just organic growth. By the way, organic growth is linked to the Ecobonus services, the one that already have improved this business line performance in the last quarter of 2021. It is also impacted the good performance by a change in perimeter. It's here that since March first, we are reporting the numbers of Centro Europa Servizi, a bolt-on acquisition that we announced in the first quarter.
We are already seeing the numbers for one month, and it is also part of the reason why we see here double digit growth. Also, we had a positive impact in this first quarter, both in terms of revenues and financials in terms of EBITDA, but from our FinTech project in specialty finance, in offering small and medium enterprise guaranteed loans through our lending entity, Centro Finanziamenti S.p.A.
As you might remember, Centro Finanziamenti is a lending entity that we use. Basically as a sandbox for innovation, we don't wanna be, you know, a lender of scale, but we do some projects that show our potential clients how technology processes can be used to improve effectiveness, commercial effectiveness, efficiency in terms of costs, and also how this can actually be totally compliant. You know that you know something together, especially in Italy, compliance issues, as of today, we have been able to put in place effective processes that are fully compliant. That was also a positive thing for the first quarter of 2022.
Relative to the remaining business lines of the BPO, so the loans BPO and the leasing and rental BPO business line, they are basically stable relative to the first quarter of 2021. As we look to the next quarter, I would say that we will see a reduction in the impact of this penalizing comparison, and we still see growth from the other business lines. We expect to have numbers in the second quarter of 2022, similar to those of 2021, and therefore closing the gap as the situation of remortgages stabilizes to, you know, normal levels that are the ones that we saw at the end of 2021. I'll say that this basically completes my part, so back to you, Marco.
I think, thank you, Alex. That we are at the end of the presentation, so we can open to Q&A.
Excuse me. This is the conference operator. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on a touchtone telephone. If you change your mind and wish to remove yourself from the question queue, please press star and two. Anyone with a question may press star and one at this time. The first question comes from Aleksandra Arsova of Equita.
Hi. Good afternoon to everybody. Thank you for taking the questions. Two questions from my end. The first one is on the outlook. It's definitely more cautious than before. Having said that, if it's reasonable for the entire year, 2022, to assume a decline in mortgage revenues in a range, let's say mid-teens. The second one is about cost evolution. In the first quarter, you experienced something like 10% growth in personnel costs, which I assume most of which is organic. And also you mentioned some increase in marketing costs. Do you see any potential pressure on margins due to inflation? And what is the evolution of costs in the coming months?
The last one is about your M&A strategy. Do you have some potential deals in pipeline? And then maybe a comment on the newspapers reporting a couple of days ago that the process for the disposal of Facile.it has started. Could you maybe share with us if you may or may not be interested in taking part in this process? Thank you.
Okay. No, thank you. Let's say yes, the outlook for mortgages is more cautious for the reasons that we explained. We still hope to see growth of purchase mortgages in the final months of the year for the market. At that point, the normalization of remortgages will no longer be present. Hopefully the fourth quarter of the year should be up unless we have big surprises. I would say instead for the coming months, yes, certainly double-digit contraction is possible. I mean, overall, I think you know that figure that you put forward could be. It's really hard to say.
It's a possibility, let's say, depending on how the fourth quarter goes and also the third quarter goes. We might be doing slightly better or, you know, in line with that or slightly worse. It's more of a factual figure that, you know, is a meaningful figure. But really we have to see how the situation evolves in the coming quarters. I would say whatever expectations people had, I think it makes sense to tune them down for one or two quarters and then they should be back to normal unless, you know, we end up in a very unstable economic or geopolitical situation.
The message is really that, you know, mainly Q2 and maybe Q3 you know should be seen inside a more conservative or in a more conservative way. This is for the first question. By the way, Alessandro said that for BPO the impact, for instance, of remortgages will be less and less relevant in the coming months. We will already see the better comparison at the end of Q2. But again, this figure is a meaningful figure. By the way, on the BPO side, the revenues that we are losing are the lowest margin revenues, so that will help also a little bit in terms of the overall results.
In terms of the growth of personnel costs in Q1 2022, I would say it's overall organic. I mean, there are no big discontinuities. Certainly, you know, we are not hiring a lot of people in a situation of declining volumes in some of our businesses, especially operational people. I would say there is nothing particular to be expected there. There is inflation for now only in very specific professional roles like developers or, you know, some other, like data scientists. Overall, in Italy, wage inflation is not present across the board. You know, we should be able to resist that, at least for a while.
We increased marketing costs. Well, of course, you know, we spend more money in part to compensate or, you know, in situations of lower demand. In other cases, just to push growth. Here as well, I would say, we don't see any particular pressure on margins. Of course, you could expect to see, you know, as mortgages decline and other businesses grow, you could see a shift to businesses within broking with lower EBITDA, lower average margins that are expanding by themselves.
In all the businesses of the broking division that you know we mentioned that are growing in general we see expanding margins over time, but these margins are still lower than the margins in our mortgage business. That could be the dynamic, but in terms of you know at the single business level you know we don't expect to have pressure, of course, in mortgages with weaker demand or you know lower conversion because people come and don't find the products that they were expecting, et cetera. The margins could temporarily decline, but you know it's just there is nothing structural, I would say. Finally our M&A strategy.
I would say in general, you know, we never stated a specific M&A strategy, but we have been doing a lot of acquisitions, mostly, I mean, of acquisitions within BPO. You know, in bolt-on acquisitions or to introduce new verticals. That's been a very sensible way to allocate our capital. Within broking, there just no not enough operators to really have a strategy. So the last acquisitions was SOS Tariffe, but not many things. Of course, there is this big competitor of ours. It's our main competitor, as you know, Facile.it, that is on the market.
From, you know, the rumors in the market and from what we know, I would say it seems quite unrealistic that, you know, something could happen on our side, but because we see what, you know, realistic expectations, I would say. Both in terms of, you know, what people could, you know, think the business could be worth, and also the potential growth, in particular, I mean, and, of course, also people are still talking about that as if nothing had happened in the markets. You know, I would say, you know, for us it would be interesting because there are synergies, so we would be the best buyer, of course.
You know, it is difficult to see the conditions right now for that.
Yeah. If I can add something, I mean, you should look at our market cap today and then look at, you know, our broking division, which is, I think, comparable to Facile.it, which is bigger and growing faster, both in terms of revenues and in terms of EBITDA, in the last five years. And then you compare to the expectations that are out today in, at least as a rumor today, and you see that there is a disconnect between at least what the public market are seeing and what the expectations are on the private markets.
Of course, maybe we have a better understanding of the quality of different things and so on, or, you know, we just prefer our stuff. Overall, it's we think it's unlikely that, you know, not impossible, but that something could happen. I think we are done with the questions.
Yes. Very clear. Thank you.
The next question is from Marco Cristofori of Intesa Sanpaolo.
Good afternoon. Thank you for taking my question. The first one is on Moneysupermarket.com. I noticed that you increased your stake, investing nearly GBP 60 million in the quarter. Just to understand, if you want to increase further this investment, and if you are looking to any commercial or partnership with this group, trying to do also an industrial partnership and not only a financial investment. Secondly, if you can maybe give more color to your most recent acquisition that will be consolidated from Q2. How much are you expecting in terms of revenues and additional revenues, I mean, and if there are potential synergies with these companies. Thanks.
Okay. I will take the first, and Alessandro will take the second. Regarding Money Supermarket, it's a business that we think we understand. It's in a different market, but you know, it's exactly the type of business that we are in with our broking division. We look at this mostly as a financial investment, you know, of something where you know, in a sector where we understand the industrial details, so we can read the performance possibly better than average, hopefully. By the way, you know, so we think this makes sense in terms of you know, what we have paid for our stake and also for the business.
Also, you know, we are not super happy to have too much money sitting on our bank account. That, that's also an important factor, especially if there is inflation. You know, having money on the bank account is not great. In terms of industrial ties, this is a business that, you know, that is very similar to what we do in Italy, but it is in a different market and there are no real synergies. You could have, you know, exchanges of know-how. You could maybe have some, you know, learn from each other, but you wouldn't buy a company or a stake of that type for that.
You can do it, you know, making friends with some colleagues in another country who are not competitors, and you share your best practices. This is certainly a possibility, but it's not the driver for an investment. I would say the answer for. Sorry. You asked also whether we wanted to buy more. Okay.
Exactly.
Well, look, in the United Kingdom, the reporting regulations are that you have to report every passing of a 1% threshold. It's three percent, four percent, five percent, et cetera. Every 1% you have to report it. You know, whatever we do will be visible. And I wouldn't say anything in advance also because, you know, we might decide over time based on also another M&A opportunities, you know. Because of course, you know, buying another 1% is, you know, within our means.
You know, if we want to make today, but if we make an acquisition, and if acquisition is relevant, you know, that could be of our resources. We also have to keep that constraint. I would say just keep looking at the regulatory reporting if you want to see if we have done something or not or, you know. No, we don't have a particular outlook on that.
Okay. Thank you.
Relative to Centro Servizi Europa, well, it's a In the end, a small company, as you said, a bolt-on acquisition that offers information services and also para-notary services relative to real estate processes and, more specifically, real estate processes connected to the non-performing loans. That is their core niche. You know, where we see the synergies is in, you know, selling para-notary services to banks. Their client base is different from ours, so we see potentially some commercial synergies.
There is also the possibility to use specialized people that are working today in our para-notary services, and that are becoming less and less, you know, at full capacity to be used in a business where instead there is more demand and also, you know, this company has been able to increase market share in the recent past. I think also thanks to our boost, it will be able to grow faster. Anyway, we're talking about something, you know, north of EUR 10 million in revenues more or less yearly. That's to give you an idea. That's what, you know, on a year basis, you should be expecting as an addition.
You know, as you said, we just started in March adding it to our real estate services. Other synergies can come from using the, you know, our process technology, our workflow technology, to their processes, which are efficient, but not as they could be, with all the force of our tools, our IT platform. This is like transformation that we will undergo during, let's say starting now and then, for the rest of probably 2022 as we integrate the business, in our real estate services business line. I hope this answered the question.
Thank you. Yeah. Thank you.
The next question is from Raphaël Moreau of Amiral. Please go ahead.
Yes. Hello, gentlemen. Just a quick one on your FinTech.
Yeah.
If you have any idea of, in terms of volume, how much did it present? Is it recurring business already? Yeah, what could we expect maybe for the rest of the year?
You know, you can find in the press some details of this project, because it's a project where we were able to involve also the European Investment Fund as part of the funding to this exercise, which is basically a solution for brokers, so physical brokers that wanna work with banks in offering to small and medium enterprise the guaranteed loans. We created a platform together with one of these brokers. It's called the EAGLE platform. You know, we are working with them to optimize processes, interfaces, and the speed of getting to yes.
You know, we expect to originate during the course of 2022 around EUR 160 million of loans that are gonna be then distributed to a securitization vehicle, which is funded partially from senior notes from Intesa Sanpaolo and Akros. For the mezzanine note by the European Investment Fund. That's the kind of thing that we set up. You know, as I said, we have no intention to bring it to a larger scale than this. We might repeat it in the future, but the objective is to sell this kind of operating platform to other players in the market that are interested in this kind of solution. So.
Any in terms of revenue and profitability that was generated?
I think we are not disclosing the space, but anyway, it's not particularly significant, as you can imagine from something that accounts for EUR 160 million in total origination in a year.
Well, one thing that we said was that this project was absorbing resources in the past.
Yeah.
Now it is profitable, so At least something is no longer consuming.
Yeah. It was profitable in Q1, and will be profitable for the overall year in 2022.
Okay. Thank you.
The next question is from Filippo Prini of Kepler.
Hello. Good afternoon. Thank you. I've got three questions. First one is your net debt. Can you give an indication for your net debt at the end of the year? More generally, if you believe that you should be able to generate cash clearly before the outlays for M&A, dividends, and buyback. The second, just getting back for a second on the mortgages for the cluster of also under 36-year-old. Sorry if I miss it, but could you remind me how much the weight of the segment of the total production mortgages last year? The final question, maybe looking back at your history on the mortgages. If you look at the mortgage market in Italy in the last 20 years, maybe we can spot two moments of decline.
The first one across 2007, 2009, where by the way you managed to increase your revenues, maybe because you got a smaller size, but you've been able to be a reference for the clients looking at opportunities of rates. Another decline was in 2012, where by the way you had been affected by the market. Maybe it's too early to say, but according to your experience, if things will get worse, should we be in the position of 2007, 2008 or the position 2012? Thank you.
Okay, maybe we start from this one. No, certainly we don't expect even with a worsening of the situation to see 2012 again. In 2012, the Italian state was, I would say, almost on the brink of a default and the Italian banks were in a similar situation, or at least it was the perception of a large portion of the capital markets. The shock was very homogeneous. This was first a supply shock, but very serious. I mean, banks were asking us to do plans on what to do if we had to go back to the lira.
In response to this situation which was perceived as critical, we had some governments that started doing a tightening of you know fiscal spending and so on, and also some regulatory, so some reforms and so on. You know, this had a very negative psychological adverse effect on consumer confidence. First it was a supply issue or an issue of the financial system.
That was stabilized, but the way it was stabilized was, you know, the, let's say not the by-product, but let's say the by-product of the policies or of what you could read in the newspapers, et cetera, was so scary for Italian consumers that for the next at least five years, they stopped buying durable goods. They stopped buying property. You know, they just thought, "You know, I'll save money because I don't know if I will have a pension or if I will have a job three years from now." This is not the situation for a number of reasons.
I would really give to that scenario a probability that is just like comparable to a whole war affecting a lot of European countries. I would say low probability, very low probability. It's not going to be like 2009 either, I would say, because in 2009, it was another financial crisis, different. Between the financial crisis of 2009 negatively-
Excuse me, just one moment. I have to reconnect the moderator, please.
Hello?
Please go ahead, sir.
It's not like 2009 because it was a financial shock affecting only some lenders, the biggest international lenders and not others. Very non-homogeneous. Overall, there was a recession, but the market was so non-homogeneous that there was a lot of benefit from switching. We were able to increase our market share because of that. Now we don't see any of those two scenarios. The most likely scenario if the situation worsens is similar to what you have in a recession. Let's say that overall, in the market, there are just apart from the remortgages, but fewer mortgages being done. Maybe the market goes down by 20% year-on-year. You know, if it's a very serious recession, 25%-30%.
That would be already very, very serious. We see this is not the situation we are in. The situation we are in is still not like that. You know, a serious deterioration would most likely lead to a drop of, say, 20%, something like that, 30% really, really to be pessimistic. We will not be able to compensate that most likely with market share, because this would come from demand and not from supply. Of course, we would still have some growth in market share because of the penetration, but the shock would be on the demand side if we see deterioration.
I don't expect anything to happen on the supply side, especially with, you know, the European financial institutions will not allow any fragmentation, I would say, of the financial markets. Going to the cash generation, you know, looking at the outlook that the different analysts have established, we will have a performance that is similar to the previous year overall, you know, and, I mean, let's take that as a reference point. If that happens, we'll keep generating a lot of cash. We even have deferred tax assets, so we will have very nice cash generation.
You know, you look at any of the models that are there, and it's very simple to see that, you know, I don't know what we generate, but like, let's say, well, whatever. We just take net income and that's a good indication if we don't do M&A. Is there any other question? Or other parts of the question?
Yes. Yes, sir. Excuse me. We do have a question now from Paolo Cipriani of Private Investor.
Yes, good afternoon. I'm just interested regarding the e-commerce trends comparison. You mentioned that each one is growing, I mean, is solid year-on-year growth. Can you just please elaborate a bit more and maybe further details about that? Because there is like some comparables with the Q1 of 2021, since there was the lockdown all around. Yeah, how it's growing and if you just maybe you could say something.
Well, it is. I would say it is growing. That's a business also where we are able to apply some price increases year after year, also because all the other traffic acquisition channels are seeing price inflation. I think Q1 of last year was a good quarter but not an incredibly strong quarter. We are back to a more normal situation. I would say this is a business where what we are seeing or what one should expect, I would say, is growth similar to the growth of e-commerce. You know, the very strong year was 2020. 2021 was weaker.
I mean, we had to spend a lot of money to compensate for weaker demand and so on. Sorry, 2022 looks more like a normal year in the evolution of this type of business.
Okay. Fair enough. Thank you.
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