Dear ladies and gentlemen, welcome to the webcast Q2 twenty nineteen Results of the HyperPort AG. At our customers' request, this conference will be recorded. As a reminder, all participants will be in a listen only mode. After the presentation, there will be an opportunity to ask questions. May I now hand you over to Roland Slabkir, who will lead you through this conference.
Please go ahead, sir.
Yes. Welcome to the half year result conference call for HyperPort AG. As you may know already, we had a great first half year. We made a big step forward in digitalizing the credit, housing and insurance industry in Germany. So we means a network of independent one companies highly linked, highly interacting with each other in the four segments.
And as usual, later, I will go into the details for each of the segments. What I can tell you right now already is that all of the segments contributed to this first half year growth. We achieved a 29% growth rate, ending up with close to €160,000,000 in revenue. Even with high investments in our future in engineering and sales capacities, we were able to increase our profitability. Our EBIT went up by 7% to €60,000,000 And let's say, the growth speed of the different segments were slightly different, starting at 40% for private clients and going up to 94% in the insurance platform.
I will come back to this later. But for now, what you see here is a good start in the year, solid and in line with our expectations for 2019, where we expect revenue between $310,000,000 and €340,000,000 and an EBIT between 32,000,000 and €40,000,000 So as always, a quick update on the market environment. Let's say, a big change compared to this what we reported 2018 and for the first quarter. We have a solid housing market in Germany, and most of our business models are linked to the housing market. So solid means there's a net migration to Germany from the Eurozone from Eastern And Southern Part of Europe.
We see an increase in life expectations in Germany, and we see more and more people living in single apartments, so more and more apartments needed as well. Altogether, we expect right now an exceeding demand of 1.5 to 1,900,000 units in especially the metropolitan areas in Germany, so huge demand for housing. On the other side, the local governments and the regulator struggled with this fast increase in demand over the last eight years. They tried different kinds of regulations. They try to speed up the development of new areas for housing.
But let's say, they still fail meeting the right or doing the right things to handle this increasing demand and speeding up the construction site in Germany. So in the end, new construction is stable compared to last year. For the first half year, we expect something around 150,000 units to be finished only in Germany. And because of this, rents are up and even more prices are up here in Germany. Because of the regulation and uncertainties from this from local governments, there's a hesitation of investors to sell or buy apartments, even with this sharp increase in prices because this increasing uncertainty increases the spread between both sides, so makes transaction more difficult.
Because of this or as a combination of both rising prices and weak number of transactions, we see more or less stable mortgage volume in Germany right now, plus 5% reported by Bundesbank for the first half year, so slightly above inflation rate. What is important to understand is when you look on the economic environment for the net migration, especially to Germany and the extremely low interest rate here in Germany, you could expect a faster growing housing market in the faster growing mortgage market. So this is not happening. It's some kind of, let's say, future promise that we collect here. And every quarter where housing stays low, this, let's say, the stack in front of us, which needs to be still built and financed, is getting better.
The good discussion helps us already a little bit. In our metropolitan areas, we have still a renting market. Here in Berlin, where we are situated, 85% of the people still rent apartments. It's getting extremely difficult to rent a new apartment in this environment with empty apartments below 1% right now. So more and more people, especially from the middle class, need to consider to own their apartments.
So ownership rate is incrementally going up in the metropolitan areas. So there's a big chance that in the next ten to twenty years, we will see a change in the German residential market that we will have, let's say, typically for Europe, 60% or even 70% of homeownership rate, not 50% like right now. And this is a nice potential for us for the next decades because all these homeowners need to finance their residence. And so the mortgage market will be, let's say, solid for the upcoming decades. Okay.
So how the different segments of HypoPort performed in this environment. We start with the core of our group, the credit platform, and there with the marketplace. Europace, As you know already, we have specialized submarkets places for saving banks, Finmas and cooperative banks, Genopace and for small intermediaries, our own With the Europase brand, we serve large intermediaries, sales organizations and private banks. All these units together delivered strong growth in the first half year. We went up by 40% to a transaction volume of €31,900,000,000 again, exceeding market growth.
And quite funny, we exactly made in the 2019 the number of mortgage volume that we had in 2014 in the whole year. So we doubled our volume within five years. And you can see with the CAGR of 16% and the current development of 40% that our growth rate stays quite stable over a long period. This is because of the, let's say, credentials of or the properties of our business, it's a B2B business. It's an organic growth in partners, in the penetration rate of our partners.
So step by step, we gain market share in the €250,000,000,000 German mortgage market. Talking about the product details. Mortgage was up 60% in the first half year. Linked to this mortgage products typically are the Spousbafatrege, building financing plus 40%, so strong growth. Where we see some weakness right now is personal loan business, where we saw a strong growth last year.
And so we have a high base we are coming from. First quarter was even a little bit more weak. Second quarter was already getting better. In average, we are now at minus 7%. We expect for this year that we will end up neutral in this product segment.
So altogether, this growth rate is contributed by all segments. So the private banking industry, the independent mortgage advisers and the regional banks. But as you know all, regional banks are very important when you look on the total market volume because they represent roughly 60% of this €250,000,000,000 market. And we have still quite low penetration rate in these two sectors of regional banks. While the savings banks with FINMA already for more than two years deliver a high growth rate of something 50% to 70% every quarter, GNOPs increased the pace lately.
More about this in a second. Savings banks now are at 57% plus compared to first half year of twenty eighteen. So the transaction volume, the adoption rate is increasing, and we can say that we are now roughly at 6% market share within the savings bank sector. We feel a strong sentiment toward FINMA's. So more and more banks are actively in projects with us, trying to push the penetration rate within the organization forward.
With this two fifty two savings banks under contract, which we currently have, roughly two out of three savings banks in Germany are contractual partners of Hindmars already. So in this group of two fifty five, there is a huge ongoing product portfolio to increase the usage of Finmas because of the high competitive advantage of the model and the software and the solution compared to their traditional way to close mortgages. So it's easier for them. It's more convenient. It's faster.
They save the labor, and they get higher conversion rate in advising their clients. As well as positive development in the second quarter here in the savings bank was closer cooperation with the internal IT service provider of the savings banks, which renewed the interfaces, established better, more intensive interfaces between Finna's and their core system and which started to even recommend to savings banks to use Finmas as a front end solution. So now coming back to the even more attractive performance of the corporate banks right now. So Genopase has a long tradition of double digit growth. Until last until the beginning of last year, below 20%.
So it was battle for each cooperative bank and to convince them to go forward. And let's say, for ten years, we fight it for every additional volume there. Because of the high speed of the savings banks, the cooperative banking sector realized that they are missing something, that savings banks are digitalizing, private banks are digitalizing their mortgage business, but they stay off line. And in the summer last year, finally, they decided to team up with us to get initiatives started to digitalize their mortgage business as well. So together with Bauschberg, Kasses, Schwerbuchale, a leading corporation within the sector, we established Bausch Venecks and started initiatives along the value chain to increase transaction value with them.
This lead us in the middle of last year to a 40% growth rate end of last year, 60% growth rate. The beginning of this year, close to 100%. And in the second quarter, we crossed even the 150% growth rate for the Cooperative Banking sector. But they are now on high speed, trying to catch up with the savings banks in the adoption rate. And so we are here roughly at three to 4% right now in the penetration rate of the Cooperative Banking sector.
So there's a long way to go still. But with this high speed in adoption, see a good chance that both of these regional banking sectors will contribute a lot to the future growth of Europase. Only in the first half year, they contributed more than half of the volume gain for Europase. And as it looks like, it's speeding up, and we are pretty sure that we will stay in high double digit growth at both of them, if not Guinness Pace stays even in three digit growth for a certain period now. Altogether, the segment delivered a strong growth, top and bottom line in the first half year, a 22% growth rate on top line based on this gain in transaction volume and additional services rendered by our pooling industry, which we provide to enable partners to use the Europay system.
And because of the incremental EBIT margin of 100% and beside the fact that we heavily invest in sales and engineering resources, we grew our EBIT margin by 25% to a new market high of €40,200,000 Okay. Talking about growth. So this is going to continue here. We are pretty sure that we are able to deliver double digit growth rate out of this existing product portfolio. But as you know us, we want more.
So at the end of last quarter, we announced the acquisition of WEM Capital AG, a highly specialized small company here in Germany, which is servicing the middle and larger corporations in Germany, the back end of the German industrial industry. They with roughly 50 employees, they serve a couple of 100 clients in helping them to finance their growth and their projects using subsidies and subsidized loans government subsidized loans from specialized agencies. That's the consultant business with a very good relationship to this kind of small and large corporations here in Germany. We acquired it because for the last two years in an, let's say, aviation project within Doctor. Klein corporate clients, we look for a way to enter the corporate financing world here in Germany.
We established a small corporate finance team, started to finance mid caps here in Germany, being a broker an adviser and a broker between banks and these mid caps and learned a lot about how this market works. Let's say, we are still at the starting point, 16 people, 1,000,000,000 in advised portfolio right now to be closed. But what we learned is that there is a need on the mid cap side to get help. And there is a huge need in digitalization between the banking industry and the mid caps to make it possible that transaction between them get more efficient. Even I personally am able to, let's say, have a perspective on this.
Hyperbot is financing via banks as well. Most of our acquisition, we finance with banks. And there is a lot of inefficiency in this market, how we handle the transaction process, how we handle the information flow and how we come to the best deal for the mid cap. And our Corporate Finance team, let's say, established an efficient off line process now how to deal with them. Together with Ramp Capital, we are able to scale this kind of business already.
So we will serve not a couple of dozen companies in the future, but a couple of 100 companies helping them to finance their growth, projects by bank loans or with subsidies from government agencies. But both together, it's a full solution, a full stack for the CFO of every mid cap company here in Germany. And based on this market presence and market power we have, we see the chance to establish as well a B2B platform in this market like we did it twenty years ago with the European system. So Ramp Capital is the Doctor. Klein, which solves the chicken and the egg problem for this kind of product area for Corporate Finance.
And the platform is under construction. We started to build it end of last year. And we expect the first modules and the first support delivered in the beginning of next year so that we are able to slowly start using it. And with the market power of the joint REM Capital, Corporate Finance team to convince banks to support this platform and work ourselves into the middle of this industry as well. How big is the potential?
We expect mid caps to lend roughly €50,000,000,000 annually in Germany right now. So onefive of the volume of the mortgage business. Similar volume in transaction fee, we expect. So it's an attractive proposition. And with our abilities to enter banks and with the power of REM Capital and Capital Finance together, we see that we are able to initiate this marketplace.
So from the future, back to the reality of the first half year and to our next segment, Private Client division. As you know, it's the Doctor. Klein franchise system in the core with lead generation on the Internet and delivering a strong brand. Actually, Doctor. Klein just won again an award for the leading and fairest brand in the financial service industry.
So we offer a platform for consumers and mortgage advisers to operate on. Doctor. Klein, after a long growth path, was again growing in the first half of this year, plus 11% in the transaction volume, up to €3,500,000,000 You can see here that the CAGR of Doctor. Klein was even higher than Doctor. Klein.
At the Neuropace, we are close to the twenty fifteen volume already, so close to double within four years. But it took some toll on us. Especially the fast growth last year, we had to invest now in scaling our internal operation. We had to adjust together with our partners in the franchise system, which adviser we are using. Our efficiency still is was growing even in first half of the year, plus 9% in advisers compared to this plus 11% in the mortgage volume, shows an efficiency gain, but it was costly to, let's say, adjust the whole operation.
Plus, because of the huge success of Finland and Guinea Pace, the number of banks operating with Doctor. Klein grew fast. So Doctor. Klein is now, for the consumer, the most attractive way get quotes and mortgages from more than 500 banks. But with all these small banks, you need to negotiate and renegotiate the, let's say, benefits for the Doctor.
Klein network. While we have attractive contracts long term and often negotiated with the larger banks, which is close to 500 smaller banks, this is a lot of work to do right now to bring them on an equal attractive financial level for Doctor. Klein and negotiate the bonuses and the commercials again. So we have to increase the team of product managers there, and we are in a long queue of a couple of 100 negotiations with banks right now. This costs us profitability.
This costs this increased our labor costs. And together with the adjustments leads to a decreased profitability of the whole segment right now for the first half year in 2019. We are down roughly €2,000,000 in EBIT right now. This actually includes as well some additional investments in consumer focused modules and apps for Doctor. Klein to be, let's say, different than what the default Europeans world is offering to experiment there and to find ways to attract and for long term long time linked to consumers, which may be interested in mortgages as well.
So higher costs, a little bit lower revenue, especially on the gross profit level because of this 500 plus banks now, change our profitability, but it's a onetime effect. We are in this process of renegotiating our contracts. And because of this, we expect latest next year to increase our profitability again, maybe not far not in 2020, but to the level of 2018, but we will increase it. And let's say, from there, it's not will not be so far anymore to get to the 2018 EBIT level again. Okay.
So after this, coming to one of our core growth segments, the real estate platform. As you know, we are serving here two types of clients: On the one side, the housing industry, where for the last seventy years, we finance and mature them. On the other side, with the acquisition of Faio, we offer them an ERP system to run on us. On the other side, two offerings for the credit industry. The first is linked to the mortgage process, property valuation, appraisal platform so that the advice and transaction process of Europaid is supported by a smooth, integrated and digital evaluation process for the bank with every mortgage.
And this is a little bit special for Germany. With the acquisition of Faio, we have gained control of the agent software used by the real estate agent of the banks. So we are the core provider of this software solution for the selling process of properties as well. Together with the mortgage process of Europace, we delivered a full solution for every real estate center of a bank in Germany and are the only one in the market able to do so. So how these different segments performed in the environment described already?
Let's start with the mortgage financing platform for the housing industry. We had a weak first quarter, a quite good second quarter, even despite the fact that still the construction of social housing is far behind lags far behind demand. We have an extremely low interest rate environment, which should initiate a lot of projects. But because of the political uncertainties, still the industry holds back and, let's say, stays calm with their number of projects, which they actually do. So for us, stable result, but the potential is huge here in this kind of product.
Next, the Software as a Service solutions delivered by file. In the property the real estate agent software, we acquired this right now, renewed. There's a new version put into place for all clients. And with this, we established as well a new pricing model for our clients. In a B2B world where you work together with trusted partner and have long term relationships, it takes some time to implement this.
So the 9091% gain in revenue here is still most based by the inorganic acquisition of Fire, but we set already the base for future revenue growth by price increases and by a better integration with the mortgage solution and additional values for our clients, which they are happy to pay for. It just takes time. So let's say, this year, the organic distribution of additional revenue is low from this from the Fire side. But it looks promising for the next couple of years that we will get here into a nice double digit growth organic growth from Fire as well. Where we achieved already a double digit growth organic is the Appraisal business.
Right now, we need to scale here with lot of human labor. The demand from Europase partners to get an integrated solution from us is high. To meet this demand, we need to scale fast. Next to this, we build up our development teams so that we are able to digitalize the appraisal business, which we are right now acquiring and dealing with and getting more efficiency in our workforce so that we will be able to scale more without additional labor in the future. Right now, it's labor intensive and but a huge chance for us by, let's say, gaining the of being the market leader is not even reaching the point where we have a monopoly in the appraisal business for banks in the mortgage world linked to the core mortgage platform in this industry with the OpEx.
So here, this 111% is still diluted by organic unorganic growth, but the organic growth is double digit already. We are on track with a fast speed to grow this business. Altogether, these three product platforms deliver a 40% growth rate top line because of the investments, especially in the Appraisal business and because of this, let's say, a little bit weaker housing financing platform business, we saw a decline of roughly €900,000 in the first half year in EBIT contribution. This is just a onetime offer. We set here the pace.
We invest in the future. This is going to be a fast growing large business with high distribution profitability to the hyperbought network soon. So coming to our fourth growth area, the insurance business. Smart Intrutech is the platform that enables insurance sales organizations to generate leads, to compare prices, to transact insurances, to manage insurance portfolios, to receive commissions, to communicate with 200 insurance companies in case of any default events or whatever. We are the only one who is delivering this kind of technical solution in Germany right now.
And let's say, we are the only one to have the genetic footprint to do this long term. And this, the whole industry agrees on. There is no single insurance company like Allianz or whatever who's able to deliver a core IT solution to a whole sector. There is no single sales organization who's able to do this, and there is no start up, which is trustworthy enough to deliver this kind of solution to the industry. For the first half year, we can say that we agreed with major market participants that we are going to beat this platform.
There are not a lot of voices who deny this or oppose this development. So we are on the right way. We agree with our clients, with our target group. What we are lacking still is action. We are in a lot of projects.
We are getting forward. They are using step by step more components out of our platform. But it's still, let's say, a muddy environment. So the steps are difficult to do, and they take time, and they are not fast. But we are working with the whole industry in the right direction.
So when you look at the numbers, we see a 94% growth rate based off inorganic growth by the acquisition of AC last year, but as well with additional organic growth delivered by Quality Pool and SmartIntritech together. We had the first quarter with slightly positive EBIT. Second quarter was slightly negative. So right now, we look on we're at zero. We expect for the full year to stay in this area of zero so that our huge investment of the last years in the platform with acquisitions, with engineering skills and with sales pay back slowly.
And we hope for the whole German insurance industry that the extreme efficiency gains, which we all may able to achieve when smart insurer is used by all participants in the market, That the billions we can save in back office labor will make the whole market more attractive, and this will not take ten years from now, but that we will achieve huge gains in productivity and efficiency by migrating large partners to the system, to the platform and that we get the whole industry moving toward smart insurer in the next couple of quarters. So there we are. All four segments distributed. We have a record half year as so often in the past. We see earning records as well.
And this is all based on a fast growing pool of talents of Hyperport employees, which deliver this. As you can see, for the first half year, already the number of employees compared to the revenue gain slowed down. So we are gaining efficiency again. But yes, we are investing heavily in people right now. And especially engineering resources and sales resources are under huge demand from our side.
All our entities are growing and investing in the future. And as you know already, in most of our business models, it's the current revenue is not linked to the number of employees we have right now. Our sales side and our engineering are doing everything which is necessary to scale the business further and to attract additional transaction volume for the future. So this number of people which are acting for the future is growing fast, and we try to accelerate this as much as possible in an organic way. On a long term perspective, growth rate is in line for the last five years.
We are scaling our operation and adding via programmatic acquisition some additional drop speed and expand our network to new areas. So you invested in the company with a double digit long term growth rate, top and bottom line. We show that we are able to scale in addition with acquisitions. We made 10 acquisitions in the last two point five years, actually. We are still light from our balance sheet.
We still have some firepower for some additional acquisitions based of our strong profitability, and we are going to scale and grow HypoPal's data in the next years. So I hand back to Ms. Bayer for a Q and A session if there is, for the first time, some pressure in the English
Now we will begin our question and answer session. And the question is from Gerhard Algonhard with Berenberg.
Just a question on your corporate finance platform. Did I understand you correctly that you expect the market of €50,000,000,000 and the transaction fee similar to what you're getting at Europase, yes? So is that the potential market size for you?
Yes. Mr. Gunnar. Nice to hear you. For asking the first question in English call.
Yes, you're absolutely right.
Sorry, I missed the German one. Missed the German one. I'm sorry.
No, it's fine. So you're absolutely right. It's market volume, 50,000,000,000 and something around 10 bps as well as transaction fee for the system. This is what we expect, yes.
Okay. So what you've done is you've got this you have started to develop this in house, and you've bought a big potential user with Rank Capital. Is that what you did?
Yes. Let's say, in a certain way. We let's say, we developed the Corporate Finance team already in house. So we built a team. It's right now 16 people, and it has a product portfolio or a project portfolio of €1,000,000,000 And with this, let's say, ramp capital, we will use to scale this additionally.
So Ram Capital has great client relations in the German mid cap industry with a couple of 100 clients. With them, we will scale the Corporate Finance business. And this together is, let's say, the necessary starting point, the chicken and the egg the chicken or the egg for the funding port platform.
Okay. But the REMS basically adds clients, it doesn't necessarily add technology at this point?
Exactly. They don't add technology, they add client portfolio, right.
And we have no further questions. I hand back to our host for closing comments.
Okay. Thank you. Yes. So thanks for your attention. Hope to hear you in three months.
I'm delighted already to bring you then closer to our nine month results. And I expect that we deliver again the growth path and that we that you see that Hapapot continues its success story during 2019. After then, hope to hear from you offline. See you soon. Bye bye.
Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect.