Good day, ladies and gentlemen, and a warm welcome to today's earnings call of the JDC Group AG following the presentation of the financial year figures of 2024. The preliminary results will be presented by CEO Dr. Sebastian Grabmaier, CFO Ralph Konrad, and COO Dr. Ramona Evens. After the presentation, we will move on with the Q&A session. There you have the opportunity to ask your questions directly to the management board. Having said this, Sebastian, I hand over to you.
Yeah, thank you very much, Sarah. It's a great pleasure to present to you the figures of, at least the preliminary figures for the full year 2024. We can proudly state that this is by far the best year in the history of our JDC Group as it comes to absolute terms, but also to gross terms and percentage terms. You will see that this will be a very happy meeting. Let me introduce my colleagues to you. With me here in the line are both Ralph Konrad and Ramona. I just saw Marcus as well, but as you're just listening, hi Marcus, and Ralph and Ramona will present themselves.
Ramona.
Sure. Hi, I'm Ramona Evens. I'm here for the first time, and I will introduce myself a little longer later during the presentation. For now, I'm the new Chief Operating Officer, and I'm responsible for operations, for human resources, for digital processes, and for data management.
Hi, I'm Ralph Konrad, responsible for IT, finance, legal compliance, and the M&A department of the JDC Group. Sebastian.
Thank you very much. Yeah, on the next slide, we just introduced the company to you really quick for the few that do not know the company from scratch. Yeah, we are a typical platform business. That means that we have contracts with all the product providers basically in Germany. We take in the data of more than 220 insurance companies, all the mortgaging banks, the alternative platforms, the asset management platforms, and the investment companies. We digitize the data, we standardize the data, and then we process it, and then we make the data visible in our own systems, or we load them up via an API structure to the systems of our clients. Typically our clients are not anymore the individual brokers and agents, but more and more other fintech intertech companies, other platforms, more and more insurance companies, and the German banks.
Right now we have about 5.8 million contracts on the platform and earn about on average EUR 40 per contract each. The 5.8 million contracts, that's data sets, and this breaks down in about 2.4 million contracts. On the next page, please. We can see that this was really, really a very, very successful year for our JDC Group. We had a very strong Q4. For the first time, the company could achieve a turnover of more than EUR 60 million, EUR 62.7 million indeed. That's a new record high that what we did in the single quarter. It is also good that we are growing and the growth is growing. The entire year 2024 could exceed even the very good Q4 2023 by more than 28%, following or leading to a growth turnover of 28.6% over the entire year from EUR 171.7 million to EUR 220.9 million.
That is even a little bit higher than the upper end of our guidance last year. You also can see that according to the increase in turnover, also the EBITDA is growing quite nicely. Also in real terms of by 28.9%, but there are some one-offs, as you can see, of EUR 0.8 million. If you eliminate these one-offs, EBITDA growth would even have been almost 36%. A very nice development, and especially against the backdrop that Top10 was consolidated in the end of 2023. There is more than EUR 60 million organic growth in the year in the Q4 2024. You can see here the table of the figure development, the Q4. You can see that that was the most successful Q4 and therefore the most successful quarter we ever had from EUR 48.8 million in 2023. The turnover revenues grew to EUR 62.7 million.
That's also 28.4% growth. Overall, that's what I said is the growth from EUR 171.7 million to EUR 220.9 million. That's also a growth of EUR 28.6 million. Yeah. You can see how this breaks up in the different segments. We will have more to this by Ralph in a minute. You can see that also the most important line, it's always this gross profit line, that's commission in minus commission out. You can also see that there's a nice growth of 17.8% in the Q4, leading to a margin of overall EUR 64.3 million, growing by EUR 21.7 million. Very nice development also for the earnings figures. EBITDA for the first time in a single quarter was EUR 5.9 million now, coming from EUR 5.0 million in 2023. The full year we could grow the EBITDA from EUR 11.7 million to EUR 15.1 million.
Also in the mid of our guidance. We're quite happy about that. You can see then that the growth figures in %, they grow even more the more you go down the lines. EBIT is up almost 50%. Very nice development as we think. The nice fact is that the growth is based on a number of factors. All the business lines and all the product groups are growing nicely. The biggest boost came from investment and financing, especially the consolidation of Top10. First consolidation again was December 2023. It was the first full year we had Top10 in our figures. That is a little bit more than EUR 20 million on top for the year 2024. We have a very nice growth here of plus 56%. The base of our business is the insurance business.
That was also nicely growing by 17%. That's just a margin of EUR 18.4 million more turnover than last year. All the others are back. You see that real estate markets are back in the retail sector and also financing is back. Some alternative forms so that they grew by 10%. Overall a really nice development over all product lines. Yeah. You see this, that's what I stated, not only all the product lines are growing, but also the different business segments. Still the biggest part of our business comes from the 16,000 IFAs we have under contract. This segment grew by EUR 35.1 million. That's a growth of EUR 31.5 million. Also our major customers that we have on board grew by 30%. That's a margin of EUR 11.1%. Also advisory is back on track.
Here we always tell you that you can expect growth of plus or minus 10%. It was also a very nice growth of almost 17%. You can see that our turnover split is roughly three quarters is the IFA business and about one quarter is the major customers. Very good distribution here too. Yeah, Ralph, maybe you go deeper into figures.
Yes. Let's look into the comparison by quarter. If you look there at the development by quarter, we've seen a very dynamic year 2024. It's particularly noticeable that the distribution of sales over the year was very stable compared to the previous years. In other words, there was no weak summer with weak turnover that we normally see. If you look at 2021, 2022, 2023, this was not the fact in 2024. Nevertheless, we had a very good Fourth Quarter with a record turnover as Sebastian mentioned of more than EUR 60 million in just three months. We expected a strong year-end business, a typical year-end business, but the development in Q4 was even above that expectations. In contrast to the previous years, the driver was not the insurance business, but the investment business. Let me please mark that this shows how important a balanced business mix is.
I think that confirms our strategy not only to focus on one of the segments. At the end, we ended up slightly above the upper end of our guidance, which is from our point of view a very good success. In the Advisortech segment, like in the previous quarters, that segment showed extraordinary good performance in the Fourth Quarter. The revenue was up by more than 31% to EUR 55.7 million and EBITDA increased by almost 19% to EUR 5.3 million. Some of you will wonder why EBITDA has grown more slowly than sales. There are mainly three reasons for this. The first is that Q4 2023 was already an exceptionally good quarter and was hard to beat. That is the first reason. The second is we again had one-off cost for the integration of the Top Ten Group of around about EUR 200,000 in Q4.
The main reason is that due to the very good stock markets, we received a lot of performance fees for many managed accounts and there the JDC's margin participation is significantly lower compared to the normal margin participation. These three reasons led to the fact that we saw a very good EBITDA, but a slower growth in EBITDA compared to turnover in Q4. The personnel costs are up by 18.6%, sorry, a small portion of this due to inflation. The main part driven by the consolidation of the Top10 group. Same with the other operating expenses. They grew by 10%, including these EUR 200,000 restructuring and integration costs as a one-off. In the meantime, the cost for the restructuring and integration of Top10 and some more M&A costs are about EUR 800,000 this year.
That is the reason why we decided to show some Pro forma figure in gray so that you can see that the EBITDA margin or that all the margins are even higher than reported if you deduct this one-off costs. Pro forma, you can see an EBITDA growth for the full year of 33.3%, reported 26.6%. The turnover grew by 30%, which is EUR 197 million, which also shows a record high. We are very happy with this development, you can imagine. Some operational figures on the fly, new orders peaked around 150,000 in 2024, which means a slight growth. The number of contract transfers achieved an all-time high of more than 560,000. This figure is even more impressive given that 2024 did not include any mass transfers or bulk transfers due to new major customers. It was all operational day-to-day business.
As a result, our annual net premium on the JDC platform is now above EUR 1.3 million, which is a plus of 10% compared to the end of 2023. This all would not have been possible without our highly committed and highly motivated team. You have to realize that behind a growth of 30%, there are hundreds of thousands of additional contracts, documents, applications, processes that we have to or that we have managed without a large increase in personnel due to our automation efforts. I would like to take the opportunity to say a big thank you to our team. That is not very common because to say thank you, it is not my core competence. At this place, a very honest thank you to the team. Excellent and exceptionally good job. Okay, let's come to the advisory segment.
The advisory division continued its very good performance over the year and has also achieved a great result in the Fourth Quarter with a sales growth of 15.9% to EUR 11.1 million. A Q4 EBITDA of EUR 2 million was achieved. In my memory, this is also an absolute record high number for the advisory segment. For the year's whole, our advisory division is approaching the EUR 40 million sales mark, which we will hopefully see then in 2025. We were able to increase EBITDA by 36.8% to a very strong number of EUR 4.2 million. The advisory segment is now contributing more than 25% to the group result. You remember I never tire of emphasizing how important this segment is for us. Here too, I would like to thank the Finom team in Germany and Austria. We are very happy to have you with us. Okay, cash flow statements.
Let's start with a disclaimer because the cash flow statement is now presented at a very early stage. The preliminary figures are already discussed with the auditor. Thus, we do not expect any material changes, but the cash flow statement has not been reconciled with the auditor and there might be shifts within the items. We started the year with a cash and cash equivalence of EUR 26.4 million, which is a plus of almost EUR 10 million compared to 2023. Cash flow from operating activities amounted to EUR 15.8 million, which is below the previous year. You may remember that we had around EUR 5 million of our 2019-2024 bond on our books. We issued our new bond in 2023. Before that, however, we placed large parts of this EUR 5 million. In other words, we sold them.
This sale in the cash flow statement was qualified as cash flow from operating activities because it was not the direct financing. That is a reason why cash flow from operating activities is below the previous year. If you look at the real cash flow from the sale of all financial products through IFAs, then the cash flow from operating activities is up by EUR 2.5 million-EUR 3 million. A little bit misleading from today's perspective. Cash flow from investment activities amounted to EUR -12.6 million and was mainly driven by our investments into our Sumitas participation with EUR 7.2 million. We invested another EUR 2.4 million in purchase price for participations and earn-out payments into already consolidated companies.
Around EUR 10 million into participations. The cash flow from financing activities amounted to EUR -4.8 million. Main reasons for this were at first our share buyback program, which ended May this year or May 2024, sorry, with an investment of EUR 1.7 million and the interest payments of EUR 1.4 million for our bond. Just to remind you, the cash flow from financing activities last year was positive because in this year we sold our treasury shares to Provinzial for EUR 13 million. That was the reason why this cash flow from financing activities was positive in 2023. The quarter ended with a cash balance of EUR 24.7 million and cash on hand last Friday was EUR 32.2 million.
Okay, as always, some more information about share price and the bond. The share price is developing positively stable. Let's say it like this. You all know at the moment it's not that easy for smaller companies at the stock exchange. We had a close at 21.90 on Friday. This morning, the market has responded very positively to our publication today. The share price went up to EUR 23.40, I think. At the beginning of our conference, it was back to EUR 22. Sorry, market cap is around EUR 300 million. We have 147,000 shares on our own hand as treasury shares with an average purchase price of EUR 19.89 still. The bond is valued at EUR 20 million, is trading very stable at around 106% right now. Maybe of interest for you, the bond is due at the 1st of November 2028.
We have the first call at the 1st of November next year at a quote of 101.5% and a year later at 100.5%. Shareholder structure remains unchanged. Okay, let's come to the spotlight. The first spotlight is my new colleague, Ramona. We already reported in the middle of the year that the JDC Management Board was being expanded. Now Ramona will be able to introduce herself in person for the first time to the investors.
Thank you very much. Okay, hi. Hi to everyone. My name is Ramona Evens, and I'm thrilled to be here today. I'm also thrilled to be on board JDC as their new Chief Operating Officer. I'm with JDC now for a couple of months, and I have to say it's pretty much exactly how I imagine it to be. It's a great company with very smart and very dedicated colleagues, and I'm just very happy to be contributing to their work. My job is to make sure that the company growth is supported by very strong and very efficient operations. I've done that already with CHECK24.
Maybe for those of you who are not familiar with the German consumer market, CHECK24 is one of the largest sales platforms in Germany and one of the largest insurance brokers in Germany as well. I have got some experience in dealing with massive growth, and I am happy to share that experience here with this company as well. Maybe a few words on my background. I did my PhD at the Chair of Finance and Banking. I have a background in strategy consultancy.
I was with the Boston Consulting Group, and I was also in the sales management of a German insurance carrier, which is tremendously helpful in our business model, also to know the other side of the business. Yeah, and I am a little bit of a tech nerd myself, so I am genuinely happy about every work hour we save with technology. Yeah, I'm looking forward to shaping the future of JDC together with my colleagues.
Thank you, Ramona.
The next spotlight is that we wanted to give you an update on the stage of integration of the Top10 Group. We already did this in the last earnings call. Once again, transaction is done, closing is done, all regulatory requirements are fulfilled. We have completed the formal integration, which means that in the meantime, all the entities of Top10 are merged onto the corresponding JDC entities. Please keep in mind the Top10 companies no longer have their own accounting groups. We know that you are interested in the turnover and EBITDA contribution of the group to recalculate the organic growth, but we cannot give a completely accurate answer here.
What we can say is that the group's organic growth without Top10 would have been above 15%. With Top10, it's 28.6%, and without, it's plus of 15%. Contribution, turnover contribution of Top10 is around EUR 20 million. The EBITDA contribution is slightly above EUR 1 million, and thus within our business plans. Yeah, we are very happy with that. It's more or less exactly what we have planned some years ago. The last thing left is the IT migration. The systems are already talking with each other, means that they are connected via a set of APIs, and we are already using features on both platforms, but we still have to merge these platforms. We now have two platforms in the asset management area. That's work in progress and one of our important goals for the year 2025. This is my favorite slide.
We show this slide to you every year. We do our back tests of our efficiency gains and our scalability. If you have been following us for a while, you will be familiar with this graphic. The columns show the development of the JDC Group's total cost. The overall costs are increasing, but in terms of growth in a very moderate range and primarily driven by M&A transactions. From 2023 to 2024, it's mainly the additional cost from Top10. If you look 2020 to 2021, it's mainly the additional cost of the Morgan&Morgan transaction, which we bought then. If you compare these total costs to the gross margin as a kind of cost-income ratio, you can see without any doubt that our platform is scaling.
In 2018, the ratio was above 105%, and today it's already below 90% and will soon, I think next year, be definitely below 85%. The efficiency gains in 2024 were achieved with many tools and automation efforts. If you remember exactly one year ago, we told you that in the year 2024, we plan to optimize the first processes using an AI platform, which we at this time were actually pair programming with a team of external specialists. Today, one year later, this platform is live and helps us to provide insurer data much faster, much cheaper, and in a better quality to the broker. A big success. This platform will help us to gain further efficiency in the upcoming years as well. I am very convinced when we meet next year here, the trend will still be our friend. Sebastian.
Yes, some words to our guidance. You see that there's a lot of checks in the boxes, so checkmarks. You can see our guidance was in turnover EUR 205 million-EUR 220 million. With EUR 220.9 million, we are just a little bit above the upper end of our guidance, which is a nice checkmark. Also, EBITDA is on track. We guided EUR 14.5 million-EUR 16 million. You can see that one-offs led to we are also on the upper end of the guidance with EUR 15.9 million minus EUR 0.8 million in one-offs. With EUR 15.1 million, we are mid of the guidance. Also, our individual goals for 2024, we could reach all of them as Ralph reported. Integration of Top10 Group is 95% done. We have now from Sumitas in 2024, we saw about EUR 600,000 in gross margin. Also check the box.
We have our refocus on smaller IFAs. We have a marketing campaign and also refocusing of our sales team to the mid-sized and small IFA groups. There, we are making progress. You could see that a lot of growth comes from this very big chunk in our business, also growing even more than the major customer business. Very content with this development. Our major customers could grow with more than 30%. Here, a very nice development. Yes, we are expanding our IT cooperation with insurance companies, both on the Morgan&Morgan side and also in more delivering more and more services to insurance companies themselves. Yes, as Ralph Konrad said, we have very successfully tried out the first processes and projects in AI.
We could save quite a bit in resources by gearing up our digital quota to more than 90% in the business groups where we use AI. This means that cost in these sales channels goes down significantly. In the end, 12-15 employees could be moved to other parts of the company. That gives the cost savings, making us more efficient, as Ralph showed in the slide before. That is what we are aiming at, our economies of scale. The cost per contract is further reduced, as also Ralph showed. We are very happy that we can have a very clean sheet here on the guidance of 2024. This brings us to the guidance in the year 2025.
From EUR 220.9 million in 2024, we want to grow to EUR 245-265 million in turnover, resulting in EBITDA growth that is significant from EUR 15.1 million in the year 2024. We want to achieve EUR 18.5 million- EUR 20.5 million. Hopefully we can see the EUR 20 million, that would be a very good development of the last years. Also our individual goals, we think are challenging but achievable. We want to integrate the Morgan & Morgan comparison platform to the JDC Platform. We will now combine the product intelligence of Morgan & Morgan with the broker management platform to a very good and important project. Also our asset management platform, that's Deutsche Finanz Portfolio Verwaltung. As you remember, we merged our managed accounts platform into the management platform of DFP with a very nice development.
Also, Sumitas, we want to grow our margin coming from Sumitas and are looking at a pipeline of M&A transactions that might or might not be signed. Here we still see ourselves as being ideally positioned as being one of the main consolidators of the market with all our very stable shareholder groups and also with this very nice growth and development. Yes, we definitely want to develop our IT platform even more. We still think we are the service provider of choice for all the institutions that are looking for an IT platform. Yeah, we also will continue to scale up the JDC platform with AI projects. Now, two of our business lines already run with support of AI processes, and this we want to expand to the rest of the business lines. Obviously, that's a known point year over year over year.
We want to use economies of scale and also further reduce our costs per contract. We think that we have a very strong base for the development in 2025 with good KPIs beginning in the year. As always, right, our business is depending on further developments of the global national economic environment. You see some, there were some heavy clouds above the German economy. You see after elections, there many see some lights on the end of the tunnel and some change to the better. Obviously, all of this is influencing consumer confidence, and that's what retail investors in the capital markets need and also what insurance clients need to buy more product. Overall, we're confident that we are in a very good environment and can grow even more in the coming years. Yeah, this gives us a new outlook for 2030.
As you could remember, in 2020, we were very bold and we said we want to come to EUR 250 million in turnover in the year 2025. At that time, we want to multiply our EBITDA. I know that many listeners made a quadrupling of our EBITDA, so up to EUR 20 million. You can see that we are quite certain to get in this direction. You can see that our guidance is in the median higher than the EUR 250 million, and also the EBITDA expectations are in this direction. I think we did a good job in, yeah, telling a vision of the future in the year 2020, looking then to 2025. This is what we were asked by many of you, can't you give us like an outlook what JDC could look like in the year 2030?
I think it's important to know that our market share is still very, very small, right? It depends what figure you're looking at. We had 0.6% market share, and we don't see why we can quadruple or even 10x the turnover. If you see mature platform businesses, these have easily 10% or more of the market. There is no ceiling here. We think that step by step by step, we can move turnover in the direction of EUR 500 million and also move EBITDA then, and this is a clear result, to EUR 40 million-EUR 50 million. That's what Ralph and I were thinking when we are looking in our own future.
We were asked by the supervisory board whether we are not open to extend our contracts for the next five years, and we happily agreed after some discussions where we can go and what we can develop the company into because we think with these figures of EUR 500 million, turnover, EUR 50 million in EBITDA at a more, yeah, a continued growth path, you know, that's what we want to see. I think we can envision the evaluation at not being at EUR 300 million, but rather coming in the direction of EUR 1 billion. This is what Ralph and I and the team, Ramona and Marcus, will fight for, that we have, yeah, one of the market-leading or the market-leading platform in the German investment and insurance industry. Why are we so convinced that this will work?
We are in the core of these four mega trends in the German finance industry. You can see that digitization is like now for the last 10 years the word and the main concern of all these companies in the market. In the insurance industry, it will not be the last industry that's not digitizing. This is just a given. Also, demography tells us that the average age of the intermediaries is so high and it's growing year by year with such a high margin that half of the holders of contracts will go out of business in the next 10 years. There is a huge pond of fish out there that the bigger fish can eat up. This leads to buying portfolios, buying brokers, and also buying other platforms as we did with Top10. This leads naturally to the next point.
Yeah, there's a big consolidation game now already going on, but it's rather a start because the market is very fragmented still. There's a lot of other platforms still out there. Who read the Oliver Wyman study? There's only like three big platforms that are growing. They are big and they're profitable, and the rest is rather not. That means that the bigger platforms in the market have the best outset and starting point. Yeah, we see it. We can say it's a pole position for market consolidation. I think we can play a good role in this. Regulation, you can see that now there is some trend to take back some of the ESG regulation, but combined with data protection, data transparency, only the big players will be able to really transform in this regulatory environment and also transform the IT platforms.
We are back at digitization. This is a combination of these four drivers, and I think we are ideally positioned. I'm happy that Ralph is on my side now. Now it's a 22-year-old marriage, and we are at least now open and convinced that we can go into the year 2027, Ralph, right? Together with Ramona and Marcus, I think we have a very good management platform as well. Ralph, maybe you want to add to your personal decision.
Nothing to add.
We thank you for your attention. We will be with you as your management in this company and try to drive your value. Hopefully you still trust us and help us to fulfill our aims. Thank you very much, and we're happy to take all your questions you might have. Sarah.
Yeah, thank you so much for your presentation and congratulations on the results. We will now move over to our Q&A session. For a dynamic conversation, we appreciate it if you would ask your questions in person by audio line. To do so, just raise up your virtual hand, or if you've dialed in by phone, you can do this with the key combination star key 9 followed by star key 6. You can also place your questions in our chat box. We will start with the first one with Benjamin Kronke. You should be able to speak now.
Can you hear me now?
Yes.
Super. Good afternoon, gentlemen. Thank you very much for the presentation. Let me start with, I guess, a bit of a typical question if companies provide an outlook range. Can you talk a little bit more about the assumptions that go into, let's say, the high end and the low end of that guidance range and maybe related to that, what sort of contribution from M&A is baked into this, if at all? The second question would be around gross margins, if I may. That is, obviously what we see is that gross margins continue to trend down, understandably so. I guess the question is, how should we think about the development of gross margins going forward?
Ralph, if I recall correctly, you once said that you expect an annual contraction by around 50 basis points or so. Is this still valid? Maybe related to this, just wondering how we should think about gross margins in the mid to long term, i.e., what do you expect gross margin to settle over the next sort of few years? Thirdly, can you talk a little bit more about the contribution from Sumitas in 2024? Is there anything extraordinary you would point out? I guess also here, let's say, how do you expect or what do you expect Sumitas to contribute in 2025? Very lastly, apologies for that, what is the profitability? Sebastian, if you could remind me, what is the profitability profile of Sumitas and to what extent does it dilute your current margins, if at all? Thank you.
Okay, Ben, thank you for your questions. At first, the guidance next year is without any M&A activities. As always, when we do our planning, we plan with the contract that we have already signed, and that's enough, let's say, uncertainty for the planning. No M&A activities included. If we would do some M&A activities, then there might be a bigger growth. Yes, you're right, gross margin is trending down. The reason is at first competition. Sebastian can give some color on this. The fact that more and more business is coming from bigger intermediaries, which is a result of the consolidation.
I think this is a trend that we will see for the next years that we will lose, let's say, 50-60 basis points. On the other hand, we are growing fast and we are able to scale our platform and deliver the services at a lower cost per unit. That is the reason why we still think that there is a question in the chat that the EBITDA development will not flatten. This was a very special situation in the Fourth Quarter because of this managed accounts thing. Yeah, maybe that as a first respond. Sebastian, maybe you can give some answer to Sumitas.
Yeah, we are very thank you for your questions, Ben. Yeah, we are happy with the development of Sumitas. You could see that in December, we could sign and close one of the biggest, or actually it is the biggest occupational pension platforms in Germany. It is the broker BVUK with a turnover of more than EUR 40 million that came to the book of Sumitas. This is, it is also developing nicely. It is growing and very profitable with a profitability of more than EUR 10 million EBITDA. Sumitas is now a grown-up company with more than EUR 30 million EBITDA and more than EUR 55 million in turnover.
Really nice development. For 2024, Ralph, you correct me, we have about EUR 550,000 in additional margin from Sumitas. We expect this to grow in 2025 to more than EUR 1.5 million. We do not think this dilutes, maybe on the contrary, because we saw that this very specialized business of the occupational pension platform does not really fit into our more retail-oriented platform. We will just have more income in the margin level. Most of the commissions of BVUK will not go from the top line to the payouts of commission, but will contribute on the margin level. This will not dilute our margin, rather on the contrary. That is also the profitability profile that you asked for.
It will be a very nice contribution on the margin level, and that's what we expected to earn about EUR 1.5 million-EUR 2 million over the long run in EBITDA. Very happy with this development here.
Right.
Answer your question, hopefully.
Yes, yes. Thank you very much. Maybe just coming back to my first question, Ralph. I mean, thank you for answering the M&A part related to your 2025 guidance, but maybe just to the rest. What defines the lower and the upper end of your guidance range, i.e., what needs to happen for JDC to come out, let's say, at the higher end and what's baked into the lower end just to get a feeling there?
I think when we did our planning and also our guidance session, we are rather conservative, right? You can see that the growth is only 13-16%, knowing that in the past we have an average growth of about 16% in the company. That is our four-year mid or key kegger. We see that the platform is ideally positioned and we have strong business, but on the other hand, there are some clouds above the world economy and also German economy. This gives us a more conservative outlook. Very happy if we see the turnaround in Germany. You can see that all the business confidence figures are on a very all-time low, right?
This is the third year, the last coalition government led us to a three-year depression basically in Germany with sentiment being quite low. There was an election that what business leaders think is rather successful. It promises to be a stable government. There are big hopes that the economy is turning up in Germany, but this is what we did not price into our growth figures. We rather think that the sentiment will rather stay a little bit low in Germany and therefore this conservative outlook for our turnover. The rest, when it comes to costs and also earnings, is just a progression of all the measures we took using more AI, saving on costs, becoming more efficient.
We see that the EBITDA figures will increase much more as the turnover picks up. That is exactly what we want to show you, that the platform is scaling and we are earning more money year over year over year. I hope.
Understood. Understood. Thank you very much.
Thank you for your questions. We will now move on with the questions from Lukas Frank.
Yes. Hi, good afternoon all together. I would like to also go more into the financial numbers concerning, let's start with the 2030 guidance, also related to M&A or organic split. Did you factor in any organic, inorganic, so from M&A effects into your EUR 450 million-EUR 500 million outlook for 2030, or is this just organic?
Okay. When you go back to 2020, we told you that we will double turnover to EUR 250 million within five years. For the next five years, today, we do not know what company we could buy, but given the fact that the market is consolidating, of course, we will take opportunities or use opportunities if we will see opportunities. We grow on average, as Sebastian said, by 15%. The bigger you are, the harder it is to keep this pace. Yes, there will be some M&A activities, but we will be able to achieve this goal or almost this goal even without M&A activities. Sebastian, would you agree or disagree?
It depends. Then is Sumitas organic or not, right? It is a question of definition. We will definitely keep on supporting Sumitas with platform technology and also investments. For us, as a platform, it is organic, right? Investing, we can as well claim that this is not. We are already buying a lot of portfolios of our brokers that go out of business. You can say that is M&A, but in the end, it is just organic because we are just the natural buyer or the last resort for the clients that are left in the market. We would consider that organic as well. Also, you can argue that. Yes, if there are other platform opportunities that we saw in Top10, in the end, Top10 was exactly as successful as we wanted it to be.
Now, with a push in the capital markets, it was a very wise decision, although it was not an easy one in the beginning. Yes, we will definitely, we are in the pole position for this consolidation game in the market, and we will use any opportunity we will get.
Okay. Going more from top line to bottom line, if I remember our last conversations, you had more the ambition or the target to reach a 12% EBITDA margin going forward. Now, if I calculate the margin on your 2030 guidance, we talk more about 10%. Is there still room for, let's say, a positive surprise, or did there change anything in the last month or quarters concerning your margin profile going forward?
Yes, what we said is once we are at a billion, right? We said we will earn EUR 120 million, and we still are there. That obviously in these businesses, you can imagine an earnings margin of 12-14% at the most. As you can see, as long as we pay out 72% of our commissions that we earn, then there's a natural ceiling, obviously, right? Yes, there is also positive surprise. It also depends on whether this trend that platforms do not only, that are not always in the intermediary chain, right, where you get in commission, then you pay it out, but rather provide platform services as a service provider, paying value-added tax.
If this goes on, you will see that there will be more margin to the commission. In the end, it's rather on the absolute figure of the margin, but at the percentage points, right? This also goes for the bottom line because in the end, it doesn't really matter whether you earn EUR 50 million on EUR 500 million or on EUR 400 million. Let me please add, there's no change in our view or there is no change. It's just, let's say, we want to give you an outlook, but let's be cautious so that it's, from our point of view, very good achievable.
Okay. Third question to the investment side. In the past, you had more or less very low investments. Will this be also the case for 2025 to 2030, or do you have to, yeah, make any bigger investments we should bear in mind?
Investments, you mean our cash flow from investment activities?
Yes. Without excluding M&A.
Yeah. Yeah. There is nothing you should have in mind. We invest EUR 2 million a year into our platform, which is activated, and then its depreciation is in the same size. The investment, the cash flow from investment activities is only that high, negative high, because we still invest into Sumitas. We have now invested EUR 10 million and our commitment is EUR 15 million. We will invest another EUR 5 million into Sumitas, but that is it.
To add on it, we invest more in our IT for sure. It is rather EUR 10 million-ish, but eight of these 10 are reflecting the P&L and good.
Yes exactly.
Thank you, Sebastian.
Then small last question, do we should expect any further one-offs this year, or is everything done by 2024?
Nothing from the Top10 group. Yes, we're done there.
Thanks.
All right. Thank you so much. We have one person in the queue and then a couple of chat questions. Let's move on with Andreas Affen.
Hello. Can you hear me?
Yes. Yes. Andreas.
Congrats with another impressive result. Definitely happy shareholder here.
Yeah, happy when you are happy shareholders.
That's good. Maybe just starting with the new government, you seem to tell that it's already reflected in kind of the sentiment in Germany. It's like it's picking upwards. Have there been any talks around kind of the regulation from the new government, if that will change for you in either a positive or negative direction?
Yeah. There is a lot of talk about stabilizing the pension management systems. Obviously, in Germany, we have a pay-as-you-go system, with no investment to draw from other than Scandinavian countries. There is a lot of talk. In the end, there are some driving factors, some that could be a little bit distracting, but in the end, this is nothing to really worry or be happy about. This will just, it will not influence our business a lot. Let's put it this way.
Okay. Maybe on the P&C inflation there in insurance premiums, how is that trending right now? Is it still like mid-single digit, or I think it was higher this year, but yeah.
I think in the long run, you can calculate with 3% or 3.5% in a normal inflation environment. The last years, it was higher. Car, for instance, was above 10%. Health was around 15%. Building was around 15%, but that's not, unfortunately or fortunately, not the normal development. I think, Sebastian, three, three and a half percent is the right number.
Okay. You did this, announced this major, major new insurance network with, I think, it was 7,000 agencies that you would launch. Is that progressing on time? You still expect something from that this year? Is it like the other bank insurance projects takes a long time?
No, it's a silent launch. At the moment, it's done with the test group, and we review the first results together with this network. Yes, we will see financial effects in 2025, and that's part of our guidance.
Okay. I think now I have been following you guys for five years, and I think this is the first conference call where we have gone through an hour without talking about the bank insurance. I do not want to let you go that easy. Can you maybe just, yeah, some of the deals going well, some not going well? What is kind of the summary on those major deals there?
No, it is a good observation, Andreas. Thank you. Obviously, the bank insurance development is still important, but it is not the only thing. That is the reason why we are also talking about other issues. The development with the savings banks is quite good. We will see an eight-digit turnover in 2025 from savings banks alone. I would say it is within our plans. That would be my evaluation on this, Sebastian.
It is what I am always saying i t's as slow as we planned.
Okay. That makes sense. Yeah, I think what was my last question? Lukas was so good to ask all my questions here. Yeah, I actually think that was what I had on my schedule. Yeah, I will let you guys move on to the next.
Thank you for your questions. Thank you for your trust.
Thank you so much. Let's now move on with the questions from Edwin de Jong.
Hello, gentlemen. Can you hear me?
Yes.
Good day. Yeah, a couple from my side. On the longer-term guidance, the EUR 450 million-EUR 550 million turnover is 2030. Going back to the assumptions underlying, what part would you expect to be the insurance platform, and what part would you be expecting the asset management side, e.g., the Top10 business? That would be the first. Shall I go on? Shall I go on?
Maybe easier.
Ralph mentioned that one of the reasons of gross margin pressure was the competitive environment. Maybe it's good to have a few words on how that's developing and what has happened there in the last year. Thirdly, on Sumitas, so you're nearing, I think, the end of your investments. You're going from EUR 10 million -EUR 15 million, and that is the end of it. What happens next? Are you going to sell it, or what's exactly the exit scenario there? Those were the questions.
Will you take the first one off and add to the other two, or?
The first is the hardest. What is the share between asset management and insurance in 2030? Good question, Edwin. As I said, it's very important to have a balanced asset mix. If you look into the figures 2024, then asset management side has a bigger share than I expected at the beginning of the year. I would say it would be wrong to just focus on one of both.
The last 10 years, we had a very hard focus on the insurance side. That was the reason why we then won all these tenders and had the development you know and you have seen. Now it's time not to refocus, but to also focus on the asset management side with the Top10 acquisition. We have a very broad set of features, and we can do very good offerings, especially on the managed account side. I don't know.
One third, two thirds, more or less? Is that a direction?
Rather 40/60, I would say.
Okay.
Yeah, competitive environment. Again, I can recommend this Oliver Wyman Ask Compact study. It shows that in the end, it all plays into the hands of the very big platforms. Yes, that's where the competition comes from mainly. That's two groups. One is Fondsfinanz and one is Blau Direkt. Fondsfinanz still being a little bit bigger than us and Blau Direkt a little bit smaller. That's by far the top three market leaders. There's also the margin pressure coming from basically Blau giving away a lot of margin, paying out a lot of commission, and Fondsfinanz having an okay margin, but then giving out checks for newcomers.
We see that both of these platforms are bought by private equity, HG Capital in the case of Fondsfinanz, and Pink is in the case of Blau. We can also see that obviously private equity investors want to earn money as well. There is pressure on their cost base and leading to different measures, layoff of people for the first time, or then drawdown of services. We can see that our platform is more and more better positioned as we always try to balance growth and profitability. We will see these efforts with the other platforms as well. We expect that these free lunches times are over, and customers also have to pay their fees or their margins with the other competitors.
We think gradually the competitive environment is improving. As compared to the big number of smaller platforms, obviously size gets more buying power, gets more commission volume, and then also has more margin to spend in IT. It is a spiral upwards. You can see that the gap between the big platforms and the smaller platforms is growing and growing because the small ones are not growing. The big ones are growing fast. In the end, there will be, it's a clear outcome of the game.
Is there also already a question? Is there also already an increasing trend visible in multiples that are paid for the smaller ones? Or is it still, I remember, six to eight times, I think?
For the platform businesses, this mostly can be more. Yeah, it depends. I think it will be a little bit higher than that. The last transaction was PMA also bought by HG Capital, but we do not know the price. What I hear, it is more than 12 times. I do not know.
For platforms, yeah.
When it comes to Sumitas, yeah, you are right. There is $5 million more to be invested. That means $50 million in equity. It is not a secret that Sumitas also has a debt facility of at least $50 million. There is at least $100 million to be spent for investments. I think this will carry through the year 2025. We have to discuss internally whether to have more capital deployed or find other co-investors. This is still in the open. Right now, as we said, we are happy with the development. We have a very active M&A team that basically buys a broker every month. There is a lot of activity there.
As there are another 2,000 brokers out there above about $500,000 in turnover that could be bought, there is a lot of room to go. Yeah, right now we are well-financed, and we'll see how this develops over the next 12 months. We have to take the decisions. Obviously, it's a luxury problem, more or less.
You could continue if you want to maybe expand your cooperation with Sumitas.
We see that the other models work quite nicely, right? GDW, for example, now just became the biggest broker in Germany, being an accumulated group of around 50 brokers. You can see there's future in this business model. We are glad that we are among the top five players there and also can derive some growth from this aspect.
Okay. Maybe one more, if I may, that's on the AI part. I think in our recent roadshow, we already talked a little bit about that. Twelve to fifteen people that you can replace by AI in a year, that's quite a big number, I would say. What kind of savings can we expect more in the 2025-2026 period, so to say?
The savings are that we do not have to increase our headcount in a relevant way. It's not that we will lay off people. We need all our people that we have. As mentioned, we have a very motivated and, yeah, very motivated team. It is rather that we can show the information faster, in a better quality, and use the people that we have to do more, to do tasks that bring more value to the company. I would really like to look at it that way and not like cutting 10 jobs or 20 jobs.
That's also not how I meant it.
Sorry, which would be possible, but I think it would not be the right decision.
That's also not how I meant it. I meant it like so you can do the same work with less people, but...
I would say in 2025, at least 10 people, 26 more.
Okay. Okay. Those are really decent numbers. Thanks.
Thank you so much for your questions. In view of the time, shall we cover two or three questions from the chat as well? Yes. Okay. What proportion of the full year 2025 midterm guidance is already covered by the ramp-up of existing partnerships?
100%, as mentioned. We did not plan anything that is not signed right now.
All right. How's the progress with Ernst & V, Versicherungskammer Bayern, and the new European insurance company announced August 5th?
We will answer, Sebastian.
Yeah. EKB, as we said, is as slow as we planned. The savings banks are starting to onboard. Now there might be a roll-up. They have an internal structural topic as well as the responsible board member also changed. The first meeting is just to come. Yeah, slow start there. Also, the big European insurance company, as Ralph mentioned before, that was a soft launch, but we are happy with this development.
We already have more than 200,000 contracts on our platform from the segment. I would say all in all, we have to be happy with this development. As always, could be faster, and we definitely have partnerships that develop faster.
Right. Onboarding of big clients like Provinzial, SV Versicherung, etc. has shown to be quite a long process, with many of the biggest potential clients being in the onboarding phase. What are the biggest bottlenecks, and what do you do to address them?
I mean, the biggest bottlenecks in this big partnership are that the management of our partner who decides to do the cooperation with us has to convince internal people and has to do the internal project after onboarding. All our bigger projects, they suffer from this, that the, let's say, ground speed of the corporation since it started technically is not that fast as it could be. What do we do?
We service, we service, we service, and we educate the people. It's a marathon. If you look at the figures, we already have 25%, which is like EUR 50 million-EUR 60 million coming from these corporations. Again, we have a lot of these corporations, and they will carry us in the future and will help us to come from EUR 220 million today to EUR 500 million in 2030.
All right. On what evaluation metric is the goal of EUR 1 billion market cap based on? What number of the shares would you expect in 2030 to reach the EUR 1 billion market cap? I guess you need to increase the number of shares for acquisitions.
Obviously, Ralph and I, we hate dilution, right? It is like we are diluted. Since the foundation of the company in 2002, we are diluted quite significantly. We have the same interest, the two of us, as all the other shareholders here and investors that we do not like to dilute. By now, we could increase our EBITDA significantly. On the debt side, we have some maneuverability and some leeway.
You would rather expect us to add to debt if we do M&A transactions than to do capital raises. If we would think about capital raises, maybe to increase liquidity a little bit, but then this will be rather small. We do not expect to have a dilution effect. We can do this by organic growth and M&A transaction using debt. Good news.
All right. I guess two questions left. Can you add some color to your thoughts about the buildup of funds and whether you would consider another share buyback as an alternative at this point?
The only luxury problems that we basically have is that our liquidity in the shares is low, right? It is like obviously we have a big number of happy holders that are trusting in the company and just do not really sell. This is why there is not a lot of movement. Most of the shares go into block transactions away from the stock markets. Good and bad, right? Every seller finds a buyer or the other around, but it does not look that liquid. We saw that the share buybacks really helped to, or let's say, was contributing to the fact that the share is not liquid. This is why basically it was one of the reasons why we stopped share buybacks and did not have another one, right? Yeah, Ralph, maybe you want to add to that.
Yeah, it is always the same discussion from a question of capital efficiency. If we think that there's a valuation of the company is higher than it is valued at the stock exchange, then a buyback makes sense. We have the profitability, and we have the cash for this. If we do not invest the cash into M&A transactions, then it's always that's the discussion between liquidity and capital efficiency. We didn't decide to do the next share buyback program, but we also did not decide not to do any again. Maybe this is the concrete unconcrete answer.
Thank you so much. The last question, and I'm quite not sure if we already covered it. With market share of 0.6%, why has your market share not grown at a faster rate if the value proposed is so compelling? Is growth curtailed by the capacity within JDC, or is the market slow to transition to your platform?
Yeah, thank you for this question. The reason is the market is quite big, right? The entire premium is 6.5% of German GDP, and there's EUR 30 billion in commission paid out to German intermediaries, right? Also with our growth rates, right? We're now coming from EUR 0.5 billion- EUR 0.6 billion. We're doing our best to really roll out the platform as fast as we can, introduce as many major customers as fast as we can. Yes, we are highly motivated to grow our market share. We're doing a lot, yes, obviously, we are the most impatient of all in the market. It's a very slow transition. That's really true.
Right. Thank you so much. With this, we will come to the end of today's earnings call. Thank you, everyone, for joining. You've shown interest and all your questions. A big thank you also to you, Sebastian Grabmaier and Ramona, for your time. From my side, I wish you all a lovely day. I hand back to Sebastian for some final remarks.
Yes, thank you very much, Sarah. We want to take the opportunity again to thank our team, right? To stem almost 30% growth, that's quite an operational challenge. We have very high image factors as well. Very good satisfaction of our clients and our customers, also among the institutional clients. That's a very good sign for us. Also with our investors, we get very good feedback. Thank you also for that. The best feedback we can get is the stock markets for basically all of you. As Ralph mentioned, it's not easy times for a small cap, especially in a European market.
We can see that we will go on to deliver quarter after quarter after quarter as promised. You can see always the last years, we tell you what we do and what we plan, and then we fulfill what we're planning. Quarter over quarter, we will show you that we are growing, that growth is growing, that earnings are growing more than turnover. This is why both Ralph and I and the team, Ramona and Marcus, are really convinced that we have a good chance to become the market leader. We have a good chance to get to a valuation that can reach a billion. We have all the cards in our hands, and we will play them right. Trust us as you trusted us five years ago.
I think we have a good view on the market, on the developments, and that's not optimism. It's just like a, yeah, a continuing approach, step by step by step. We will conquer the market. This, yeah, then will be very positive numbers for all of us. Thank you very much for your trust, and thank you very much for listening a little bit more than the years before. Happy to take more questions you might have via phone, email. We are looking at a very positive year 2025. Thank you very much, and have a good afternoon.