Scout24 SE

XETRA:G24

Earnings Call Transcript 2020-Q1

[Operator]

Good morning, and thank you for joining the Scout24 Results Q1 2020 Conference. At this time, I would like to pass off to the moderator.

[Ursula Querette, Head of Investor Relations]

Welcome, everyone, to Scout 24's First Quarter 2020 Earnings Call. I am Ursula Querette, Head of Investor Relations at Scout24. I have Tobias Hartmann, our CEO; and Dirk Schmelzer, our CFO, with me on this call. Our analyst presentation is available for you on our website, and you can see it live if you have used the web link. Tobias will start the presentation with a summary of the key Q1 events and recent KPIs. Dirk will then take over to dive deeper into the Q1 financials.Tobias, over to you.

[Tobias Hartmann, CEO & Chairman of Management Board]

Thank you, Ursula, and let's directly move to Slide 3 of our presentation. We had a strong first quarter 2020. Growth and resilience sums it up well. We have successfully delivered on our growth strategy, as you can tell from our results. In the context of the COVID-19 crisis, which started to impact all economic and social arenas in March, Scout24 has proven to be very resilient. We have decided to use our position of strength to help our real estate partners to navigate through the impact of the COVID-19 crisis. We have swiftly implemented a comprehensive action program that is aligned with our long-term strategy. With this program, we have supported, and continue to support, all our real estate partners, from agents to consumers, while at the same time reinforcing our leading market position. We have also identified further short-term cost efficiency measures, which come on top of the cost efficiencies already announced last year.On 31 March, we completed a milestone as the sale of AutoScout24 to Hellman & Friedman has closed. From the net cash proceeds of EUR 2.84 billion, we have already repaid a large part of our debt and started a second tranche share buyback program on 6th of April. We reconfirm our proposal to pay a 2019 dividend of EUR 0.90 per share. We further reconfirm our intention to distribute up to EUR 1.69 billion of capital to our shareholders via share buybacks over the course of 2020 and 2021.Let's now walk through the key performance metrics on Slide 4. Our Q1 revenues grew by 5.6%, reaching EUR 89.1 million. We are proud of this strong performance, especially considering that starting in March the first COVID-19 impact became apparent. ImmoScout's operating EBITDA margin increased by more than 5 percentage points to 64.6%, thanks to the successful implementation of the cost efficiency measures announced last year and our operating leverage. This margin is even more impressive considering that IS24 now includes some of the lower-margin previous consumer services segment activities.In the first quarter, we managed to grow both our number of real estate partners and our ARPU. Residential Real Estate ARPU grew by 9.6%. Business real estate ARPU increased by 6.8%. We continue to be the, by far, most relevant real estate marketplace for both agents and consumers in Germany with a distinct #1 market position for active listings and a clear leadership position with 14.7 million unique visitors per month, growing at over plus 11% year-on-year. Sessions, another important KPI for traffic grew by 5% year-on-year to almost 104 million visits or sessions per month. The addressable home seller audience was at 340,000 at the end of March 2020. This gives us a high and growing base to support our lead engine product. By the way, revenues with the Realtor Lead Engine almost reached EUR 4 million in Q1 2020, representing an increase of approximately 90% year-on-year. So in summary, a strong performance and momentum across the board in Q1.So much for our Q1 performance. Let's move on to Page 5. In March, we have announced and initiated our immediate action program to assist agents and consumers to navigate through the COVID-19-induced challenges. The program consists of 3 pillars. For agents, we have launched Liquidity plus, grants them 9 months extension of payment for the April invoice. 1,200 agents have made use of this deferral possibility in April, and the program has been extended into May. IS24 analyses show that our agent partners are weathering the storm and are coping with the contact restrictions, which are now being increasingly relaxed. By the beginning of May, professional listings were up 3% compared to pre-COVID levels.On the demand side, the sky is brightening as well. Demand from consumers who are searching for real estate is picking up, and they are starting to relocate and move again. Sessions on our platform were up 7% in the first week of May and exposé impressions up 12%. We are also seeing premium membership revenues recovering in May. Besides the rising supply by our agents, our platform also profits from increasing private listings. This is fueled by the second pillar of our immediate action program. Listings plus, which we have launched for consumers, granted private listings to be advertised free of charge for a 4-week period starting on 27th of March. At the beginning of this month, private listings were up more than 20% compared to pre-COVID-19 levels. The Listings plus program had also been extended into May.Finally, with our Leads plus initiative, ImmoScout24 will support interested residential agents with free homeowner leads in the second quarter of 2020. Actually, we have just started with this. And from the supply and demand activity on our platform, we see that homeowners are ready to transact again.So in summary, all these data points show that the German real estate ecosystem has proven to be very resilient. And while the COVID-19 development and overall impact on the economy are still uncertain, we are in a position of strength, which we are using to support our long-term partners. What we do know, despite the prevailing uncertainty, is that the digitization in the German real estate ecosystem will accelerate. In order to create even more awareness, we have initiated a position paper on the digitization of the industry. Together with other leading associations and companies in the real estate sector, we have developed a 10-point program for an operational real estate market. The position paper shows how a successful digitization of the industry and its processes and services across construction and real estate transactions can be achieved.Citing our position paper. We request, for example, that building permit procedures are digitized and accelerated. We also request that citizens are able to apply for housing benefits online. Obtaining a loan should be possible in digital form without personal contact, and the industry is committed to facilitating legal transactions in digital form to name only a few of the points. As you can see, together with the other members of the alliance, we are also seeking the support of the legislator as well as the federal, state and local authorities. Only if everyone works together, a market standstill in the face of the COVID-19 can be prevented. The digitization of the industry is moving fast. It needs to move even faster, and Scout24 as clear innovation leader will benefit.Now I'd like to hand it over to Dirk to provide you with further details on our Q1 financials on Slide #6.

[Dirk Schmelzer, CFO & Member of Executive Board]

I thank you, Tobi. The first quarter 2020 was the last quarter in which the Scout24 group operated in 2 digital marketplaces with ImmoScout and AutoScout. The deconsolidation of AutoScout24 will be shown accordingly in the half year financial report.Anyway, ImmoScout24 had a strong start into 2020. External revenues increased by 5.6% to EUR 89.1 million in the first quarter compared to EUR 84.3 million the same quarter 2019. The membership migrations initiated at the beginning of the year started with great momentum as well as the free-to-list initiative for certain rental listings. Only towards the end of the first quarter, COVID-19 and the associated physical distancing measures had a dampening effect on consumer behavior, the business of our agent partners and consequently, on the business of Scout24. Quarter 1 shows that despite those first COVID-19 impacts, we still came out at the lower end of our now suspended full year revenue guidance, reconfirming our strategy outlined at the Capital Markets Day in November 2019.As Tobi already mentioned, ordinary operating EBITDA of ImmoScout24 increased by 14.4% to EUR 57.5 million. That is a very healthy margin of 64.6%, 5.2 percentage points above the year before. The new Scout24 group generated an ordinary operating EBITDA margin of 61.8% in the first quarter, an increase of 4.7 percentage points versus first quarter 2019. All 3 new segments contributed to that growth, which you can see on the next slide, #7.The strongest growth driver was the Residential Real Estate business with 7.1% revenue growth in quarter 1. Revenues with our Residential Real Estate partners profited both from an increasing number of agents and ARPU growth. Sales of on-top products and migration to higher tier memberships started with great momentum. The latter with an acceptance rate of over 40% of the customers addressed. An important on-top product was the Realtor Lead Engine, where revenues increased by almost 90% in the first quarter. Revenues from services for consumers also rose sharply until mid-March.Revenues from individual listings were down on the previous year. This is primarily due to the initial free-to-list initiative launched at the beginning of the year. The offer was very well received. The number of private rental listings rose by 12% year-on-year in January, by 8% in February and by 3% in March. The foregone revenue was partly compensated for by an increase in premium membership revenues. In April, free-to-list was then extended to all listings booked by private individuals as part of the immediate COVID-19 action program.Revenues in the Business Real Estate segment also grew at an above-average rate of 6.4% in the first quarter of 2020. This development was mainly due to strong growth in revenues with project developers and with business real estate core customers. Pay-per-ad revenues declined year-on-year in the business segment.3rd Party Media & Other revenues declined by 6.4% in the first quarter. The main reason for this was the decline in media business. The subsidiary, FLOWFACT, also reported declining revenues due to delayed transition of products into the new cloud solution.On a positive side, ImmoScout24 Austria developed very good with a growth rate of 12%. The ordinary operating EBITDA margin of ImmoScout24 rose to 64.6% compared to 59.4% in the previous year, with all segments delivering positive margin expansions. The Business Real Estate segment achieved a margin of 73.6%, driven by revenue expansion and significant economies of scale. The Residential Real Estate ordinary operating EBITDA margin was 65%, up 4.4 percentage points. The lower-margin business with 3rd Party Media & Others also improved its profitability by 2.7 percentage points to a margin of nearly 40%.Let us now drill down on our strong ARPU development, which I mentioned before, and turn to Slide 8. Please note, we have redefined Residential Real Estate core customers to include also finance partners, such as savings banks who act like realtor agents. Those were previously included in consumer services. Core customers are the basis of our ARPU calculation. Core customers are all customers with an existing contract, which includes at least one core product. The newly defined real estate partner ARPU is, hence, a mix between residential agent and property manager ARPU and finance partner ARPU. Since the latter is significantly higher than the former, this leads to a higher real estate partner ARPU than you were used to.In the first quarter of 2020, the number of residential agents and property managers was up 3% to 15,289 while the number of finance partners remained flat, leading to an overall real estate partner growth of 3%. The ARPU with residential agents and property managers increased by 9% from EUR 649 to EUR 707, while finance partner ARPU rose by 6.5% (sic) [ 6.6% ] to EUR 974. As a result, overall real estate partner ARPU rose by 9.6% (sic) [ 9.5% ] to EUR 729. The number of business real estate partners reduced slightly by 2.2% to 2,748. The ARPU with business real estate partners increased, however, by 6.8% to EUR 1,811.Now let's turn to Slide #9. Our results have been driven by the solid revenue development, cost efficiency measures and product development efforts, which resulted in higher own work capitalized. Increasing IT costs were therefore more than compensated. Those were up due to our AWS migration and resulting increasing share of cloud-based platform and software solutions. Group functions contributed EUR 2.4 million to the cost. In total, our operating costs remained almost flat, while revenue increased, which reconfirms our ability to scale the business.The increased own work capitalized refer to project developments that support the future growth of our platform, such as projects aiming at an accelerated homeowner acquisition, an improved consumer journey, integrating CRM solutions, premium membership enhancements and data technology projects. Ordinary operating EBITDA from continuing operations amounted to EUR 55.1 million in the reported quarter. This represents a growth rate of 14.4%. At 61.8%, the ordinary operating EBITDA margin from continuing operations was 4.7 percentage points higher than in the first quarter 2019.Now I continue to give you a brief update where we stand with regards to the cost-efficiency measures we announced at our Capital Markets Day in November last year. Please flip to Slide 10. At the CMD, we had announced EUR 14 million of cost savings for the full year 2020, 40% related to AutoScout and 60% related to ImmoScout. This translates into EUR 8 million for the full year 2020 for continued operations. As you have seen on the previous slide, our group margin improved by more than 4.7 percentage points compared to first quarter '19. Starting in late Q2, we have implemented a number of cost savings measures and continue to do so. A majority of these measures materialized already in the first quarter. The corresponding savings have been in personnel costs and here, specifically in G&A and sales. We have also spent marketing more efficiently and have reduced other costs across the board.In sum and across the group, we have realized cost savings of EUR 2 million in the first quarter of this year, which will result in full year cost savings of EUR 8 million. We have, hence, delivered on our announced cost efficiency measures.In order to cope with the COVID-19 challenges we have seen so far, we immediately identified savings potential for the remainder of the year. We believe that in a further downturn, we can scale our business for the remaining 9 months with variable and structural cost efficiency measures in the current COVID-19 context. We currently estimate that these measures will amount to approximately EUR 10 million on a full year basis, consisting of 20% pay cost, 20% cost of sales and 60% marketing spend.Finally, and in the context of the completed sale of AutoScout, we will incur approximately EUR 4 million of dis-synergies in personnel, engineering and procurement for the full year 2020.To sum all these measures up and taking COVID-19 free listings measures aside for a moment, we reiterate our guidance to improve margin by 200 to 300 basis points until 2021.On Slide 11, we are detailing the items below ordinary operating EBITDA. Nonoperating costs were at EUR 2.5 million in the first quarter 2020, consisting mainly of reorganization costs. This is 75% lower than in the first quarter last year, where there was a higher share-based compensation. As a result, the reported EBITDA from continuing operations has increased significantly by almost 40% versus first quarter '19. At EUR 12.8 million, depreciation, amortization and impairment losses on continuing operations were slightly lower than the previous year due to lower IT equipment depreciation and expiry of purchase price allocation amortization. The financial result from continuing operations decreased from minus EUR 4.2 million to minus EUR 6.4 million. After-tax expense of EUR 6.8 million, Scout24 reported earnings after tax from continuing operations of EUR 26.6 million for the first quarter '20, increasing by more than 50% year-on-year and translating into a first quarter earnings per share of EUR 0.25, an increase of 56.3% versus 2019.Let's now turn to cash on Slide 12. Our balance sheet total of EUR 5 billion is only a snapshot in the middle of executing the AutoScout24 transaction. While it reflects the cash inflow of EUR 2.84 billion as of 31st of March, the transfer of the asset has only taken place on April 1.Let's turn to the debt side. Before closing, EUR 100 million were additionally drawn under the recurring credit facility I. The cash bridge also reflects an outflow of EUR 680 million for initial debt repayments, thereof, EUR 315 million recurring credit facility II, EUR 45 million floating-rate promissory notes, EUR 200 million term loan, EUR 120 million recurring credit facility I. And by the way, the latter EUR 320 million were valued as a reduction in cash and cash equivalents, but not yet as corresponding reduction in liabilities. You will find this amount reported as cash in transit on other financial assets. Therefore, the cash and cash equivalents from continuing operations of the Scout24 group increased to EUR 2.3 billion as of 31st of March 2020. In addition to our commitment to repay debt in an amount of up to EUR 780 million, of which EUR 680 million has already been repaid, as shown on the previous slide, we reconfirm our share buyback plan.Let's turn to Slide 13. On April 6, shortly after the announcement of our 2019 results, we have started our second share buyback tranche. This up to 490 million tranche corresponds to approximately 7.4% of our shares outstanding. We launched it in this amount to fully use up our tax distribution account together with this year's dividend proposition of EUR 94.3 million. As of 23rd of April, over 1 million shares with a volume of EUR 58.1 million have already been repurchased. We then had to pause the activities until the AGM invitation was published last week. This week, we are resuming the share buyback activities. The proposed dividend payment, in addition to the planned share buybacks of up to EUR 1.7 billion in total, is part of the plan to return the proceeds from Autoscout24 transaction to our shareholders.Talking of the AGM, besides the dividend payment, an additional regular 10% share buyback program and a redemption share buyback program will be proposed for resolution. The additional up to EUR 200 million 2021 share buyback amount you see on this slide, will come from the newly resolved program. The up to EUR 1 billion redemption share buyback program will be executed, if approved by the AGM, via a public purchase offer between 1st of February and 30th of June next year. The corresponding decrease of share capital is mandatory.Please turn to the next slide for an overview of the respective agenda points. We have published our AGM agenda last week on May 6. As you can see here on Slide 14, the agenda points corresponding to our capital return plan are number 2, number 7 and number 8. As it is very much in the interest of all our shareholders, we are asking you to vote in favor of these resolutions. And of course, of all the other resolutions as well. There are 10 agenda points, 9 of which are requiring your vote. As already mentioned, the AGM will take place on June 18. It will happen solely as a virtual meeting without physical attendance of the shareholders or their representatives. You can find all necessary information on our website.With this, I would like to thank you for your time and hand over to the operator to handle the Q&A session. Operator, over to you.

[Operator]

[Operator Instructions] At this time, we will take our first question.

[Fathima-Nizla Naizer]

I have a couple of questions. The first is on the deferral that you offered the real estate agents...

[Tobias Hartmann, CEO & Chairman of Management Board]

Sorry, since the -- since the operator hasn't done the introductions, would you kindly introduce yourself.

[Fathima-Nizla Naizer]

This is Nizla Naizer from Deutsche Bank. A couple of questions from my end. The first is on the deferral of payment that you offered real estate partners in April and May. We were curious to understand why out of the 15,000 Residential Real Estate agents that you do have, only 1,000 of them actually wanted the deferral. Is it because the underlying health of the real estate agent market is still quite robust? Some color there on what you're hearing would be great.Secondly, you mentioned that activity has picked up and has gone back to pre-COVID type of levels. Are you also seeing that in the number of transactions that are taking place? Or is that still ramping up slowly? So some color on what's actually happening on the ground would be fantastic.Lastly, on the premium memberships that you said grew well in Q1 until mid-March. Have you offered anything new to the premium subscribers to drive that growth? How many members are you seeing at this point of time? Like some color on how that has grown would be great? And what is your outlook for the rest of the year with this particular revenue stream as well?

[Dirk Schmelzer, CFO & Member of Executive Board]

Nizla, thank you very much for that. This is Dirk, and I will answer the first question then hand over to Tobi. On the deferred payment, I think this is an interesting question. At least open exactly, I think, 2 interpretations. First of all, the one you mentioned, it might be a signal for a pretty good health of the German real estate agent market that only 10% of our overall agents took the payment deferral as an offer to delay payments for 9 months. The second interpretation is that we are -- and we are working on that as you know, still a minor part in the agent's P&L. And therefore, it is not sort of the most critical part with regards to agent liquidity, which in turn might lead you to the conclusion that we have still room to increase ARPU.And I would hand over with regards to your activity question to Tobi.

[Tobias Hartmann, CEO & Chairman of Management Board]

Nizla, thank you for your questions. So on the activity level, we've seen really good growth rates rebound to basically pre-COVID levels, whether it's on the users, on sessions. Also listings, obviously, we've seen quite a bit of growth also supported, obviously, through our activities on the free-to-list initiatives. So everything is trending really upward and positively. What we don't have yet developed back to pre-COVID levels is all the leads, i.e., the transaction levels, we're seeing them not at the same level yet. This is obvious because there's still contact ban restrictions and limitations as to how to conduct business.On your question regarding the memberships, the premium memberships, we are also continuing to tweak the product and to add new features. So we are more or less around the 90,000 subscription stock and memberships. And we develop this actively. As Dirk pointed out in his speech, we're investing into the product. And so this is a key part of our strategy going forward. Thank you.

[Operator]

[Operator Instructions] We will take our next question from William Packer.

[William Henry Packer, Executive Director of Media Equity Research]

It's Will from Exane BNP Paribas. So 3 for me, please. Firstly, could you -- you provided us with a number of agents as at the 31st of March. Could you talk us through how that number has developed? Have you seen any churn?Secondly, you delivered some healthy ARPU growth. How should we think about ARPU growth for the rest of the year in the residential business? Can it grow further or hold its gains?And then finally, it feels like the media line is most at risk, and there was evidence of deterioration, I think, towards the end of the Q1. How has that developed during the second quarter?

[Dirk Schmelzer, CFO & Member of Executive Board]

Okay. Thanks very much, Will. So first of all, with regards to the amount of subscribers on our platform. You have seen in my presentation that we saw quite healthy growth. First of all, with regards to the amount of real estate partners and residential agents, which grew by 3%, but also on the real estate partner ARPU, which grew by 9%. And here, namely -- 9.6%, and here, namely, from the residential agent and property manager ARPU as well as from the finance partner ARPU. And therefore, we have seen healthy growth according to our CMD plans compared to the delivery that we have seen in Q1. Your second question was...

[William Henry Packer, Executive Director of Media Equity Research]

You've continued to see healthy growth since the end of Q1. Was that the message?

[Dirk Schmelzer, CFO & Member of Executive Board]

Yes. And to give you an update, that healthy growth is continuing. As of April, we still see around 16,900 agents on our platform. We still see an ARPU level of around EUR 720-ish. And we still see an increase of business real estate partners now up to 2,751.Coming to your second question, Will, and thanks for that. What we have introduced beginning of the year and as part of our CMD strategy, was a rate card mechanism for our residential agents. And what we have then done under the COVID measures that we've given to the market, also, slightly change that rate card mechanism with regards to rebates we're giving. And here, the most important point certainly is a COVID discount that we're giving to the customer on the rate card. The second point is we are giving discounts for list-all and list-first measures that the customer is undertaking. Certainly, complementing our free-to-list initiative on the PPA side. So what we want to achieve is to have as much as of the German real estate market on our platform as possible, and we want that with free-to-list and with list-all and list-first initiatives, as I just said. Now does that have an effect on ARPU growth in this year? Certainly. So I wouldn't see our ARPU growing in the remainder of the second quarter. We also reconsider our ARPU growth strategy for the third quarter. And the fourth quarter would be the earliest quarter where we see slight ARPU growth kicking in, and that will continue in 2021.Now with regards to your third question, which was on the media revenues, I can confirm, and you have seen that in our numbers, that we are seeing a development here, which is slightly going down. However, we see first silver linings, let me put it like this, on the media business as well slightly picking up. But if we sort of just solely look at the second quarter, we would say that media might be down around 40%. But I would like to remind you, Will, that this is only 4% of our overall revenues.

[William Henry Packer, Executive Director of Media Equity Research]

That's very helpful. Just to clarify one thing. So it sounds like for the rest of 2020, EUR 720 ARPU sounds reasonable. That's where you've got to, and you're talking about no more growth for the rest of the year with growth to improve next year?

[Dirk Schmelzer, CFO & Member of Executive Board]

Yes. And that is -- Will, that is roughly reasonable because it is a mix of new customer acquisition, which is also in our focus, plus the corona discount, plus the list-all and list-first discounts we're giving.

[Operator]

We will take our next question from Miriam Adisa.

[Miriam Anuoluwapo Adisa, Equity Analyst]

Three questions from me. Firstly, just on the deferral event. If you could just give us an update for what you're seeing in May, perhaps sort of a run rate number. Does it look like it will be much lower than the 1,000 that you saw in April?And then secondly, back at the full year results. You gave us a sort of estimation of EUR 6 million to EUR 10 million revenue impact for April. Just wondering if anything changed in your expectations because it sounds like things are slightly better perhaps than you saw back then.And then thirdly, on the premium model. Just wondering if you're concerned at all that it could be difficult to move away from the premium listing model, and how you're thinking about potentially -- or when to introduce monetization again there?

[Dirk Schmelzer, CFO & Member of Executive Board]

Okay. Thanks very much, Miriam, and welcome back. First of all, with regards to the deferral in May, we see the same trends that we basically saw in April with around about a not material figure of our overall customer base of 10% to 15% making use of the deferral program. And we see that across the board. We see that on residential sale as well as on commercial.And to your second question on the revenue impact. To be honest, we have been positively surprised by our ability to cope with the originally outlined revenue impact that we saw of between EUR 8 million and EUR 10 million. So in April, stand-alone, we only saw EUR 4 million flowing through, and that is due to a mix of effects. First of all, free listings. Although free for 30 days, still more than 15% of our customers made use of payment options in the free listing space. The second piece is we managed to compensate some of the lost revenues by what Tobi just mentioned with memberships on rent, which were existing already with potential people looking out for a new apartment. But what we also see now is memberships on the landlord side increasing. And with that, we were able to compensate for the revenue loss of free listings. And certainly, we also plan to continue with that into May because we see those figures accelerating and also playing into our strategy of delivering realtor leads to our customers. And the more listings we have on the platform, the more we are able to deliver realtor leads to our real estate customers.And that also leads me to the question you had around the premium model, which was basically what Tobi said earlier on. We don't think that there is a sort of a cannibalization, what you outlined in your question, with regards to the model. We more and more see it as a complement to our strategic offering that we have out in the market.

[Tobias Hartmann, CEO & Chairman of Management Board]

Maybe, Miriam -- this is Tobi. Maybe -- let me just add also for the audience something which might be a little bit different to what you're seeing in other cases and instances. The offer we put out there to our customers was not peanut butter spread, hey, everybody gets a deferred payment, if you want to. The underlying assumption is we want to have a strong communication, we'd like to be in touch and in an active dialogue with our customers, i.e., you need to call us. You need to get in contact with us and then we will apply a specific package such as a deferred payment plan, but there's something in exchange such as a commitment on the other side, you, as a customer. And that's how the program was put together, the 3-pillar program, and that's how we're executing. And our experience so far has been positive also from the feedback and sentiment we got from our customers.

[Operator]

We will take our next question from Craig Abbott.

[Craig Abbott, Head of Mid and Small Cap Research, Germany]

Two questions from my side, please. First of all, I just wondered -- tell us a little bit about the continuation of payment holidays and listing strategy for May. I mean what's the likelihood that this could be extended for June or even beyond, would be the first question.And the second question is just looking on the business side. I realize it's, what, around 20% of the business. And so far, your trend there also with further customer wins has been quite positive. But as you noted in your quarterly report, obviously, you're seeing already declines in both the listing side and I think on the customer side as well. And we all know what's going on out there. And particularly, looking a bit further down the road with maybe structural moves toward more hybrid offices, potentially -- maybe looking at quite a prolonged downturn in office space, rental or purchasing and so forth. Any concerns here that the -- that you might -- the dynamics of the business real estate side could deteriorate over the coming quarters?

[Tobias Hartmann, CEO & Chairman of Management Board]

Craig, it's Tobi. Thank you for your questions. Regarding your first question on the listing strategy and whether this could be extended to June...

[Craig Abbott, Head of Mid and Small Cap Research, Germany]

And the payment holiday.

[Tobias Hartmann, CEO & Chairman of Management Board]

Right. So right now, it is not our plan since we haven't also communicated it. Now having said that, we all know that there's a lot that we don't know yet -- as of yet. And if there could be a second wave if -- by the federal state the various plans that they're rolling out, which are a little bit all over the place here in Germany, we are seeing different trends and figures. Is it a theoretic option? Of course, it's a theoretic option, but actively, we have not planned it so far. And so that's where we are. So we don't really have a strong opinion right now, but you can assume it's not our plan as of now.On the business side of your question. We agree there's a couple of question marks on the commercial side. However, there's also pockets of opportunities. Sublease options are an option that will become more important, as we've seen in prior years and in different times already. That's also something we could do on our platform and that we could support. Now having said that, certainly, the business part when it comes to commercial is something where we need to be innovative, and we'll see a lot of different trends going forward, depending on the rebounding of the economy. So fair point. Thank you.

[Operator]

We will take our next question from Lisa Yang from Goldman Sachs.

[Lisa Yang, Equity Analyst]

I have a few questions, please. I just wanted to follow up on the -- I think your comments earlier that your ARPU won't grow until the end of Q2. But now it won't grow in Q3 either. So it sounds like you're a bit more cautious on Q3. So I'm just wondering why that would be the case. Why wouldn't we see ARPU at least sequentially pick up a bit in Q3 given the positive trends you're seeing so far?The second question is, I know there's a huge amount of uncertainty that at the end of March, I think you said on the call that you expected to -- or you aim to be broadly flat on revenue for the full year. Do you think this is still achievable?And then in terms of your outlook comment on Q2, Q3 being the most impacted by COVID-19. I mean are we talking about a 10% revenue decline here or 30%? I mean any -- I appreciate it's difficult to comment, but are we closer to a minus 10% or minus 30%?

[Tobias Hartmann, CEO & Chairman of Management Board]

Thank you. I'll take -- sorry, I'll take the first question on ARPU growth again. And we would like to, again, explain a little bit how we're approaching this, which is fully in line with the strategy that we've laid out also during our Capital Markets Day. It's very important that we strike the balance of being the right and the fair partner to our customers during this crisis. So we had shared that we very well started with the migration path, i.e., the upgrade path for the first 8 to 9 weeks into the year. And it resonated well. The adoption rate was great. The products are working. And the ARPU, obviously, had a very positive impact. Now going into COVID-19. You can't ask your customers for higher ARPUs and to upgrade and to pay more money when everybody else around you is actually giving rebates or even giving things out for free. So that's why we chose the 3-pillar strategy, but we didn't just simply put out a discount, we also connected it to the core strategic objectives of the strategy, which is we'd like to be an active marketplace, we'd like to gain more market share in listings and we like to provide our customers medium-term with leads to do more business. So coming back to your question, we are not growing. We don't assume to grow ARPU this year faster because this would be breaking the DNA of what we are trying to establish, which is a long-term relationship with our customers. But what's very important, we do know that the products are working, we do know that the strategy is working because we have executed it for the first 8 to 9 weeks of the year before mid-March COVID-19 hit us. The other questions, I would defer to Dirk. Thank you.

[Dirk Schmelzer, CFO & Member of Executive Board]

Yes. I knew that was coming on your question with regards to the full year guidance. I think we clearly see a path back to normal here in Germany with contact restrictions being relaxed. The German real estate market and operating arena proving to be more resilient than we initially thought. We are -- but yes, we still think we are in a volatile and somewhat unpredictable territory. And that is given the unprecedented nature of COVID-19. First of all, in Germany, the responsibilities for relaxation measures have been pushed down to municipalities. COVID-19 regulation has become more complicated through that. So there's a slightly different regulation applying to each of our agent customers and consumers in each federal state. Secondly, there is a risk of a second wave, as Tobi already mentioned on a question earlier on. And thirdly, I think the macro effects of the crisis are still very unpredictable. In the past weeks, we have been driving on short sight. We've been staying active. We've been staying flexible, and we've been staying ahead of the game. And that is exactly the reason why we are navigating well through this crisis, and we want to continue to do so. Hence, there are good reasons why we are not providing you with a 2020 guidance at this point in time.On the full year -- on the Q2 guidance you were asking. I mean, certainly, we have a bit more -- being halfway down the road, we have a bit more visibility on the second quarter. And you were specifically asking when do you see the second quarter with the current trends. As I said earlier on, April has been better than we originally expected. In May, we see the same trend. So if we would be down more than -- significantly down more than 10% in the second quarter versus prior year on revenue, I would really be surprised.

[Lisa Yang, Equity Analyst]

And can I follow up? I think you said earlier, one of the reasons why ARPU didn't grow is because I guess you want to improve your competitive positioning. Could you maybe comment on what competition is actually doing? You mentioned they're giving away discounts or for free. I mean have you seen them becoming more aggressive lately?

[Tobias Hartmann, CEO & Chairman of Management Board]

Yes. We haven't seen a lot. We are leading the pack right now here in Germany. There was an offer out there by eBay Kleinanzeigen for the month of April for the professional business also for listings initiatives and a rebate. But other than that, I would certainly stress that we have the most comprehensive plan and program out there. Now obviously, we don't know what's planned tomorrow. But as of now, that's pretty much what's going on.

[Operator]

We'll take our next question from Andrew Ross.

[Andrew Geoffrey Ross, Research Analyst]

First one is actually on Bestellerprinzip. It seems strange to go this far on discount for that coming up. So could you just give us an update as to what you think is going on there in terms of timing? Are we still thinking second half or into next year? And I guess give us some context around your ARPU contributor, it might start to grow from Q4 and into next year with the introduction of Bestellerprinzip? That's first question.Second question on -- back on C2C. I understand it's hard for you to be sure about how you're going to price that into June, but maybe you could give us a sense as to how you're thinking of pricing it more second half and medium-term in the context of you've seen a nice uptick in listings by doing this and eBay Kleinanzeigen may or may not be about to change and so they could be a more aggressive owner. So how are you thinking about your market share in C2C more broadly in that context?And then third question. FLOWFACT sounds like it's not going as well as it has. I'm not sure I'm totally clear as to why not. So I was hoping you could give us a bit more color to why not.

[Tobias Hartmann, CEO & Chairman of Management Board]

Andrew, it's Tobi. Thank you for your questions. On the famous Bestellerprinzip. Yes, so what we are assuming right now is we are still expecting the law to come into force sometime in the second half of the year. Why? It's a bit strange. We've debated this internally because right now, that's obviously not the core issue, but this has been pre-stage discussed and put forth to be confirmed. We don't see a reason why this should not go through at this point in time. Again, we don't think that this will change significantly, and so we're assuming for the time being second half, sometime, it will be put in forth.On your second question with the C2C and what we're doing there and how we're thinking about this. We're obviously monitoring the trade-off between gaining market share and monetization. And this is something where we're learning every day and each day and the teams are making great progress in collecting more data points. So we have a couple of different playbooks that are ready and that we can adjust. And this is how we'd like to take this along. So we don't have a definitive final plan for second half, but we are well prepared with various puts and takes, depending on what we see in terms of market share and listings and activity.And then could you please repeat your third question because we had a hard time understanding your third question, Andrew.

[Andrew Geoffrey Ross, Research Analyst]

Sorry. I've got a bad line. It was just on FLOWFACT, which I think has slowed more recently. So perhaps you've been migrating it into the cloud. I was hoping just to get a bit more color as to what's not going well at FLOWFACT.

[Dirk Schmelzer, CFO & Member of Executive Board]

Thank, Andrew, for that. We're making good progress on the cloud migration, actually. I think the progress needs to be more on the customer side than on our side because the product is ready for the cloud. It's just migrating the existing features for the customers into the cloud. What we can confirm is that in -- by October this year -- August, September, maybe a bit earlier than October, we will be fully ready to have the product feature upgraded for cloud services as well as for stationary services on FLOWFACT and integrated that within the ImmobilienScout offer. So by that point in time, there is a hard integration between both offerings and every ImmoScout customer can make use of the full feature set of FLOWFACT when he is a FLOWFACT customer as well, and vice versa. And their product readiness, as I said, is coming through as planned, latest October, but we believe we can be a bit earlier here. So August, September, we should be ready on that.

[Operator]

We will take our next question from Marius Fuhrberg from Warburg Research.

[Marius Fuhrberg, Analyst]

Basically, with just one question remaining from my side. You stressed that you have 340,000 registered homeowners right now. And it's quite impressive, I would say. My question here is, what do you expect -- how many of these homeowners will finally result in a lead to the agent? And in a period of time, do you think you can gather a significant amount of leads out of this bases? And also, where is your kind of goal of how many registered homeowners you would like to have on the platform and how they would develop the next 2 to 3 years?

[Tobias Hartmann, CEO & Chairman of Management Board]

Thank you for your questions. So it's a stock that we are building and that we are growing. We do believe it's an important currency of the future for the real estate ecosystem. And we also do believe that this is a longer-term play. So if you were to ask us what's the concrete velocity until we can monetize? It goes anywhere from -- there's different stages of data points of homeowners where we have more data, where we know exactly a transaction is likely to happen -- could happen within the next 6 months. And then there's others which are a little bit earlier in the stage and in the journey. So all in all, this is a journey that could last over 2 years' time horizon and how we can monetize and how we can turn this into various leads into different funnels with or without the real estate agents. Again, what's very important is we are building this stock because we do believe this is where the journey starts, and this is an important part of the relationship in manyfold ways also for add-on offerings because that person or that household then needs to find another home, and so you can engage in many different ways. So it's really strategic. This is why we're also putting a lot of investment behind it to further finance the product.

[Operator]

We will take our next question from Patricia from UBS.

[Patricia Pare, Associate Analyst]

I guess the first one is, just trying to understand how are viewings currently conducted in Germany. Is it possible to do viewings with people living in the flat? Or is it still only allowed for empty flats? This was the first question.Then my second question is just trying to think about the growth potential for the mandate acquisition product. I don't know whether you can -- and I know this is still very, very early stage. So I don't know whether you can give us some numbers in terms of how many agents have used this product already. And I think you mentioned that around 1,000 agents were willing or had expressed interest into getting these leads for free in Q2. So just wondering whether those agents are potentially new customers or agents who have already taken the product, know the value they can get from this and like just want to take the opportunity to get it for free. So that's the second question.And then finally, I don't know whether you can give us the numbers on how many agents are on basic versus image versus acquisition this time.

[Tobias Hartmann, CEO & Chairman of Management Board]

Okay. Thank you, Patricia. First question, in terms of viewings. It depends a little bit on the states. They're both possible, yet, you can actually visit still physically, but there's pre -- steps you need to take and to make sure that the homeowner has agreed, and there's some sanitation, prep work and steps that you need to make. On the other hand, we also have a digital tour that we're offering. There's a huge spike in agents understand and seekers understand that this is a powerful tool. We've seen a huge pickup on our platform as well. There's different quality products. There's a cheaper version, and then there's a more comprehensive version in terms of viewings, and you can actually schedule it. It's live on our platform. You engage with your real estate agent or the homeowner, then you schedule for a time and then you basically have a viewing there. So both still works, but it's a little bit different in terms of physical viewings state by state.Your second question in terms of growth potential for the mandate acquisition. We do know that it has a lot of growth. We do know from -- obviously, from the existing spend patterns that this is an active position that we are underpenetrating today. We have today anywhere between 700 and 1,000 customers that are actively participating already. Again, people are getting more and more exposed to it. This is why we've put together the 3-pillar program also which is the leads plus component, which we're penetrating and which we are also allowing to have customers take a first dive into the product. Of that, it's interesting. We've gotten a pretty good response already. This is pretty much actual data now. We've already 200 new customers that we've won and that we've acquired through this initiative as part of the Leads plus initiative that we did not count towards as a customer beforehand. So we're seeing very good traction. And obviously, there's an underpenetration so far.

[Operator]

We will take our next question from Christoph Bast from Bankhaus Lampe.

[Christoph Bast, Analyst]

Christoph Bast, Bankhaus Lampe. Two questions left for me. Firstly, on your extraordinary costs, they have dropped quite significantly to only EUR 2.5 million, which was mainly due to lower share-based compensation. But as this number already includes costs for reorganization, it seems like share-based compensation in Q1 stood somewhere between EUR 1 million and EUR 2 million. Would you say that this is a fair quarterly run rate for 2020?And the second question is regarding your 10 points program. All of these planned measures, which is the one you would be able to monetize best? Is it digital application for mortgages, virtual visits of flats or rather the digitization of the notarization? And what do you think is the likelihood that this is going to happen or going to be introduced within the next 3 years? That's it.

[Dirk Schmelzer, CFO & Member of Executive Board]

Okay. Thanks very much for the questions. I think the number you mentioned on a quarterly basis for share-based compensation is roughly accurate for the remainder of the year.

[Tobias Hartmann, CEO & Chairman of Management Board]

I think on the 10-point program, the first thing is that it would be great if information was available virtually versus you have to run and collect all the data. That's a key convenience factor that's missing today. I think all the way through the transaction, which is ideally, you wouldn't have to go through a physical notary, but you could do it online, this would be the most impactful piece. What's the likelihood that this will happen over the short period of time? I think the likelihood, unfortunately, is low because there's lots of people popping up in front of the governing parties right now. But at least, we were leading the pack, and we basically explicitly put it out there so that there is a heavier word out on the street that something needs to be done. And the Bestellerprinzip doesn't help the digitization. That's not the right thing. But these measures that we basically iterated, these are the right things to do. And we continue to be acting in alliance with other partners to make sure that it's just getting more convenient.

[Operator]

We will take our next question from William Packer.

[William Henry Packer, Executive Director of Media Equity Research]

Sorry. Will Packer, again. Apologies for following up. Just a quick one on the margin guidance you talked to in the prepared remarks. Am I right in thinking now that the margin guidance for 2021 and 2022 is still in place? My understanding was guidance has been withdrawn, but if we just could have some clarity about what's still in place looking forward.

[Dirk Schmelzer, CFO & Member of Executive Board]

Will, that's the reason why we reconfirmed it in the call you just heard. What I would like to point out is -- and your attention to is the EUR 4 million of dis-synergies I have also pointed out there. But apart from that, we're quite optimistic that we can sort of fulfill the margin guidance we've laid out for 2021 and '22. And in that context, I would also like to point out that, of course, all measures that we are taking at the moment are, on the one hand, cost measures. On the other hand, also measures that enable us to increase and improve our revenue growth in the outlying years '21 and '22, which would certainly also have a positive impact on the margin.

[William Henry Packer, Executive Director of Media Equity Research]

But to confirm, for 2021 and 2022, organic revenue guidance, that is dropped?

[Dirk Schmelzer, CFO & Member of Executive Board]

This was versus 2020?

[William Henry Packer, Executive Director of Media Equity Research]

Sorry, I'm being slow. So just to think, so for 2021 and 2022, the CMD guidance is in play, but just on a lower base? Or the revenue guidance is not, but the margin guidance is? Sorry for being slow.

[Dirk Schmelzer, CFO & Member of Executive Board]

You're not slow. The revenue guidance is in place versus a lower base for 2020, yes.

[Operator]

It appears there are no further questions. Thank you for participating in today's question-and-answer session. I will now pass it back to the moderator.

[Ursula Querette, Head of Investor Relations]

Yes. It's Ursula back here. Thank you all for joining. And if there's any further questions, please write me an e-mail or call me. Thank you all for being there, and talk to you soon. Bye-bye.

[Tobias Hartmann, CEO & Chairman of Management Board]

Bye now.

[Operator]

Thank you for your participation. You may now disconnect.