Scout24 SE

XETRA:G24

Earnings Call Transcript 2023-Q1

[Operator]

Ladies and gentlemen, welcome, and thank you for joining the Scout24 SE Q1 2023 Results Call. [Operator Instructions]

I would now like to turn the conference over to Filip Lindvall, Head of Group Strategy and Investor Relations. Please go ahead.

[Filip Lindvall, executive]

Good afternoon, everyone and welcome to Scout24 First Quarter 2023 Earnings Call. My name is Filip Lindvall and I am Director, Group Strategy and Investor Relations at Scout24. With me on the call today are Tobias Hartmann, our CEO; and Dirk Schmelzer, our CFO. Tobi will kick off the presentation, and Dirk will dive deeper into our first quarter 2023 performance.

As always, we will conclude the call with a Q&A session. You can find today's presentation on our website under Financial Reports and Presentations. If you're using the web link we provided beforehand, you can follow today's presentation live. This session will be recorded and a replay will be made available as quickly as possible after the event. Please take note of the disclaimer on Page 2.

Tobi, now over to you.

[Tobias Hartmann, executive]

Thank you, Filip, and welcome, everyone. Page 3 summarizes our Q1 performance. We are off to a good start in 2023 and Revenue growth for the quarter came in at 13% and OOEBITDA growth at 16%. Our agent membership business continued to show strength with revenues growing at 16.5%, driven by pricing momentum and new customer wins. We grew our number of customers by 4.1% in the quarter and are very happy to partner up with these new agents to offer them the best products and marketing tools to help them operate efficiently in this market environment.

On the topic of innovation, we have successfully partnered with a third-party provider of professional real estate valuations to include its product in our agent membership packages. This will provide our customers with additional highly insightful pricing data. With these new products, we want to further increase price transparency in the market and continue to establish ImmoScout24 as the trusted party and brand bringing seller and buyer together, especially in times of deviating price expectations, this feature is of particular importance.

Our seller and mortgage leads business continued to face muted demand, as agents and mortgage brokers are hesitant to buy leads in the current environment. But we do see sequential improvements in the number of transactions in some parts of our business, which we view as a positive sign, but we are not ready yet to call out a sustained recovery. In our unique private subscription business, we are continuing to win new customers at fast pace. At the end of first quarter, we reached 342,000 subscribers, representing growth of over 20%. Growth was again fueled by strong demand for TenantPlus. OOEBITDA grew by 16% in Q1, driven by product mix and strong operating leverage.

On the topic of efficiency and operating leverage, I would like to mention that we have started to implement organizational changes to merge our product and tech organization, this will make us more agile and enable a more integrated workflow, thereby accelerating product innovation and implementation. Adjusted EPS grew strongly by 27%, reaching EUR 0.56. On the back of a good first quarter, we are pleased to reconfirm our full year guidance for 2023 of 12% revenue growth and 13% ordinary operating EBITDA growth.

Now let me move to Page 4 to walk you through our key Q1 2023 metrics. On group level, revenue totaled EUR 121.9 million, a 13.0% year-on-year increase. Ordinary operating EBITDA of the group came out at EUR 68.2 million, representing a margin of 56.0% and a growth over Q1 2022 of 16.3%.

In our Professional segment, subscription revenue increased by 10.7% to EUR 70.8 million. This is the result of strong core membership and PPA growth, offset by weakness in our seller leads and mortgage business. The number of professional customers grew more than 4% year-on-year. We are particularly pleased about the continuing trend of welcoming new customers in this challenging market environment. ARPU increased by 6.3% to EUR 1,088.

In our Private segment, including the landlord platform, Vermietet.de, subscription revenue increased by 23.6% to EUR 17.0 million. This was fueled by continued new customer wins for the TenantPlus product. Total number of private customers in Q1 2023 increased by more than 20% to over 340,000, another record high, which we are very pleased with. Private ARPU increased by 2.5% to EUR 16.6. Our private customers clearly appreciate the value-add nature of our products in our market with scarcity of available rental objects in Germany.

Turning to Page 5. Let us review where we stand on targets and momentum for the 5 value drivers on the basis of our Q1 performance. Professional membership revenue increased by 16.5% year-on-year as our membership products are in high demand, significantly outperforming our midterm target. Seller leads revenue declined in Q1 2023 by 16.7% year-on-year. Although we grew revenues versus Q4 2022 by 14%, we faced a very high comparable with Q1 2022, which impacted the growth rate negatively this quarter.

We are curtailing certain marketing and lead corporation-based activities in this business, which might impact revenues negatively going forward. This is fully in line with what we stated previously. We will rather focus on efficiency than revenue growth. As a reminder, the seller leads business is in its early innings, representing roughly 8% of our total revenues in the first quarter.

Our mortgage business revenue declined by 19.6% in Q1 2023, affected by the significant decline in real estate and mortgage transactions in the German real estate market. Mortgage brokers are hesitant to invest in leads at this time of heightened uncertainty and decreased underwriting appetite from banks. On a positive note though, looking at our mortgage advisory business, every month since December 2022 has shown sequential improvement in number of transactions.

Our unique private subscription business continues to grow strongly as the product and value proposition resonates well with consumers and landlords. Subscription revenues grew 23.6% in Q1 2023, mainly driven by continued strong growth in TenantPlus, offset by soft demand for BuyerPlus. The number of total subscribers grew by 20.6% to 342,000 in Q1. Our landlord solution around Vermietet.de is continuing to gain relevance. We continue to grow the number of registered units beyond the 1 million mark, reaching 1.169 million units on the platform, representing 81.9% growth year-on-year.

To conclude, I would like to summarize the key takeaways. We are pleased with our Q1 2023 performance. It is a good start into the year. We see continued high demand for our core IS24 product suite and are focused on supporting our business partners in this environment. As expected, demand for leads continues to be muted.

From a transactional point of view, we are seeing sequential improvement month-by-month across the portfolio, both on mortgage and brokerage side. While this is a positive sign, it is yet too early to call it a sustained recovery. Initiated organizational changes will make the company more efficient, enabling faster product innovation and implementation going forward.

And with that, I would like to hand it over to Dirk.

[Dirk Schmelzer, executive]

Thank you, Tobi, and welcome, everyone. On Slide 6, you can see the year-on-year revenue growth in our 3 segments and the respective ordinary operating EBITDA margins. The 9.3% revenue growth in the Professional segment is fueled by strong core membership, PPA revenues and offset by declines in the seller and mortgage businesses. Ordinary operating EBITDA margin improved 2 percentage points to 62%, driven by favorable product mix shifts, operating leverage and reduced marketing spend in our seller leads business.

The Private segment was again characterized by strong demand for Plus products due to rental market conditions. The subscription revenue increased by 23.7%, driven by continued customer growth, as Tobi mentioned, we crossed the 340,000 mark by the end of the first quarter. The ordinary operating EBITDA margin of the Private segment decreased slightly by 0.6 percentage points year-on-year due to increased marketing investments for individual product groups like TenantPlus and credit checks to capitalize on the tailwinds in the rental market.

Media & Other segment revenues increased by 7.9%, compared to quarter 1 2022. The primarily due to the strong ImmoScout Austria business and growth in our third-party advertising business. Media & Other ordinary operating EBITDA margin developed positively. Increasing by circa 10 percentage points, driven by a combination of ImmoScout24 Austria revenues coming in at high incremental margins as well as reduced investments in our CRM businesses.

Let's turn to Page 7 to dive a bit deeper into the Professional segment. Professional segment revenue grew by 9.3% in quarter 1 2023 to EUR 78 million. Growth was driven by new customer wins, strong demand for memberships, ARPU growth as well as increased paper ad revenues. Despite the current challenging real estate market environment, we were again able to increase the number of agent customers by 4.1%.

Subscription revenue increased by 10.7% to EUR 70.8 million. Thereof, EUR 61.4 million were attributable to our core business with agent memberships, which grew by 16.5% year-on-year. On seller and mortgage leads, revenues declined by 16.7% and 19.6%, respectively, in Q1 2023, compared to first quarter 2022, driven by lower demand from customers due to adverse market conditions.

Professional ARPU increased by 6.3% from EUR 1,023 to EUR 1,088. Our pricing strategy impacted ARPU positively, offsetting new customers generally coming in at lower ARPU and the negative impact from seller leads. Paper ad revenues continued to grow strongly at 23%, benefiting from the increased inventory compared to first quarter 2022 and longer standing times. At 62%, the ordinary operating EBITDA margin of the Professional segment increased 2 percentage points year-on-year due to a favorable product mix, operating leverage and reduced marketing spend in our seller leads business.

On Page 8, let's take a closer look at the Private segment. In the first quarter of 2023, the Private segment continued to benefit from strong demand for our TenantPlus products due to rental market conditions. As expected, demand for BuyerPlus continues to be soft. The average number of customers for the period grew by 20.6% to EUR 342,037. Private ARPU increased by 2.5%. As a result, subscription revenues increased by 23.6% to EUR 17 million. In line with trends observed in our Professional segment, paper ad revenues grew at 32.3% in the private segment, benefiting from the increased inventory compared to quarter 1 last year and longer standing times. Ordinary operating EBITDA in the Private segment grew by 22.2%, slightly below revenue growth as we invested in new marketing campaigns. The ordinary operating EBITDA margin of 46.8%, decreased by 0.6 percentage points year-on-year.

Turning to Page 9. Let us go through the main ordinary operating items. Own work capitalized decreased by 14.2% quarter-on-quarter to EUR 6.2 million, mainly due to the planned expiry of development and integration projects at Vermietet.de, FLOWFACT and ImmoScout24. The ratio of own work capitalized to revenues decreased by 1.6 percentage points from 6.7% in Q1 2022 to 5.1% in Q1 this year. This development is in line with what we have communicated previously. Total operating effects increased by 6% in the first quarter, significantly less than revenue growth of 13%. This is due to a combination of items, which translate into operating leverage.

Specifically, personnel costs increased by 9.1% in Q1 2023. This increase is mainly explained by sales commissions increasing with growth in membership revenues. At the same time, a number of efficiency measures were initiated in the first quarter to reorganize our structure for tech and product. This will lead to a reduction in head count in the future.

Our marketing cost decreased by 6.4% quarter-on-quarter, mainly related to reduced investments in the lead business offset by increasing investments in other areas. We continue to maintain marketing spend at a healthy level, in particular, in our Private segment to gain further market share in the current environment, while marketing spend in our Professional segment has been reduced. IT costs remained at a comparable level with a slight decrease of 0.3% year-on-year. Selling costs increased by 42.8% in Q1 2023 due to increased costs for lead cooperations and higher marketing costs for individual credit checks.

As a result of the strong revenue momentum, operating leverage and a favorable product mix, ordinary operating EBITDA increased by 16.3% in Q1 2023. Accordingly, the ordinary operating EBITDA margin was 56% in the first quarter, representing an increase of 1.6 percentage points year-on-year.

Let's turn to Slide 10, which tracks our operating leverage. In Q1, ordinary operating EBITDA growth outpaced revenue meaningfully by 3.3 percentage points, supported by product mix and improved operational efficiency. As Tobi talked about in his part, we are in the process of updating our organizational structure to create a faster and more dynamic delivery.

The fact that we are coming out of a phase of significant investments over the past 3 years has consequences on the way we operate. Monetizing on the investments, shaping a faster and more agile organization focused on execution, ultimately operating smarter. As part of this process, there will be a reduction in head counts throughout the year. This will provide additional support going forward for sustained operating leverage in 2023 and beyond.

Let's turn to Page 11, where you see the items below ordinary operating EBITDA. In the first quarter, nonoperating effects increased primarily due to one-off costs related to the reorganization of our tech and product functions. Higher nonoperating effects impacted reported EBITDA growth, which came in at 8.6%. Depreciation and amortization increased by 6%, mainly due to higher amortization of internally developed software.

The financial result improved compared with Q1 2022. This is mainly due to the liquidation of the special fund at the end of the first half of 2022, which created one-off costs. As a result, net income grew by 84.5% to EUR 37.1 million. The lower income tax rate in Q1 '23 is due to nonoperating effects, mainly reorganization measures. These led to usage of unrecognized tax loss carryforwards and correspondingly to deferred tax income. Basic EPS rose by 102.4% to EUR 0.50, and adjusted EPS grew by 27.3% to EUR 0.56, supported by lower number of shares outstanding.

Turning to Page 12 and full year 2023 guidance. Based on first quarter financial performance, we reconfirm our full year '23 guidance of 12% revenue growth and 13% ordinary operating EBITDA growth.

Based on current trading and what we are seeing in the market right now, I want to provide you with our key perspectives on the remainder of the year. First, [indiscernible] business is performing well, and we are not seeing any signs of accelerated churn. Having said that, we do not expect the strong first quarter growth rate to persist for the full year as we are lapping more difficult comps and customer growth is likely to slow down over the next quarters.

Second, the seller leads and mortgage business is facing continued muted demand. We don't expect these businesses to recover meaningfully over the next quarters. We are, however, starting to lap easier comps in the second half of 2023. Private subscription revenue growth continues to be fueled by strong TenantPlus growth, offset by weaker demand for BuyerPlus. Given current market dynamics, we don't see demand for BuyerPlus recovering near term. Our PPA business is starting to lap more challenging comps already in the second quarter 2023.

To conclude, we feel good about the current financial trajectory and the revenue momentum we are seeing in the business. But we would not expect first quarter '23 revenue growth to be a guiding post for the full year. On ordinary operating EBITDA level, we continue to feel very comfortable with our guidance. We will provide with the next update in our second quarter, first half year '23 call on August 8.

With that, let's open the line for questions. We would appreciate if you could limit your questions to 2 per speaker. Operator, over to you.

[Operator]

[Operator Instructions] The first question comes from the line of Will Packer from BNP.

[William Packer, analyst]

A couple for me, please. Firstly, we're kind of 9 to 12 months on from when mortgage approval started to fall sharply and you've obviously posted some pretty good agent growth numbers. Do you think we're past the worst of the risk of churn now 9 to 12 months on from those negative mortgage rooms? Or do you think there's still some risk, for example, if there's not a big step down in transactions? Just how you're thinking about that? And how have the agents reacted? Have they diversified into rentals? What are they doing at the [ core base ]?

And then the second question is regarding PPA revenue. It's been an important growth driver in the last 12 months, but we're heading into tougher comps. Inventory on the website, is still strong, though, even with growth year-on-year. Can PPA remain an important growth driver going forward? Or should we expect it to more be stable?

[Dirk Schmelzer, executive]

Basically referring to the developments over the past year. I think on the mortgage side, what we have always pointed out was that the toughest change in the mortgage environment was increasing volatility. Now with the decision of the central banks, to reduce the amount of increases from 0.5 percentage points to 0.25 percentage points, maybe a bit more lighter outlook. Also, mortgage rates have started to be less volatile. And therefore, we believe there could be a slight hope that we've reached the trial here, and we believe it's coming up again.

That will, of course, be an early indicator for the market to come up again. We see transactions and hence, agent income being down 10% to 15%, 20%, a bit more. And we believe that this will continue at least for the first half of this year, might be a bit lighter by the second half of this year. And then we are seeing -- let's see where we stand in the second half of 2023. What still remains, and I have to point that out, is that Scout24 and ImmoScout24 remains the biggest source of lease for real estate agents. And I think that is something, which is reiterating our strategy here.

And talking about strategy and moving forward, I will hand over to Tobi for the second part of the question.

[Tobias Hartmann, executive]

Hi Will, it's Tobi. Regarding your PPA question, we believe that PPA will continue to be a growth driver for the following reasons. If you consider the German environment right now. It's really the first time in a very, very long time that homeowners asked the question around, "hey, where am I listed, where do I see my home?" And that pushes through the agents, whether they're selling directly or whether they are working with agents.

So to say, you remember those days when we talked about the biggest competitor and the biggest competitor was really the gray market. And there's a pressure on the gray market to become visible, because it's harder to find the right buyer or to find a buyer. And that's why we do believe we have a very compelling and a very leading product value prop here, both on professional side as well as on the private side of PPA. So yes, so we do believe that this will continue to be a strong growth driver.

[William Packer, analyst]

Just a follow-up, Dirk, on your response. So should I take away from your comment that -- on the assumption that there isn't a major change in property trends this year, you're comfortable with the view that agent numbers should be stable or grow slightly from there. Is that a fair summary?

[Dirk Schmelzer, executive]

Yes.Will, I mean, to be very concrete here, we're going to see agent growth in a year-on-year comparison. What you will not see is a significant agent growth compared to quarter 1 this year, right? So we might add a few agents. But as we said earlier on, it's a huge long tail that we're seeing, and those agents usually tend to be on our platform with PPA, and that's what Tobi just outlined. So we're also getting these agents, but via PPA products and not necessarily by a membership products.

[Operator]

The next question comes from Nizla Naizer from Deutsche Bank.

[Fathima-Nizla Naizer, analyst]

I have 2 questions as well. The first is on the growth in membership revenue in your professional customer base 16%, I mean, quite a nice acceleration. Is it fair to assume that the pure ARPU related to the membership was around sort of a 12% growth in Q1? And was it largely due to the price increases mostly? Or was there sort of upselling activity as well as your agents moved up sort of the offers that you have? Some color there would be great. And I guess linked to that, I mean, if you think of it on a sort of a year-by-year basis, a scope of price increases, is this kind of the range that you think your agent base would be comfortable with? Or do you have any color on how you're thinking about maybe pricing going forward? That's question one.

Question two, on your private customer subscriber numbers, have you sort of made progress on developing a product that would keep these customers even after they found a rental property, et cetera, so that you keep them with you for longer? And at the run rate that we see in Q1, if it continues in the next few quarters, you would hit your 400,000 target by the end of 2023. So just thinking of how soon can you maybe hit that target at the rate things are going?

[Dirk Schmelzer, executive]

Thank you, Nizla. Thank you very much for the questions. Start off with the membership revenue growth that you rightly pointed out is at 16% and you can assume that the ARPU growth in the core membership is in the area of what you pointed out. So somewhere around 12%. That was a good shot. And how that comes together is basically with the pricing measures we pointed out during our strategy days. So it is certainly in terms of condition-based price increases, it is rate card price increases. But it is also moving agents within the rate cards and trying to convince them, which is increasingly easy to move into higher rate cards, because they get better services and a higher quality of leads in there. So that is basically what we are seeing.

On the membership side, you've been asking ARPU growth going forward. I think that we managed to increase ARPU to increase membership revenues at the same time as keeping customer satisfaction high and keeping the amount of agents on our platform increasing. And this is the guiding post that we will use for the future as well, and let's see where we come out there.

On your question regarding private subscriptions, I think what you will see here over the next quarters is, of course, more and more of those customers that we are gaining, keeping on to our platform for longer times, because we're still seeing a very contracted rental market in Germany. But what we will also see is additional products from our end to keep those customers on the platform to move and migrate supposedly into BuyerPlus products and/or combine their listing -- sorry, their subscription with buyer features and additional features on the site that they can use after they sign the rental contract. So yes, we are working on that, and we are continuing to grow private customers very healthy.

[Tobias Hartmann, executive]

This is Tobi. Regarding your question about the 450,000 that we had outlined, we're not in a position to revise that, even though admittedly, we're tracking pretty well against the 2026 target.

And in terms of product features and innovation, as Dirk pointed out, we feel very comfortable with getting deeper into the value chain and offering new services. But please understand we're also not reflecting that, and we're also not disclosing that during those calls also for competitive reasons. But we feel comfortable. Thanks.

[Operator]

The next question comes from Pete-Veikko Kujala from Morgan Stanley.

[Pete-Veikko Kujala, analyst]

So continuing on the last question regarding the core membership ARPU. By my calculation, it's up roughly 12% year-over-year and you mentioned that the new agents that are coming, are coming at a lower ARPU. So someone is upgrading like a lot of packages. So maybe if you could tell a little bit like who is upgrading like are these agents that -- I guess they're not feeling a lot of financial pressure in this market if they are upgrading packages?

And then secondly, you mentioned that you're trying to kind of convince them to upgrade. So are you trying to get them in by saying you can upgrade for 3 months and then downgrade back if you don't like it? Or are these guys locked in for 12 months?

[Tobias Hartmann, executive]

Pete, Tobi, thank you. So what we can share is that among the professional real estate brokers, there's more and more the understanding that ImmoScout can help them navigate very successfully if they were to switch a little bit some of the features they're using. So yes, it's true. Some of them are upgrading and they're not just upgrading for a month, but this is part of a longer play. As we had outlined during one of our earlier calls, there's also organizational changes in some of our customer base, which means that what they used to have is a larger marketing department, they're now cutting down and cutting back on their own resources and they're more leading towards, let's say, players like ImmoScout to help them out.

In terms of who exactly we are upgrading and for what features, there will be a little bit too details here. But yes, I think your interpretation is absolutely right. So new customers are hopping on at a lower ARPU and some of our existing longer-term customers really enjoy and understand the power of the full suite. So that's the mix that resonates in those numbers.

[Pete-Veikko Kujala, analyst]

Okay. And then the second question for me today. Can you give any kind of an update on the monetization? Because it looks like you have like a 30-day free trial on that. So are we -- should we expect like paid landlord volumes to start increasing? Or what should we expect on that front?

[Tobias Hartmann, executive]

Yes. Pete, I think what we've learned here is that we took a very detailed view, let's say, also in terms of the landlords and the tenants and so forth. But at the end of the day, if you think about it, it's a service, which can be subgrouped under a homeowner service. So as we pointed out earlier, if you're a homeowner, you may sell or you may rent or you may refinance at any point in time.

So it's part of a homeowner world. If you check out the product, which I'm sure you did, you will see that there's quite a bit of changes in terms of the homeowner world. We are investing. We continue to invest in the homeowner world and we'll make this become a more dominant feature as part of a homeowner world as opposed to trying to penetrate that and market that only as a separate stand-alone solution for landlords.

And so pivoting around that, this is where we've landed and we are testing now new price models with those per days free trial, which then also automatically moves into a paid version. It's again too early to conclude on the conversion rates and anything, but it's a good learning for us. This is a part of the homeowner world.

[Operator]

The next question comes from Joseph Barnet-Lamb from Credit Suisse.

[Joseph Barnet-Lamb, analyst]

Excellent Yes. A couple from me. So the first one, how you're trying to sell in the cooler market, is there any degree to which you could see PPA customers moving into membership? I'm conscious that 1Q PPA was strong on a year-on-year sort of basis. Sequentially, it was slightly weaker, but mentioned numbers are very strong. So I wonder if that was perhaps a explaining factor? If not, it's the strong membership literally just penetrating more into the long tail. That's question one.

Question two, on the private margin, it was weaker in 1Q. It's been very strong in 4Q. I thought, and I may have misinterpreted it, but I thought the message at the full year was that there was no reason why the 4Q private margins should not continue. So could you give a little bit more color behind the factors for the softer 1Q versus 4Q private margin? And how we should think about that going forward?

[Dirk Schmelzer, executive]

Yes. Thanks, Joe. To start off with your second one, I mean, we're not guiding individual segment margins here. But what you can imagine, and you've seen a very strong customer growth on the Private side. With our marketing measures, we've been taking advantage of the current rental environment, and we've been doing a good job here when I look at the overall subscription figures. So here, you can see, once again, we very consequently following our strategy. We gained satisfied private customers in a changing market, which is moving more towards rentals more and more as we speak.

On the first one, I mean, you can assume that most customers that enter into a membership with ImmoScout24, have had contact with the platform before. So it's not that any customer is coming in the first time and putting listings on our platform. So a lot of our new customers are either coming back, because they have tried other platforms and come back to our platform, because they see they can get better leads here. And some of those customers come back as PPA customers that they have been before and now are moving into memberships.

And what we are seeing is a very healthy mix between both, right? Customers that have been relying on the gray market before, customers that have been relying on PPA before, now are growing into a membership and customers that are coming from other portals to the market leader, basically. I would think that that's the healthy mix we're seeing.

[Joseph Barnet-Lamb, analyst]

And did that increase from -- into 1Q from 4Q as a rate that you've seen previously or not?

[Dirk Schmelzer, executive]

What you can see, Joe, is that our overall listings increased by more than 30% year-on-year. And I think that's a sign of all the 3 elements that I just posted out, right? So gray market, as Tobi pointed out, getting smaller and smaller. Customers from other portals joining us or simply relying on us. And of course, some of the PPA customers that have been there before growing in the market, more younger real estate agents that are growing and now joining us as members. And that all plays into the very healthy listing development that we've seen.

[Operator]

The next question comes from Marcus Diebel from JPM.

[Marcus Diebel, analyst]

Also 2 questions from my side. First one is for Dirk. Could you talk a bit about the operational gearing. I mean, clearly, a very strong margin in the first quarter. You previously highlighted that the main cost areas, marketing and sales and personnel, do you think you can capture inflation at about 5%, 6%, which could suggest the high operational gearing. Is that still the case? And if so, why should we think about 12% revenue growth and 13% EBITDA growth? That would be my first question.

And then secondly, given that the German market is obviously very, very strong in terms of rentals, how should we think about even higher price increases for your TenantPlus products? That will be interesting.

[Dirk Schmelzer, executive]

Okay. I'll start off with the first question on operational gearing. Yes, you're absolutely right, Marcus. And I would like to put that into context. As we pointed out on various quarterly calls previously, the years 2021 and '22 have been years of investment. So we've been investing heavily into our product suite. We've been investing into M&A. We've been putting additional companies and products and features onto our platform. And we have been always saying that the year '23 will be the start of monetizing on those investments that we have made over the past. And monetizing means on the one hand, taking advantage of the superior product suite that we're having. And you see that in the strong growth figures despite a very challenging market environment.

And the second piece is cut back on the investments that we've seen before and streamline the organization in order to help us also come back to previous margins on this business, and that's what we're seeing. And that's what we're seeing on the personnel cost side for reasons we've been getting in the midst of the first quarter. We've been reorganizing, we've been reshuffling our development and product department. You have seen that we've been reshuffling our marketing and selling costs on the Private side as well as on the Professional side. You will see more of that in the second and third quarter. And you see that operating cost -- other operating costs are also going slightly down. So I would say that we are acting according to what we said earlier on, and you're going to see the operational outcome in the Q1 and Q2 numbers.

Now with that going forward, you're also asking how comfortable we are with guidance. As I said previously in the presentation, we feel very comfortable about the profitability and the over EBITDA guidance. We feel comfortable about the revenue guidance that we laid out. And we believe that our cost measures give us enough headroom to navigate through the year in order to continue growth on both elements, revenue and ordinary operating EBITDA.

And with that, I will hand over to Tobi with regards to the rental question and additional monetization there.

[Tobias Hartmann, executive]

Marcus. We do believe that we have a very compelling product there, and we also believe that we have certain pricing power since we're the only ones offering that service. Now having said that, and you're very familiar with the German market, you can't overplay our hand, because we view these customers even if they leave us after 5 months, 5.2 months, whatever an average, to come back at some point. Your Rental Plus customer today has a long memory and can become a future homeowner or if the market shifts again BuyerPlus customer. What's important to us is really to measure NPS. We do have a very solid NPS there.

So we are trying to always optimize the relationship on the one hand side and then the pricing power on the other side and obviously, then the growth that comes out of that. So yes, we do have pricing power. You should not expect that we are high-checking our pricing overnight, it's not what we will do. We'd rather work on keeping the NPS high and extending lifetime to later product stages, even if they appear as part of a homeowner world in a different shape before.

[Marcus Diebel, analyst]

Could you maybe tell us how many customers you have now for TenantPlus as of this quarter?

[Tobias Hartmann, executive]

Yes. Well, we have the overall customer figures for our Private customer segment in the first quarter is 342,000 and that is a mix of round about 310, a bit more Rental Plus/TenantPlus customers and the rest is landlords and BuyerPlus customers.

[Operator]

The last question comes Andrew Ross from Barclays.

[Andrew Ross, analyst]

Two more from me. The first one is on mortgages and partnership that I think was announced a couple of weeks ago with EuroPace. So I think it's [ called down ] already, excuse me, if my pronunciation is terrible, which it probably is. But hoping you could talk a bit about that in terms of how the product works, how you're going to monetize it? And how this could drive higher revenue per lead or revenue per transaction in the mortgage business over time?

And then the second question is on the balance sheet and the EUR 100 million buyback you announced a few weeks ago. And I guess the question is, I guess, why not more? You guys have got flexibility on the balance sheet. It would be helpful if you could walk us through the decision making as to why only EUR 100 million?

[Dirk Schmelzer, executive]

Thanks very much. Let me start off with the mortgage piece and the EuroPace. I think that is a product which outlined and shows perfectly how we are moving closer and closer to enabling the transaction and increasing the speed of a transaction. Now the customer comes to our platform, the customer gives us some data -- some personal data. And with that, the customer has a preapproved mortgage which allows us to do 2 things: first of all, increase the conversion rate of the mortgage towards the mortgage broker, who we are selling the lead to; and secondly, increasing the conversion rate of the real estate agent, who takes this preapproved mortgage customer as a buyer. And that's basically how we are working with that product.

It's still early innings. The first signs that we're seeing is -- a pretty good signs in a very challenging market environment, as you can imagine, Andrew. But this is where we stand. And we're pretty happy with the product. We're pretty happy with the cooperation with EuroPace. And I think it's another sign that we are continuing to execute on the strategy.

The second piece is EUR 100 million buyback, we're in the midst of the buyback and the decision we are taking is always what are we adding basically as a financing cost to our EPS and is it EPS accretive, what we're doing. And that is always a question of the share price at which we are buying and the current rate with our banks and the interest rate that we are paying. And with that, we're feeling quite comfortable at the moment.

And we're continuing our buybacks. And once we finish the buyback, we will have the ability from our AGM to continue with additional buybacks. But it's too early to call because there's other means of capital deployment like M&A as we pointed out. But that's basically our line of thinking. And as far as I recall, that hasn't changed.

[Operator]

We have a follow-up question from the line of Pete-Veikko Kujala from Morgan Stanley.

[Pete-Veikko Kujala, analyst]

So 2 more on the one that you just ended on. So M&A, do you have any preference whether you like bolt-ons like smaller product teams more? Or are you willing to also do something larger?

[Tobias Hartmann, executive]

Pete, we have done some smaller ones. I think we have an ability and the module to integrate those companies pretty well, I've learned. And then in terms of bigger ones, the question is, if they're available and what type of opportunities there, as you know, it's -- there's not many options out there to our knowledge. But of course, we would -- if it fits we would look at them and we wouldn't shy away if it's the right thing to do. So yes.

[Pete-Veikko Kujala, analyst]

All right. And then the last one is on the personnel costs and the kind of reorganization that you have been doing. Can you give any sort of color what type of cost savings do you expect from this? And do you expect like one-off costs from these types of programs still later this year? Or did we see the one-off costs that you expect in Q1 now?

[Dirk Schmelzer, executive]

Well, we don't tend to work on reorganization programs quarter-on-quarter. I think what we've done in the first quarter is the biggest chunk that you would see on our balance sheet and when it comes to NRR. Going forward, I think what we have outlined is that you will rather see a sideward movement in our overall personnel costs and a significant increase. And the following quarters, we will show that, as it perfectly pays into the strategy that we outlined, right? We've finalized our innovation program. We finalized our product and development investments. And now we're going to monetize that and use the operational gearing that we can create with that.

[Operator]

There are no further questions at this time. I hand back over to Filip Lindvall for closing comments. Please go ahead.

[Filip Lindvall, executive]

Okay. On behalf of Scout24, I would like to thank you all for your interest in us and joining us this afternoon. Have a good day. Thank you now. Bye-bye.

[Operator]

Ladies and gentlemen, the conference has now concluded. You may now disconnect your lines. Thank you for joining, and have a pleasant day. Goodbye.