Scout24 SE

XETRA:G24

Earnings Call Transcript 2018-Q2

[Operator]

Dear ladies and gentlemen, welcome to the Scout24 AG First Half Year 2018 Earnings Call. At our customer's request, this conference will be recorded. [Operator Instructions] May I now hand you over to Greg Ellis, CEO, who will lead you through this conference. Please go ahead.

[Gregory Ellis]

Thank you very much. Good afternoon, everyone. Welcome to the first half results. I'm looking at Slide 3 of the deck, which highlights our key operational performance. Across the group, between real estate and automotive, we've got approximately 3 million active listings. And our traffic, as measured by visits, increased to 183 million visits, or in round figures, 14% growth over the comparable period. And we've been able to maintain our relative lead position against our competitors on the listings front, which is on the bottom left-hand chart, and unsurprisingly, the growth, given the trend in the marketplace and the amount of investment that we've put into our mobile focus, 17% of our traffic comes from mobile-originated growth.Moving to Slide 4, which is key financial highlights. 10% revenue growth for the group, 10% EBITDA growth and 6% cash contribution growth. In terms of ImmobilienScout's performance summary on Slide 5, been able to maintain our relative listings position over our nearest competitor. On the right-hand side of the chart, we've got 14,300 customers, which we -- under our reporting formats, we title Residential Real Estate Partners and 1.2% growth in our Business Partners. If I just pause on this slide for a moment. We're seeing out-of-business trends resume to what you'd define as a normal market conditions in Germany -- or normal market structures. As our investors would be aware, there were some seismic events through '16 and '17. We're now basically seeing normal out-of-business rates across the portfolio, particularly in the residential. Our partner growth in residential, approximately 50% of our customers, came from win-back from our nearest competitor and 50% came from customer acquisition. If I look at ImmobilienScout's traffic performance, we've had a 2% growth in business on a very large base of 81 million, 5% growth in the mobile-originated. Our relative market positions have been relatively constant at a unique visitor level and a time-on-site level. And then interestingly enough, from a desktop perspective, we've increased by 5 percentage points both customer -- or those users rather who visit only ImmobilienScout and visit no other site. In terms of the monetization of ImmobilienScout, we've seen just under 30% of revenue generated from our value-added products. That's a 2.2% growth over quarter 1. The reason that's very positive from our perspective is that, as we were taking the business through transitions in '16 and '17, we were able to obtain positive revenue growth for the year, but we weren't seeing quarter-on-quarter improvements. And now as a result of the work that we've done, particularly on the real estate side, you're starting to see quarter-on-quarter growth, which sees us extremely optimistic for the guidance that we gave in the Capital Markets Day for both the 2018 and for 2019.Of the 29% of our total revenue in our value-added products, approximately 70%, 7-0, is associated with the premium listings. If I focus on ARPU now, our Residential Real Estate Partner ARPU grew 1.6%, that was substantially affected by customer acquisition. Our customer, the acquiring customers, generally at a slightly lower -- or a materially lower ARPU, I beg your pardon, at EUR 338 a month. It should be said in these numbers we had a very large June as well, which would have affected the half's number. Now if we take those customers that have been with us for 12 months or more, the ARPU growth that we've been able to generate for those customers is 5.8%, so you can obviously see the mix effect there of both volume and value of new acquisition customers.On our Business Partner, which aggregates our commercial market segment and our development market segment, was 11.6%. There's -- and that's a very good news for the developer component of that Business Partner segment. We've now got 80%, 8-0, of our developer customers, now moved on to the project model. Investors may remember that we had to move our developer customers off a membership model to a project model principally because our customers in the developer segment don't think in annual terms, they think in project terms. And it's fair to say that the performance of the developer segment for this half versus the previous half has been outstanding, and we expect that to continue. So as by way of summary, what we've delivered is increasing in customer satisfaction and record levels of low churn with inside ImmobilienScout. We've successfully implemented initiatives to improve and constantly improve our solution sales execution. We've had good increases in listing share, healthy traffic growth, and obviously, continue to roll out of major initiatives, particularly on the consumer side. What we'll focus on for the next 6 months is continuing to drive VIA usage and further expansion of ARPU, continuing to leverage the regional pricing strategy that we've put in place through customer propensity focuses, sales force performance uplift and continuing with the product innovations. I've mentioned this a few times that digital businesses are at their heart a product house. In AutoScout, I'm now on Slide 9, this is AutoScout Germany. Dealer locations, flat. I don't imagine that's surprising to anyone given the general market conditions associated with the vehicle industry, particularly in Germany. We've had a slight reduction in listings volume, principally due -- driven by the issues around diesel. That's not a material listings decline given the significance of the issues faced in the German market.Traffic growth in Germany was 10% with 17% growth from the work that we've been actively undertaking around our mobile websites and mobile apps. If I focus on Slide 10, which is the summary of Italy, Austria and the Benelux, 4% increase in dealer locations to 22,000. A very slight increase in dealer listings up to 950,000. And we've had a very big growth in traffic from 52 million to 40 million (sic) [ 40 million to 52 million ]. Please be aware that these numbers include the now accounting of Gebrauchtwagen, the Austrian acquisition that we've undertaken. If you wanted a like-for-like comparison, you'd deduct that 52 million by approximately 8 million and then that would give you a like-for-like. So about a 10% pro forma, if you like, increase in traffic, excluding the Austrian acquisition.If I look at our performance on revenue for AutoScout, we've got approximately 20% of our revenue in our value-added products and that's a 5% -- or 5.5% growth quarter-over-quarter. German dealer ARPU, up 7%, and our other countries, up 15%. Now the one thing that we would want to point out to you is that for the first time in approximately 12 months, mobile, who's the market leader in Germany had put through price increases. Their published price increases take effect as of the 1st of September and they range between 20% for the larger dealers, 11% for the medium and 6% for small. The reason for pointing that out is that the performance of AutoScout Germany has been extremely strong in the last 12 months because, as the #2, we've been driving the market without the help of the market leader doing its job to drive the market. And that also gives us high degrees of confidence for German auto performance '18 into '19 as we effectively piggyback off the price increases of mobile.In terms of the summary for AutoScout, we've made a very good progress on USPs, differentiating from our competition in Germany, introduction of the Marketing Power and 360-degree product, strengthening our positions in Austria and our other core countries with the good performance in Italy, Belgium and the Netherlands, and obviously, cementing our listings advantage across Europe. The focus is continue to work on trying to reduce the traffic gap between ourselves and mobile in Germany, and obviously, rolling those initiatives out to where we are #1, further penetration of the Marketing Power products, final integrations of the Austrian acquisition that was recently done and continuing sales execution focus across the AutoScout group. For Consumer Services, a good performance from this vertical, 12% or 11.9%, to be specific, but 12% revenue growth half-to-half. Our EBITDA margin was 38.6% for that vertical, which is on the guidance that we provided to the marketplace.FINANZCHECK is something that we'll give you an update when we obviously take full possession of the business. We expect the closing of that asset -- or sorry, the closing of the company purchase on the 24th of the 8 '18. Suffice it to say that the current performance of FINANZCHECK is doing very well albeit early since we made the announcement. We just would take the opportunity just to be very clear with the market on FINANZCHECK. The business was not positive earnings when we took it over. We just want to be very clear that our intention is not to make it less profitable. We -- there seem to be a little bit deal of confusion. We want to aggressively grow revenue and turn revenue growth into profitable performance. There is no intention at all to reduce from the guidance that we gave you in terms of the impacts of Consumer Services EBITDA or group EBITDA, no intention at all to make it any worse than those numbers that we provided to you.In terms of the focuses for Consumer Services, continuing our strong organic growth, particularly around finances -- or financial services; ensuring that we get more traction and engagement through our premium profile product, which has done very well for us. We've delivered a strong pipeline around understanding and being able to integrate the consumer needs along the entire property and vehicle purchase, and obviously, the acquisition of FINANZCHECK. We'll continue to focus on the -- developing products and services that meet the consumer's needs across the buying cycle. We'll obviously leverage innovation power across our AutoScout and ImmoScout businesses to give further strength to Consumer Services. And to continue to execute on the plan for FINANZCHECK, which is obviously broken down into 3 parts: the core business of FINANZCHECK, to continue to over perform, to accelerate the Consumer Services product into our AutoScout group where dealers and consumers can take advantage of the financing option and to pick 1 or 2 very good product options for MVPs to try and leverage the FINANZCHECK services into the real estate vertical. They are the 3 macro -- 3 macro focuses for finance scout -- FINANZCHECK, sorry.I'll hand over to Christian now for a more detailed look at the financial results.

[Christian Gisy]

Thank you much, Greg. And hello, everybody. So turning to Page 17. First of all, just made you aware that obviously, in 2018 on the IFRS side, a couple of new accounting regulations have kicked in. So there is 9, which has only effect on-balance sheet; 15 and 16, which had partially effect on P&L as well as on balance sheet; and for 15, we have obviously restated the 2017 figures.Now turning to the real business, Page 18. Scout24 group grew by 9% -- 9.7% year-on-year, driven by, on the one hand, AS24 and obviously Consumer Services. But also on IS24, we saw revenue accelerating -- continuously accelerating to 5.2% compared to 3.0%, which was H2 2017 or even 2.3%, which was in H1 2017.After a bit slow start on EBITDA, which we were confident to basically be able to accelerate again in Q2 all through the year, we are now showing an EBITDA margin, as of the end of H1 2018, of 55.3%, which is obviously getting closer to what we guided for.If we now go a bit deeper into the different verticals, let's start with ImmobilienScout 24. As you can see, our first revenue line, revenues with Residential Real Estate Partners grew by 6.4% year-on-year, which is a clear acceleration towards H1 2017 and which also tells you that basically, the growth in contractual revenues with our Residential Real Estate Partners has grown by 7.6% year-on-year.Obviously, the underlying ARPU growth with the existing customer, as Greg mentioned, is significantly higher than reported ARPU growth, which is partially diluted by the amount of agents that we have taken on across the last 12 months and also obviously the lower ARPU that those agents are contributing. We are again very pleased with the revenue with our Business Real Estate Partners, consisting of developed and commercial. As you can see, even on a quarterly comparison, we have been even stronger than on the half year, which tells you exactly that basically the switch to the project business was the right one, and secondly, that also commercial we are able to monetize our partners because we're delivering a lot of value to them. Revenue with private listers and others is, on a year-to-year level, basically flat. To remind, this basic revenue line is consisting of the private listers of FLOWFACT, our CRM business, and also of the Austrian business. The margin for the first half year is now yielding 68.3%, which is again up from H1 2017, which was 67.4%. And again, it basically goes into the direction that we were all expecting after basically, Q1 was, as you point out, a bit negative or a bit low. It's hard to say that on the guidance for 2018, I will come to that later again, but it's fair to say that if you look into the all core revenues, core agent revenues, we are absolutely where we wanted to be and where we said during the Capital Markets Day, which is we're expecting to exit the year at least with high single. And obviously, we are absolutely convinced that in 2019, we are able to deliver the low double-digit growth rate with the core agent revenues. This is something that is clearly to be seen out of the numbers that we are reporting for H1 2018. Obviously, the margin is, and we are expecting this again, from a guidance perspective, to reach at least to 68% for the full year.If we now turn our attention toward AutoScout, which is Page 20. Again, a very strong H1 that we are seeing. Overall, we have grown revenues by 14 -- by 15.4%. In this case, obviously, our #1 countries, Italy, Benelux and Austria have delivered 21.6% year-on-year, which I think is a very strong growth rate and is a very clear expression of how strong those businesses are and also our ability to monetize. Dealer Germany is growing by 11.2%, which, again, is also a strong number given the fact that Dieselgate has partially impacted the business here in Germany, but we have been able, through other measures, to basically mitigate the risk coming therefrom and we are expecting Q3 and Q4 to reaccelerate the growth towards the mid-teens as we have seen in the past.Revenue with OEM also showed a nice growth of 22.5% towards last year. This also makes us very confident across the rest of the year. Margin has picked up. We are now close to 50% at the end of first half 2018 with Q2 contributing 54.3%. So again, there, we are also very, very confident to reach our guidance for the year of about -- of around 52% for the full year 2018.If we now move on to Consumer Services. Consumer Services for the first half did deliver revenue growth of 12%. Obviously, very strong service revenues, which is premium profile, which is all the revenues that we are basically depicting with our consumers. Also, 3rd Party Display revenue have been very strong. Although GDPR has been launched in May 2018, we have been able to mitigate a couple of the risks that were around it. And as you can see, even in Q2, although GDPR was launched there, we have been able to deliver 17.6% growth rate in that area. Revenue with Finance Partners has grown by 7.9%. Obviously, here, we need to diversify a bit from our customer levels that we had in the past. We have been concentrating very much on 2 or 3 large customers that basically at the moment are not in the need of the lists that we're providing in the past. So we need to diversify. But again, we are very confident that, together with also FINANZCHECK, that we're kicking especially in that revenue line, this revenue line will continuously reaccelerate throughout '18. So that we can easily confirm here again our guidance, excluding FINANZCHECK, of EUR 87 million or at least 12%.If we now have a look into our ordinary operating cost. Obviously, we have a personnel cost line that has grown by nearly EUR 9 million, which is partially affected of -- within the methodology of accounting. As you see, own work capitalized has gone up by EUR 2.6 million. Those EUR 2.6 million are also seen -- can also be seen in the personnel line. So that basically if you would normalize for the change of accounting, personnel cost would have increased 10% year-on-year, which is partially affected by the increase in staff and obviously also by our merit increases and talent upgrades that we are undertaking at Scout to basically retain talent and also to gain new talent to be able to deliver on our overall revenue goals.Marketing has increased by less than EUR 2 million, which is an investment in the product innovations we have shown. IT has gone up a bit due to mainly cloud-based platform solutions that we're seeing. And other costs have decreased by about EUR 2 million year-on-year, which has to do with us reporting those costs within the personnel side.So overall, the cost base has increased by around 6% in the first half year, which is basically in line with our guidance that we are giving around cost that should increase around 5 to 6 percentage each year.If we now move then to Page 23 where we discuss below-EBITDA items. It's fair to start with the nonoperating items that are affected positively by the sale of our trademark around JobScout24 in Switzerland by about EUR 1.6 million. Obviously, this also includes EUR 3.5 million for share-based compensation coming from management programs but also coming from the stock option plan that was launched in 2016. And obviously, we had a certain amount of M&A-related activities in the first half of 2018, which partially materialized obviously in the second half, partially also through the transaction with FINANZCHECK.Depreciation and amortization is going up quite considerably, which is the result of the first-time adoption of IFRS 16. So basically, the decrease of the OpEx on the one hand and the increase of the D&A on the other hand, which has to do with the balance sheet involvement.D&A on PPA items is coming down as we continue to depreciate basically the PPA items over time.On the finance side, we are showing amortization of capitalized financing fees, which are -- of about EUR 2.8 million, which are -- which includes the write-off due to the refinancing and partially prepayment. H1 2017, just to remember, included EUR 1.9 million of income related to the reimbursement of interest payments on a tax liability. The underlying finance cost is, as you can't see here, but we tell you are down by EUR 1.5 million against H1 2017, obviously driven partially by the refinancing and the debt reduction that we have seen in the first half of 2018. Our earnings after taxes have gone from EUR 54.9 million to EUR 66.4 million, which gives us an earnings per share of EUR 0.62 versus EUR 0.51. And if you look into the adjusted earnings, the earnings per share adjusted are EUR 0.75 towards EUR 0.68 in 2017. Underlying tax rate is at 82 -- 82 would be a bit too much, yes, sorry, it's 28.2% and -- but normalized tax rate should be 31.5%.Capital structure. As you have seen, we have recently announced that we have changed a bit our capital structure again to accommodate for the transaction. We have now, at the moment, in place a term loan in the amount of EUR 300 million. We have an RCF, which is drawn at EUR 70 million, and we have the so-called Schuldschein of EUR 215 million, which gives us a position, as of June 2018, of EUR 624 million of debt. And against that is the cash and cash equivalent of EUR 34 million, which has been reduced obviously by the dividend payment. The overview that we are seeing here is obviously preacquisition of FINANZCHECK that we expected to close by the 24th of August 2018, by which time then basically money, cash money will have to flow and it will flow out of the RCF I, which is still undrawn and partially out of RCF II which is also undrawn. This means that basically, our leverage will go up, but we expect on a [indiscernible] level that basically we are able to delever down again to 2.6 versus 2.7 by the end of the year.It's fair to remind that if we wouldn't have changed basically our financing structure, the interest costs would've been about EUR 2.4 million higher than they will be post the acquisition of FINANZCHECK.If we turn our attention now what is basically our priorities for cash. Obviously, we are targeting M&A activity to strengthen our market positions in the countries where we have a #1 positioning. Acquisition of FINANZCHECK is one of those, and this will allow us to boost our revenues in Consumer Services by 2022, '23 by EUR 250 million-plus. We are still aiming to return cash to our shareholder in a ratio of 30% to 50% on an adjusted net income over time. And obviously, we will continue to repay debt. We're expecting, as I said, to have ratio of 2.6 to 2.7 by end of '18. And we will continue then to again delever towards the 1.0 to 1.5x over time.The outlook for the full year. As a couple of you will have realized, we have narrowed our guidance for ImmobilienScout towards 5% to 6%, previously was 4% to 6%. We are highly confident, as I may say, to reach that guidance. And I think we may also say that we are highly confident to end up at the upper end of this guidance. AutoScout is expected to at least deliver EUR 180.5 million of revenues as well as we are 100% clear that we are expecting Consumer Services to at least deliver EUR 87 million, which will then give us an organic growth of 9% to 11%, although we are quite sure that we will be able to deliver a double-digit growth to the market by the end of '18.Before I come to the inclusion of FINANZCHECK, let me just reiterate our ordinary operating EBITDA margin. As you have seen, we have made serious improvements in Q2 and we are more than happy to basically deliver at least 68% on ImmobilienScout, around 52% on AutoScout and obviously increase Consumer Services by at least 1 percentage point, which will be around 37.6%, 37.7%, which would give us an organic EBITDA growth or margin of 56%, towards 57.5 at the full year.If we now basically look into our guidance, including FINANZCHECK. Obviously, we are expecting EUR 12 million of revenues to kick in from 1st of September 2018, which would then increase our growth rate at the group level toward 11.5% to 13.5%. Again, this basically is we feel very confident to basically go rather to the higher end of the growth rate to the 11.5%.On the margin, as Greg already alluded to, I think there was a bit of a misunderstanding. We are expecting a very low single-digit million basically negative effect from FINANZCHECK and obviously, we are expecting 2020 onwards to be profitable and to be very much contributing toward the margin of Consumer Services. So that the Scout24 group, taking into consideration FINANZCHECK in 2018 for the months that are remaining, the growth -- the margin should be between 54.5% towards 56%.All in all, we are very happy with the results that we are delivering for H1 2018 and also with the results that we've achieved for Q2 2018. And it remains that we are very confident that what Greg and myself and the team told you during the Capital Markets Day is absolutely under control and on its way to basically deliver high single growth rates on our core agent revenues by the end of '18 and obviously low double-digit by 2019.

[Gregory Ellis]

So thanks, Christian. Just before we just go into questions, so in summary from our perspective for the half year results, very good financial and operating results. Our businesses of AutoScout and Consumer Services continue to do well and we expect them to be very good businesses into the medium term. I'm particularly happy with the performance of ImmobilienScout. As I mentioned on the call, we're starting to see quarter-on-quarter growth, which is the first time that we've seen that. Residential business now is doing well and can clearly do better, but now that we are through the transition, the product transition and the sales transition, extremely happy with where the Residential Partners are. Commercial business has done well. We launched a new commercial site this year for -- that reflects the way people search for commercial property, which is different to residential property. We've taken our customers through that new site experience and they've been migrated across to that -- or to understand how their products will work in the new site. And again, finally, the transition of our -- from the developer market segment in our business partners as we now move those customers to a project model. So all of that work across the last 2 years now has been done, has been implemented and we are now starting to see operational traction, which is very pleasing to see from ImmobilienScout.Christian and I are happy to take any questions that you may have now.

[Operator]

[Operator Instructions] We've received the first question, it comes from Miriam Adisa of Morgan Stanley.

[Miriam Anuoluwapo Adisa, Equity Analyst]

I have three. Firstly, on the agents, so you said that the out-of-business trends have now stabilized. So how should we think about growth in the second half? And how should we think about normal market growth for 2019 and beyond based on the current market conditions? Then secondly, do you expect the ARPU dilution that you're seeing from smaller agents wash through in the second half of the year? And then thirdly, on AutoScout, could you give us a bit more detail on the pricing gap now between AutoScout and eBay following that price rises and then also just your intention to maintain or narrow that gap.

[Gregory Ellis]

From an agent perspective, we'd expect to see slight growth in customer numbers between now and the end of the year. As I said, at the moment, in general terms, customers that are going out of business within our group have been offset by those customers that we acquire and then, obviously, if we selectively win back customers from our competitor, so we should see a slight growth, stable to very slight growth, between now and the end of the year and even into '19. The ARPU effects, when you say wash through, I think what you should expect to see to the extent that we continue to acquire customers at the rate that we are, which we do, we'll still have a disconnect between ARPU of acquired customers and ARPU of existing customers. The one thing that I would mention to the market is that remembering that ARPU takes revenue across an average customer. But we've made it very clear to the marketplace that, particularly in the residential business, the top 20% of our customers generate 80% of the commissions in the market. Now obviously, we're not going to declare the weighted average growth of our extremely high-value customers, but relative to other markets, Germany has a very large number of agents that's split between extremely small, medium and large customers. Now for internally, our focus is in getting ARPU on medium to large customer growth. Now if we're getting close to 6% as an average, then we're getting material growth in ARPU from those medium to high propensity customers. So just when you look at the ARPU numbers, please remember that they're averaged across a very large customer base that is really quite diverse between its monthly ARPU contributions. In terms of IS24, we don't really talk about or think about the price delta. We look at customers, the cost of lead and we try and maintain that our cost per lead to a dealer is no more expensive than that of mobile. So we work at an ROI level. Suffice it to say that we're very pleased as the market leader that they've put through a price increase, which is clearly supported economically that the dealers can pay more. But we don't mirror them on a percentage price increase, we monitor at a cost-per-lead basis. But we are today at parity, and we will maintain our parity.

[Operator]

We have a next question, it comes from Craig Abbott of Kepler Cheuvreux.

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

You already partially answered one of my first questions regarding the win-back from these Residential Partners and the trajectory of potentially pulling the ARPU up. But I just wonder, what has been the single key success factor in being able to win back this partners from Immowelt? Has it sort of been the revamping of your product line? And secondly, maybe a bit more of a strategic question but moving over to the AutoScout side, I just wondered if you're still exploring potential exploratory talks with AUTO1, and whether or not this might be an interesting option for AutoScout?

[Gregory Ellis]

From a win-back perspective, so your question was how do we...

[Christian Gisy]

What is the single success factor...

[Gregory Ellis]

Of why we win them back? I would say it comes down to 3 things. We were very confident that the product structure that we put in place in 2016 was the correct product structure. But it took a while for our sales force and our customers to understand that. So certainly, we've done -- the key success factors are the right product set in, which we were always confident of, getting the sales force to understand it and then have the confidence to communicate it, which they're doing with increasing confidence in performance, as you can see in our numbers. And for the last 2 years, our operational performance, as measured by a listings perspective and a traffic perspective, has continued to go away from our competitor to the point now where their revenue growth is falling, our revenue growth is accelerating and our traffic and listings position has been strong against them for the last 2 years. So I put it back down to operational improvements in listings and traffic, the right product set and the sales force having the understanding and the confidence to -- in the ability to communicate that to the customers within the market setting that we have found in Germany. Your AUTO1 comment, I'm not sure whether that's a bit of a fishing question. We were never in discussions with AUTO1, we are not in discussions with AUTO1 and that's not a business at the moment that we would think that would be a natural fit for us. They might think we're fit for them, but not the other way around.

[Christian Gisy]

And it's too asset-heavy, Craig, as you know.

[Operator]

The next question is from Lisa Yang of Goldman Sachs.

[Lisa Yang, Equity Analyst]

A few questions, please. In terms of your new guidance -- or narrowed guidance of 5% to 6% actually, you think you should reach the upper end of that range, what gives you comfort that you should see that actuation in the second half? What are the main drivers to get towards that 6% for the year? That's the first question. The second question is regarding the upward trajectory for the existing customers who have been there for more than 12 months. Do you think the 6% growth we saw in the first half could accelerate in second half and into 2019? And the third one is on the VIA take-up, just wondering if the upward growth of 6% for those new -- existing customers, how much of that is driven by VIA? And if you can give us some color as well in terms of what proportion of your customers who take VIA contract renew those products, that would be helpful.

[Christian Gisy]

So Lisa, thank you very much. The guidance of 5% to 6%, the reason why we are so confident about it is because we see the run rate and I refer to the contractual revenue growth as of H1, which was 7.6%. And this is something that basically we obviously, and this goes also to your second question, where we also expect to accelerate into '18 and to '19. That's the reason why I reiterate it, and Greg did as well, is that we're expecting to exit '18 in the revenue line at least a high single and basically be able to deliver in 2019 at the core '18 revenue line low double-digit. If you just take this into consideration, for '18 at least, you are -- you should be very confident, and we are, to deliver the guidance of 5% to 6%.

[Gregory Ellis]

In terms of the question you asked on VIA, the best way I think that we can answer your question is to just refer back to the growth. We had 2.2% growth over the previous quarter. We said about 30% of our revenue is in the value-added products and 70%, 7-0 percent, of that is coming from VIA. By definition, if you're actually getting growth quarter-over-quarter and 70% of your net growth is actually coming from VIA -- sorry, 70% of your growth is coming from VIA, by definition, the renewal rates of VIA must be high. So with 70% of the 20%, 30% being VIA quarter-on-quarter growth as the result of that VIA must be driving or renewal rates of VIA must be very strong.

[Lisa Yang, Equity Analyst]

What about the OpEx growth in the second half for the existing customers?

[Gregory Ellis]

Well, I think as Christian said, the fact that we're actually guiding -- we're lifting the bottom end of the guidance -- now we're not going to give ARPU guidance, but obviously if revenue growth goes up to the bottom end and customer numbers remain relatively constant in terms of volume, you should see a slight expansion in ARPU relative to H1.

[Operator]

The next question is from Richard Eary of UBS.

[Richard Eary]

Yes, just 2 questions from myself just for a bit of clarity actually. Just firstly, Greg, you talked about growth in agents and you said that you didn't think there was going to be significant growth in the second half of the year. If you look at, obviously, where we were back in history where we had like 22,000 agents, we're now about down to 17,000, although the growth in this last 12 months -- 6 months has been pretty strong. Do you see if there's any reason why we're not going to go back to those previous levels? And why you think growth from here is going to be reasonably sort of probably a little bit more anemic than it has been? So that's the first question. The second thing is just on the VIA take-up. Is this increase in monetize -- is this a better monetization as in it's driven by better monetization per ad as in less 3 VIA products on-site? Or is it driven by higher physical take-up of paid VIA listings?

[Gregory Ellis]

So I'll answer your second question first. It's the second statement the VIA. It's basically getting people to buy more volume of VIA or getting them to buy up the product ladder. So we've got 3 VIA products on the real estate side and 3 MIA products on the auto side. But it's either selling more paid volume within their current product position or getting them to buy a premium or a Schaufenster from the top spot. So either going up or growing the volume. The customer numbers, as we mentioned on the Capital Markets Day, now that we've focused on stabilizing customer volume, it's actually not a core step for us. The core step for us, as we mentioned on the Capital Markets Day, is listings and traffic, revenue growth, how the revenue is generated, so we want more and more revenue coming from our value-added products where today we've got approximately 30%. So for us, whether customer numbers go back to their previous high is something that we have no control over. Certainly, we've seen a rebound in customer volumes well above the low point. But from our point of view, I guess the key message is to take away, out-of-business is back to normal market conditions. And our business is performing now with accelerating revenue growth and it's coming from the products that we want the revenue growth to come from.

[Richard Eary]

Great. Can I just ask a follow-up question just on the take-up of high-level VIA product? So if you look at the 3 VIA products within property, can you provide us a split in terms of where the revenue sit between those 3 different types of listings? And how that's changed?

[Gregory Ellis]

I could, but you'd have to become the product manager of AutoScout -- ImmobilienScout, sorry. That's not a number that we would ever declare, unfortunately.

[Operator]

As there are no further questions at the moment. [Operator Instructions] We have received another question, it comes from Simon Heilmann of equinet Bank.

[Simon Heilmann, Analyst]

I got questions about IS24 listings. So what I've seen is that you did not disclose the number for total listings or number for segment listings for the 6 months. But you wrote in your report that you've seen, in accordance with the market trend, a reduction in listings, the average duration on platforms and the overall listings on IS24 platform. So can you give us a bit more color about the current market trends you see right now? And what do you think is the reason? And how will you deal with that to improve your performance here? And then a follow-up, according your graph you've shown us on Page 5, so IS24 versus peers. You wrote a source here that these are management estimates. So what is a -- can you give a bit more detail what is the basis of your estimates? And what gives you the confidence that you've been able to gain market share here? And as you've combined your peers, can you give a bit more background what do you see as your most dangerous competitor for IS24 right now and why?

[Unknown Executive]

Just one question, Simon, upfront, what do you mean which we did not disclose as listings.

[Simon Heilmann, Analyst]

The total number of listings, so how many listings on the total IS24 page?

[Unknown Executive]

That's disclosed.

[Gregory Ellis]

Yes, it's on Page 5.

[Christian Gisy]

It's on Page 5. If you look on the right -- on the left-hand side, you have, let's say, listings in thousands and then you see where IS24 is ending up at June '18. And what you see is basically from June '17 towards June '18 where the curve is getting to.

[Unknown Executive]

And we disclose it in our report. I think we have roughly 453,000 listings.

[Christian Gisy]

And what we have never done before and we will never do is basically disclose how much is residential, how much is commercial and developer because I mean we don't need to give more information to the market as we are doing anyhow. And on the second thing on the IWH or the combined company, as I say, the management thought is very simple. As much as we know what is on our side, you just have to [ crawl ] the other side and you know exactly how many listings they have. It's a very simple arithmetic that everybody can do. Partially, by the way, our investors do as well.

[Gregory Ellis]

It's a methodology that we've used since we took the company public. It is fair to say that our numbers differ from our competitor. We're not sure how they get to their numbers, to be very honest. But we -- suffice it to say we haven't changed our methodology since going public. So at least we've been consistent in that regard. In terms of the biggest competitors that we have, well, there's obviously on the real estate side, there is IWH. To a significantly lesser extent, at a material lesser extent, is the eBay Kleinanzeigen. And then obviously, we continue to watch people such as Facebook, but certainly, the Facebook Marketplaces, we've made it extremely clear to Facebook that under no circumstances are we providing our listings to them. And whenever we speak in the European format, we make it very clear to our comrades that it's a very bad idea to be providing listings to Facebook. And in our regular discussions with our peers, I'm not aware of anyone that has provided listings to Facebook. So in real estate, IWH, a very distant third is eBay and we monitor Facebook, but certainly, that's not something that we see materially affecting the business at all.

[Operator]

The next question is from Andrew Ross of Barclays.

[Andrew Geoffrey Ross, Research Analyst]

Just got 2 more left. First one's on private listers and others within IS24, which grew in Q1 and then declined in Q2. What changed there? Maybe I'm reading too much into it, but has anything changed? And can you give us a sense as to what private listings are doing because clearly you've got FLOWFACT in Austria now as well, which I would guess are growing? So how much of private listings down in Q2? Second question's on share-based payments, which you're now expecting between EUR 6 million and EUR 6.5 million this year, which is not nothing. And it sounds as though you're accounting for all of the share-based payment charge in your nonrecurring items, and I've got a vague memory from the IPO but some of it was going in the nonrecurring and some of it you were putting above the line in EBITDA. So how's the accounting treatment of that changed or have I just got to wrong? And then how much of that EUR 6 million, EUR 6.5 million -- what do you expect that to be going into '19 and '20, assuming the share price stays roughly where it is or goes up a bit?

[Gregory Ellis]

So Andrew, I'll do the market question and Christian will obviously answer the question on how we treat the share program. You're correct that that other line includes private FLOWFACT in Austria. Austria, although being small for real estate, is growing. FLOWFACT is actually not growing much this year because we're transitioning its product offer to a SaaS format. So we've been very cautious in as we take customers on a transition journey from the software licensing model historically to the SaaS model. The private listings business, we're confident that we're not losing listing share to eBay. We are -- we've got very good ARPU growth, but it's booking volumes that are down, which is affecting our revenue. And like many e-commerce businesses, Andrew, when the weather is really good, we see reductions in booking volume. So that's no different to our business. So ARPU is good, in fact, very good. Booking volume is down and I think we should expect that to continue, not that the hot weather will continue forever, but it's a sign of the market structure in Germany remaining still a very tight market. And it does bounce around a lot, the booking volume, as I said, with weather conditions. And if you look at the materiality, it says 3% down. But when you look at the absolute number, it's 600,000 in the half-to-half. So it's not a material revenue number. On the share-based program treatment?

[Christian Gisy]

Yes. So Andrew, on the share-based payment treatment, as you rightly point out, we have 3.5 million to the half, 1.1 million is basically attributable to the old management program, which is what you call MEP, which I think will basically run out in 2019 the latest because then the program overall will be finished and everybody will have at least vested, so this is not going to play a role anymore. The other piece is what we call the [ ZOP ], which we used to, as you are right, account above the line. We have put it now below the line for 2 reasons. First, we have changed the underlying method and that's the reason why it increased. We are going from equity to cash settlement, which creates much more volatility because cash settlement goes is much more influenced by the share price. And the reason why it has grown quite strongly in the first half of the year is because, I think, we entered the year by EUR 33 and we are today at EUR 44. So you can imagine that this basically EUR 11 has quite an impact. So it's very difficult to predict where it's going to go to what -- to '18, to '19 and to '20 because it's very much depending on how basically the share price is going to evolve over time. But if there is a change, you are right, from above the line to below the line, which is, we believe, in line with our peers and that's the reason why we did it.

[Andrew Geoffrey Ross, Research Analyst]

Are you able to quantify how much was above the line in '17 that is now below the line?

[Christian Gisy]

It was about EUR 500,000.

[Andrew Geoffrey Ross, Research Analyst]

Okay, fine. Not much.

[Christian Gisy]

Yes, because it was, as I said, in part equity settle. Equity settle is very -- that's what it says, is less volatile. And as you remember into '17, I think the share price was bouncing around EUR 33.

[Operator]

Then we have no further questions now. I will hand back to you.

[Gregory Ellis]

Okay. Well, on behalf of Christian, myself and the company, thank you very much for attending the call. We look forward to seeing you on the roadshow. The roadshow to Europe starts 31st of August and then early September for our investors in the United States, and U.K. in Edinburgh. [Foreign Language]

[Christian Gisy]

Ta-ta.

[Operator]

Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may now disconnect.