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Dear ladies and gentlemen, welcome to the conference call of Scout24 AG. At our customer's request, this conference will be recorded. [Operator Instructions] I'm pleased to introduce Greg Ellis, CEO; and Christian Gisy, CFO; of Scout24 AG. May I now hand over to Mr. Greg Ellis, who will lead you through this conference. Please go ahead.
Thank you. Good afternoon, everyone. Welcome to the results call for 2017 for Scout24. The call today will be in 3 sections. I will give you a market and operational overview on 2017 for our businesses of real estate, automotive and Consumer Services. Christian will then give you a financial summary of 2017. And the third section is Christian will take you through the guidance in the context of the new reporting structure which will come out in 2018, which is in line with the information we quote to the market on the Capital Markets Day. To the first section now, I'm looking at Page 3 or the slide titled Key Operational Highlights. Relatively stable listings volume for our automotive business with 3 million listings or active listings at the end of the calendar year and 400,000 listings, which was a slight decline, on the real estate side. That's just simply a function of the very healthy property market that remains in Germany. Usage across the 2 brands goes up to 161 million visits, of which now 71% go through a mobile device. And as per most of our calls in the last 2 or 3 years, our relative market share, particularly on the real estate side, continues to increase over our competitors. If I look at the financial highlights, organic growth of 8.4 -- 8.5%. Sustained profitability there of group ordinary operating EBITDA, up 13% to EUR 253 million. And cash flow up 12% to EUR 230 million. We've note within the 8.5%, there was 1 million of that of revenue associated with our acquisition of Gebrauchtwagen, the Austrian automotive vertical, which is about 1 million. So the organic performance in a normalized basis was 8.4%. If I move on now to the ImmobilienScout, and we go through the standard format that we've had with you with some times of listings [and] traffic and then money, you can see that we continue to grow the gap between IWH, 1.8x. We also see that the listings per customer was decreasing relative to '16, in line with the active German property markets. [ Now ] the increase has been almost a factor of 3 less than that of our competitor. So we remain very confident, particularly with the listings performance. And just a note to the market, the transaction volume remained relatively constant, '17 versus '16, but the transaction value increased. So the gross commission pool, despite less listings, remained unaffected for the broker community '17 versus '16.In terms of customer numbers, you can see on the chart with Slide 6, which talks about that we had [17,400] customers in December '16 and we finished December '17 at [17,500] customers. So the reason for this is the trend that has continued over the last 3 quarters of our churn rates significantly reducing. We're seeing residential churn, for example, down and continuing to go to record lows of between 7% and 9% and us continuing to acquire new customers at around about 300 customers per month and undertaking selective winbacks. So very pleasing to see a stabilization of our customer volume. Most particularly, the thing that we're very satisfied with is the reduction in churn.If I look at the traffic position, this is depicted in millions of visits, we had 9 million visits increase over 2016. And you can see that 74% for the ImmobilienScout side is mobile-originated, again very pleasing near our -- for our nearest competitor in Germany, 1.7x increase of the relative market share. And really interestingly, a 5 percentage point increase in the number of exclusive unique visitors to ImmobilienScout, so these are users who don't even visit the #2 competitor. And time on site remaining at 2.7x compared to our competitor, a 72% share of minutes of use.So very happy with the listings and the traffic and the customer performance. Moving on to revenue, you can see the ARPU evolution over the past 5 years there and the quarter-to-quarter comparison. The one thing that we would point out to the market is that if you look at our ARPU growth and you look at what we define as our long-term customers, which are customers that have been with us in '15 and '16, the ARPU growth is in fact 11 percentage points higher than average. So from our perspective, we are driving good ARPU growth for those customers. Obviously, the ARPU that we obtained from new customers and in the main and some ARPU reduction from customers that we win back causes a dilution. But we're seeing an ARPU growth of very -- of double-digits above the average for our long-term customers that have been with us for '15 and '16.Also to point out that the comparison in quarter 4 in '16 is influenced by the low customer volume because 2016 was when we had a difficult year in customer changes to Bestellerprinzip and our pricing approach in '16. So we've seen quarter-on-quarter growth across the 4 quarters of 2017. And when we look at the growth of ARPU for our core customers or our existing customers, we're very pleased with the result. In terms of what also is driving the ARPU, if we look at our -- and this is a core customer statement, if we look at our VIA sales October through January and we annualize that time period, it translates to VIA sales of between approximately 40 million to 50 million of VIA sales across the core customer base of ImmobilienScout. Now as the market will clearly remember, we have 3 parts to our membership platform, membership, VIA and the display products. To assist in our customers to engage in buying more VIA as a function of their overall ARPU increase, we reduced the membership price and increased the volume and value of their overall spend in VIA. So we are extremely comfortable with the performance of VIA, particularly when you annualize that revenue performance and you put it into context of the membership pricing down in return for more VIA to give us an 11% above the average for the existing customers. By way of additional reference, we are selling at approximately EUR 40,000 per month of VIA upsell, which means for those customers that have renewed their membership contract, which is what I just spoke about, which is the membership down and VIA up, customers buy incremental amounts of VIA after they've bought the annualized contract. And that's running at about EUR 40,000 a month. So again, extremely comfortable with where the VIA performance is and the sales force and the sales changes that we've made are starting to really show benefit now. If I move on to the core agent slide, which is the slide we've politely borrowed from Rightmove, because it's a slide the market's familiar with, we've said to the market that we are trying to reduce that high peak on the left-hand side, which is the number of amount of revenue we have in small customers and increase the amount of money that we make from medium to large customers. And you can see, as we track '14, '15, '16 and '17, that is happening, which is further confirmation of the ARPU and revenue growth conversation I've just had with you. It also confirms for us the significant upside that ImmobilienScout continues to have, where 60% of our core agents are still spending less than EUR 500 per month. And I would point out that despite our losses in customers, we are able to increase the budget of what we call or define as the valuable customers. And we've increased the number of customers spending EUR 1,000 per month by 8% year-on-year.If I look now at the summary for ImmobilienScout in terms of what we have released to the market, we will -- we have spoken to the market and will release consumer product and customer product on the brand-new commercial products that's available for the commercial market segment; that's specifically targeting people looking for commercial property. We continue to make money out of the realtor lead engine, which is outside the membership platform for those customers seeking volumes of new mandates. And obviously, we've introduced in the tight property market that exists in Germany what we call a premium membership offering, which allows people to buy, in a packaged format, things like referencing their SCHUFA credit check, a documentation that helps them make them look like an attractive buyer with tenant, and that remains on foot for them for multiple months as they go through the property search process. So we're extremely happy with that. We've now got approximately 40,000 subscribers on the membership product, and that's priced at around about EUR 30 per month for that premium membership package.The -- so in summary for ImmobilienScout, we've stabilized the core agent numbers. We've increased our relative market share. We've successfully implemented the initiatives to commence the improvement in the sales execution. And we continue to roll out product innovations on the consumer and customer side. For the next 6 months, we'll continue to focus on driving the VIA usage to expand further ARPU growth. We want to continue to leverage our regional and pricing strategy. We want to drive our sales force performance even further. And obviously, we are a product house at heart and we'll continue to come up with product innovations for -- on both the consumer and the customer side. If I switch now to Slide 12, which is the AutoScout, dealer locations, slightly up relative to 2017 to just over 26,000. Dealer listings, slightly down. That's a function of some price increases that we've put through in our major markets. There will obviously be some questions around the diesel situation in Germany in terms of the listing volume, it's not been affecting overall listing volume. We are seeing quite a substantial swing towards petrol versus diesel being stocked by our customers. And some of that dealer shortfall relative to '16 has been as a result of German commercial customers were moving diesel vehicles to other parts of the world, given the issues that we're all familiar with in the diesel market. But from our perspective, the listings volume is relatively constant and that we're not concerned about overall listing volume, particularly in Germany.In terms of the traffic, we've seen growth there from 45 million to 46 million visits, with now 72% being mobile-originated. And again, very healthy ARPU growth, both in the CAGR format and through the quarter-on-quarter comparison. If we give you a look now at the country breakdown, and we talked to you around Italy and the Benelux. We saw stable numbers -- stable customer numbers in Germany. I've mentioned the listings volume issues relative to '16. The other thing that I should add there is that we saw a slight reduction in the Netherlands, and that is a result of deduplication of listings between ourselves and the acquisition of Autotrader that we made just over 12 months ago. So from a listings perspective, very confident and comfortable with where the market is at. In terms of product innovation within AutoScout, we -- the 360-degree product is actually doing very well, around 4,000 listings with 360-degree views. That will be progressively rolled out across the AutoScout network. It was released in Germany. And the car valuation product, which really adds a lot of transparency for the buyers of cars that gives them an accurate indication of where that car is priced relative to the market. 71% of our consumers are interested in the price analysis. 73% have found the price valuation [still] very helpful to decide if that's the right car for them. We use more than 10 million listings in our data set that analyzes 70 features to determine whether the value is an accurate valuation. And certainly, from our perspective, we think it's the most accurate price authority for cars in Germany. So to summarize, from an AutoScout perspective, we are creating real tangible USPs for our consumers and customers in Germany. We're going to leverage the -- we leveraged the Marketing Power with a new tier, strengthening the market position in Austria and within the other European core countries, which is Netherlands, Belgium and Italy. And obviously, we really want to continue to grow our listings and traffic and money. In terms of what we're focused on, it's leveraging the USPs to get that real competitive advantage, increase the penetration of the Marketing Power products, both in Germany and the other countries, really get value, which is going very well for us, the integration of the Austrian car business and obviously continue to focus on improving our sales strategy.If I just focus quickly now -- now just to be very specific with you, our accounts that have -- approved by the auditors have been on the legal entities of ImmobilienScout and AutoScout. This is a management [view] of Consumer Services, which will obviously start to get our auditors to report on and to talk to the market on around Consumer Services. But Consumer Services, again, had an extremely good year with revenue growth in 15 -- with 15% to EUR 18 million of revenue in 2017.Our finance revenue, which is principally today driven by our financing [for] real estate, grew by 18%. Our credit score business grew by 6%. And our relocation business was more than 50,000 leads per month at around about EUR 37 a lead. So the aspects of the Consumer Services business is financially is doing extremely well. And as we mentioned on the Capital Markets Day, Consumer Services is not only good for the financial perspective, but it provides extensive value to our consumers so that both our ImmobilienScout and AutoScout sites are seen as more than just listings sites. So I'll hand over to Christian now who will take you through the balance of the presentation.
Thank you very much, Greg, and hello, everybody. A pleasure to have you on the call today. Let me first walk you -- I wouldn't say shortly, but walk you through the legal entities view, as Greg called it, for 2017. Page 18 gives you an overview about the strong organic growth and sustainable profitability of the group. We grew year-on-year by 8.5%, including the 1 million of Gebrauchtwagen.at. And we grew year-on-year the EBITDA, the ordinary operating EBITDA, by 13%, amounting to a margin of 53%, which is slightly ahead of the guidance that we provided the market with. On a quarter-to-quarter development, we are seeing a growth of 9%. And in the ordinary operating EBITDA, we're seeing a growth of 18%, again amounting to a 53% EBITDA margin.If we now look into the ImmobilienScout business, as you can see, core agent revenues and, as you know, recorded an acceleration in the second half of 2017 with a sequential quarter-on-quarter increase by 0.7 percentage point in Q3 versus Q2 2017. And again, by around 1 percentage point in Q4 against Q3, which tells you that basically the core agent business is now increasing.Year-on-year, obviously, ImmobilienScout grew by 5%. The other agent revenues shows solid growth in Austria, FLOWFACT and our PPA Professional business did grow slightly. And the last thing, professional were partially converted into membership, that's the reason why for PPA Professional side, we're seeing a bit of lighter growth. The other revenues, and we're talking legal entities, are mainly driven in their growth rate of 12% by the services -- by Consumer Services revenue, which is a combination of mortgage, of finance, e-comm and of relocation across the Consumer Services business in 2017.If we turn to AutoScout, AutoScout, as most of you are aware of, continues to delivery on its growth potential. Quarter-over-quarter, we saw a 16% increase [here] in revenues. Year-over-year, we're seeing a 15% increase year-on-year. Obviously, the core countries as being there Germany and Italy and Benelux do deliver, it's up by 19%. Obviously, going forward from the 1st of Jan 2018, Austria is also coincidentally a core country because of the transaction we had with -- in September of 2017, which gives us the #1 market position in Austria in the cars business.Other dealer revenue came in a bit higher than expected, not only because of the Gebrauchtwagen transaction but in the end because auto Spain was doing better than we originally expected. Other revenues increased obviously at a slower pace, which has mostly to do with the display revenue business that was weakening a bit in 2017. Obviously, the margin increased, as you can see, from quarter-to-quarter as well as from year-over-year, [tells] you about the scalability of the business and our also ability to basically spend the right amount of money to drive growth.If we now look into the ordinary operating cost, just to remind you, we -- in the guidance, we guided towards high single digits in revenues, and we were expecting EBITDA margin to increase by at least 1 percentage point, which we achieved and we overachieved. The cost base increase was by [ 4.3% ] in total, which is again around the 5% we are expecting as an increase each year. And again, as you can see, personnel expenses are certainly the biggest cost element within the ordinary cost. And we are seeing, on the one hand, increase in staff and, obviously, salary increases. And the second piece is also the stock option program that as well is recorded on the personnel expenses that will then going forward from '18 onwards, we will move below the line as other comparable companies do. The marketing expenses towards the guidance for 2017, was roughly 4 million to 5 million ahead. It was partly to support the introduction of new product. It is also partially performance marketing to drive our lead business, drive the revenue, as an example, from our lead engine. So this is something that came in and in line as expected. The rest is something that is basically washing out between IT and other costs.If we now turn our attention towards the below EBITDA items, the relevant piece certainly is nonoperating with a 7.6 million personnel cost that were relating to reorganization a couple of you will perceive to be higher than probably expected. The rest is still around the share-based compensation, the [EUR] 2 million cost related to the acquisition of Gebrauchtwagen. So the rest is basically as expected. On the D&A on PPA item, obviously, the amortization of the software PPA item that has ran out in '17, now basically decreases the D&A on the PPA items quite heavily, which then obviously leads also towards an increase in EBIT. Obviously, finance cost, as you know, through the refinancing that we have undergone in the early '17, managed to decrease our interest rate expenses -- to our interest expenses, excuse me, quite dramatically, quite substantially so that we are recording finance cost of about 14.2 million in full year '17. And obviously our [indiscernible] promissory notes refinancing would also help us to continue to decrease the interest expense by probably 1 million in the year 2018. Effective tax rate 33%. Also here, we're expecting a normalization towards 32% to 32.2% in '18 and then reaching the normalized tax rate in the German business overall of 31.5%. Adjusted earnings, obviously, are 151 million in 2017, which amounts to an earnings per share of EUR 1.4. Capital structure, the story continues. The deleveraging profile is still strong. We ended the year at 2.2x net debt EBITDA -- net debt-to-EBITDA. Obviously, with the refinancing, we are continuing to decrease and we are obviously expecting to further deleverage the margin. The margin [ratchet], obviously, at the time in '18 would probably continue to decrease. And we are now targeting, together with the Supervisory Board, a 0.56 dividend per share that we'll propose to the AGM in June 18, which is a 40% payout ratio on the net adjusted earnings and is really doubling the size of the dividend of last year.So far, for full year '17, now let me get to the outlook for full year 2018. If you hear construction noise in the background, we just moved offices in Munich, and the office is not fully ready. So if there is disturbance noise coming from construction, apologies, therefore, but they still are working on the building at the moment. I will try to talk a bit louder then.Page 25, to start with, are IFRS changes that have to be considered for 2017 and outlook to '18. Let me go through the different items line by line. So we start with IFRS 15, which is Recognition of Revenue, which is mandatory from 1st of Jan 2018. Obviously, the outlook in 2017 financials do not include the impact of adjustment yet. As of Q1 2018, we will then show restated 2017 and the outlook, as such, will be adjusted. We expect the negative impact on revenues of about 5.1 million in '17 and [around] 6 million in '18. Obviously, there is no impact on ordinary operating EBITDA, other than the margin increases because less revenue obviously with the same amount of EBITDA will leave us with a slightly higher margin [from] '17 and the same impact obviously is expected for 2018. IFRS 16, Accounting of Leases, here, we are an early adopter. Obviously, this is going to be mandatory by Jan '19, by 1st of January '19. But to be immediately on the right side, we decided to basically put it into our accounts as of 1st of Jan 2018. Again, outlook in '17 financial are not included in the impact of the adjustments. We will, by Q1 2018, adjust the reporting and the outlook. But there will be no restatement to the [past] [ the betas ] [to depict difference towards IFRS 15].The impact on ordinary operating EBITDA will be positive 6 million [into] '18. In '17, although we are not restating, but just to give you a sense, the impact would have been roughly 6.4 million. Obviously, the ordinary operating EBITDA margin is about to -- to increase by 1.1 percentage points. In '17, it would have increased by 1.3 percentage points.There is also an impact obviously because of Accounting of Leases on the balance sheet, we are expecting a balance sheet extension of 20 million as of Jan 2018 from a certain amount of impact from our new rent contract in the Munich office that we closed, I think, as of 1st of March 2018, which amount also to roughly 20 million. IFRS 9, Valuation of Financial Instruments. I think we can go fastly over it. There is no impact on payout, as we just expected. It is -- there is an impact in trade receivables in balance sheet that is expected of 4 million, which is, given the size of our balance sheet, probably I would call it rather noise.And getting back now to the operating and start into the operations. As you can see now, and this picture has been shown to you first time during the Capital Markets Day, full year '16 versus full year '17, we are diversifying our operations and we are still delivering 49% of revenue from ImmoScout, 34% from AutoScout and 17% from Consumer Services. Obviously, compared to the 9 months that we showed you during the Capital Markets Day, there's a slight shift from ImmoScout towards AutoScout.Now we are getting to the more interesting piece as we are adjusting our financial disclosure going forward, and as Greg was saying from internal and into an external reporting standards, we are changing it from 1st of Jan 2018. What we showed from 2017 is only management view. So on a full year basis, we are disclosing ImmobilienScout vertical with 2.7% growth year-on-year which, as I said in the beginning, did accelerate in Q4 against Q3 by roughly 1 percentage point. AutoScout is showing a 14 -- 15, sorry, 15.4% revenue growth year-on-year. And Scout Consumer Services is showing a revenue growth of 14.6%, which in total adds up to the group number of [8.5%] and 480 million of revenues. Right-hand side, ordinary operating EBITDA. ImmobilienScout margin is at 66.7%, AutoScout24 margin is at 47.1% and Scout24 Consumer Services is at 35.2%. This are again full year numbers compared to what we showed back at the Capital Markets Day. Obviously, the group is coming in at 53% with 253 million or 252.8 million of ordinary operating EBITDA.On the back of this adjusted disclosure, now let me give you our outlook for 2018, obviously, according to the new financial disclosure. So ImmobilienScout24, and now I'm going to the left-hand side, which is the revenue piece. ImmobilienScout24 is expected to grow in the range of between 4% to 6%. AutoScout is expected to deliver at least an absolute revenue of 185 million and Scout24 Consumer Services is expected to deliver at least 90 million of revenues. On Scout24 group level, we are targeting of an -- of a range of 9% to 11%, which is in line with what we said during the Capital Markets Day. If I reconcile the number that I've just given you to the old world, we will see that IS24 would grow in the high single-digit area, somewhere between 7.5% and 9%. What I'm saying, old world means that the piece of consumer services that belong to ImmobilienScout would be added and, therefore, we will see a growth in the high single-digit area of somewhere between 7.5% to 9%, which is obviously an acceleration to the 5% that we reported in 2017. The margin probably will show even slightly stronger increase driven by the operating leverage in the Consumer Services business. AS24 is continuing to grow double digits, that's the reason why we have been also able to depict 185 million of revenues. If I now turn my -- the attention to the right-hand side, which is the ordinary operating EBITDA. We expect ImmobilienScout24 to at least deliver 67% of margin. We expect AutoScout24 to continue to scale at least with 50% and Scout24 Consumer Services expected to increase at least 1 percentage point. So again, on group level, we are offering a range of between 54% and 55.5% EBITDA.To now go even deeper into the verticals. Obviously, ImmobilienScout24 in here depicted is the comparison between '16 and '17 on a full year basis but also quarter-on-quarter. And if you remember, revenue with residential real estate partners, then obviously which contains property -- which contains residential, property management and PPA professional business, then we have obviously the revenue with business and real estate partners, which is mainly depicted on the commercial and developer. And revenue with private listers and others is basically mostly our private business and a couple of other things. Obviously, the year-on-year growth, as shown before, is 2.7%, with a margin of 66.7%. On the right-hand side, just for your attention also, the KPIs Q4 '16 towards Q4 '17, you can see that we have increased slightly the number of agents. The ARPU also has been increasing by 2.1%. On the business partners, we have lost a couple of smaller clients. Obviously, we have a healthy growth on the ARPU side of about 10%.So if I guide on to '18, we expect this to -- so we expect the residential real estate partners to continue to grow and to accelerate further by 5 to 7 percentage points so that we should record on the revenue for residential real estate partner, a growth rate of between 6% and 8% for the full year 2018. Obviously, we are expecting still to win some additional customers as we have done in '17 with lower ARPU. We certainly will slow down the overall dynamic of ARPU growth. But on the other hand, we're expecting to increase the dealer share, and I think Greg gave you a clear indication of what we -- what the driver there is. And this should be further the main driver of our revenue going forward. We further also expect an acceleration growth in revenue with our business real estate partners. However, compared to the residential, this acceleration will be probably slightly lower as we are still adjusting the business model for development. But we may also be -- surprise ourselves in the second half of the year. But as of now, we believe that this should be -- that there should be growth, but not as much as on the real estate side -- on the residential side. Obviously, we expect further revenue with private listers and others to remain relatively stable. So that the overall revenue growth for the IS24 vertical is expected to reach in at 4% to 6% range. AutoScout, there is only a slight adjustment to reflect our business. Obviously, evolution. Here, we are not foreseeing large changes. I think the main difference probably is to be seen in the way how we record dealer revenues overall. We include, in the meantime, our commercial vehicle dealers so that means our truck business in [indiscernible] which has a certain dynamic or slowing dynamic effect on the ARPU growth, as you can see on the right-hand side of the table, with an ARPU growth in Germany of6%. Obviously, we expect the overall business to continue to grow around mid-teens or at least 185 million, as I said on the slide before.Scout24 Consumer Services, yes, here, we have additional disclosure. Obviously, we are recording strong growth with our finance partners and our services revenues, as already mentioned before. On the AutoScout side, when we look into legal entity, we said the display revenue was a bit lower or was lower in 2017. As you can see, it was only, let's say, [3%] and especially in the fourth quarter, there was even a negative growth rate attached to it. We still expect this business to continue to deliver a certain amount of growth. Obviously, the expectation on the Consumer Services business is to increase revenues to at least 90 million for the year 2018, mostly coming obviously from finance and also our premium membership product.To sum up, we have clear priorities for our profitability and, therefore, for the cash that we are generating. We want to reinvest in growth. Obviously, there is a bit of movement in the market in Europe in terms of certain assets that may come to market. So we are targeting certain M&A entities to either strengthen the market position as we are that we had or to grow, what we call, our adjacent businesses, which is something else [then to] grow the Consumer Services piece. We obviously want to return cash to shareholders. As already said before, 0.56 per share is the proposal that management and Supervisory Board are giving to the AGM in June. And obviously, we want to continue to deliver it and to repay debt to the target leverage of between 1.5 to 1.0 over time.Thank you very much. And now Q&A.
[Operator Instructions] The first question comes from Joe Barnet-Lamb from Credit Suisse.
I've got 3, please. So firstly, you said you report VIA from Q1. By that, I guess you mean the revenues that you're obtaining from VIA, so effectively an update on that EUR 40 million to EUR 50 million run rate. If that's the case, can you let us know what you expect for FY '18 overall from VIA? Second question with regard to your listings outperformance versus IWH, it's obviously a very strong performance there, your minus 8% [volume] listings per customer versus the minus 22% for your competitor. Is that a function of your competitor being lesser exposed to larger agents who are outperforming? Or what's the dynamic there and what do you expect going forward? And then thirdly, on CapEx. So CapEx came in -- or your guidance for CapEx, sorry, for '18 is EUR 34 million. Obviously, about EUR 8 million of that you said is property. But the underlying CapEx looks a little bit higher than I have or what I was expecting. Can you talk about that underlying CapEx level, what is being spent on and how we should think about that sort of beyond '18?
Okay. Look, Joe, on the Capital Markets Day, we said that we would change the emphasis of our reporting to be on 5 descending-order variables: revenue growth; mix of revenue, which is between membership and VIA; ARPU; listings; and then traffic. Now we'll obviously -- if we have given you revenue and ARPU, you can divide it into customer numbers. But to save you doing the basic math, there'll be a sixth component which will be an outcome of that, which is customer numbers. So that's what will be the guidance, that will be the reporting format going forward. Specifically, we won't be providing guidance on VIA. We'll be providing guidance on revenue growth and you can see the trends have changed between membership and VIA. In terms of listings performance against IWH, I think it's a function of 3 things. One is a face-to-face sales force, which IWH does not have. Secondly, the all-you-can-eat offering, which is clearly superior to the structured defined listings packages that IWH has. In fact, there are defined strategies to put IWH under increasing pressure as we bring our membership package down in price and return it with VIA increases. So I think it's the customers' understanding that the unit cost, by which it requires them to list listings with IS24, if they take the membership-only view, is less than -- less [than less]. And at least for the unit price level, may be comparable to IWH in the very near future, which is a deliberate plan of ours. And thirdly, yes, we've consistently said we've always had medium to large customer advantage, and we know that the top 20% of customers in Germany generates 80% of the growth commission. So the medium- to high-value customers have always been the focus of ImmobilienScout. And we do have [materially] more customers in that bracket than IWH. In terms of CapEx, the CapEx is really focused on product development, Joe, as you know, across the 3 verticals. And we literally follow the standard accountancy practices if we're building a revenue-generating asset. So I wouldn't expect that number to go higher in the outer years. But certainly, it has to do with the building of our both infrastructure capabilities and product capabilities.
Yes, and Joe, just to add, I mean, we are talking about 8 million for the -- for, let's say, the office. As you know, we entered into a 10-year lease rent and the office building probably in Munich was not exactly what a digital business, Internet business should be. So we had, obviously, the opportunity to deliver sort of an office here that basically really fits to our business and we decided also to invest a certain amount of money CapEx as well as OpEx wise. I think OpEx is probably 1 million and CapEx is around 8 million and exactly as Greg was saying the rest is on product.
The next question comes from Craig Abbott from Kepler Cheuvreux.
Three questions please from my side. First of all, just to get back to the listings decline that you saw in IS24. And it seems to have accelerated in the second half of the year. You told us that this was able to be more than compensated for by a rising number of transactions and [in particular] transaction values. I just wonder how you see these trends continuing to develop in 2018? And whether or not you might be growing concerned? Second point, sticking with -- on the real estate side, there have been some market noise again recently about GdW trying to relaunch I think its online platform. Some investors suggest they were planning to invest a pretty sizable sum to relaunch that. I just wonder if you could share your views here on that? And my third question is switching over to the auto side. You mentioned that barring these effects, you felt like your listings in Germany were relatively stable and that you held your ground. But I just wondered if you could give us how you stand versus competition, particularly in Germany but also in the other key markets and compare that with 1 year ago?
Well, the listings decline that you've seen on the [Immo] side is really a very standard feature when markets go into very healthy -- I wouldn't call Germany a boom, but it's a very healthy market at the moment. That's a very normal trend to continue. The unfortunate reality of a boom is the low socioeconomic elements if society don't participate in the boom. And it's the medium and [high] expensive properties, which are generally owned by the medium- to higher-income earners, decide to upgrade in the property market. So our model is really index our pricing against the value of the property. So if the German trend continues, we would expect further very slight declines '18 but it has 0 impact on our revenue-generating capability. The GdW statement for us is completely new news. We had over -- we actually never lost revenue -- we lost a small amount of revenue in GdW when they left, but our profitability went up because most of the customers that were churned were truly micro customers. We gained 4 major property management customers, including Vonovia. And there is no -- and from our understanding of that industry, they burned a substantial amount of money and there's no prospect of them entering into that logic anymore. In terms of AutoScout, we do provide -- I think it's on one of the very early slides, so I'm just going back through the deck -- the relative market shares...
Three. Page 3, Greg.
Yes, it's on Slide 3, our relative market shares against our major competition, which is either split between eBay and Subito. So -- and we provided aggregation of listings on Slide 18.
And probably just to give a bit of color on IS24 on the listings side, Craig, it's -- so Germany is stable. Italy, we see a small decrease, which is partially to deal with the price increases and obviously dealers not listing all the objects. Netherlands is mainly also a slight decrease, again, the same reason. And in Belgium, we have -- and in Belgium, we had the deal where Kapaza and 2dehands merged, so they're basically #2, #3 when together, and that's basically the reason for the slight decrease there as well. Nevertheless, in all those markets, we have a clear #1 positioning against competitor.
The next question comes from Miriam Adisa from Morgan Stanley.
Three questions for me. Firstly, could you just comment on again the competitive environment in the [ AutoS ] business? I read recently that one of the German auto insurers is thinking of launching their own platform, just if you have any thoughts around that? And then secondly on the loan you just issued. Should we just interpret this as all going towards refinancing or is there anything to read in there about potential M&A opportunities? And then thirdly just a clarification. If you could just repeat the guidance for agents in the ImmoScout business, I think I heard 5% to 7%, but also heard 6% to 8%. So I just wanted to get that clarification.
So on the AS24, just let me -- can you repeat the platform you were talking about? Is it basically aCar? Are you talking about CarGurus? Or what was the name that you referred to? I couldn't understand, sorry.
It was the German Used Auto Guarantee Corporation [indiscernible].
Yes, yes, okay. Yes, well, they announced that they are basically -- they are starting something which is, by the way, something that where they are only focusing on the customer. They don't care about the consumer, so they are trying basically to build something which we know -- we all know is not going to work out because if you basically already -- only focus on customer, it's not going to work. So obviously, we are observing those things. But it's nothing that basically worries us at all.
The next question comes from Bob Liao from Macquarie.
There were other questions there, Christian, around the values of residential and M&A refinancing.
Exactly. You want to take residential, Greg?
Yes. Well, I think the guidance we gave, Christian gave was 6% to 8%, was the revenue guidance for residential. The -- so that's clearly what we'll spend for '18 in what we've defined residential segment on the Capital Markets Day. Christian can give you the details of the refinancing, but in terms of the intent, there's no increase or decrease in intent to do M&A as a result of the financing. It was literally an opportunity to reduce the cost of debt. So our focus with M&A and our appetite for M&A remain the same as it's been for the last 2 years.
And just to add, the only thing that basically comes with the promissory note is that we are swapping interest rates, which today are fully flexible to fixed term rate to secure basically low-interest rates going forward.
And the next question comes from Bob Liao from Macquarie.
I had 2 questions. One was on the chart on Page 9, which resembled the rate move chart. And just want to ask about 2017 versus 2016. And I guess, one, is this the general comment that there's not that much of a change one on the other and wanted to see if you expect that growth or expect that to be a bigger change in the future? And then secondly, I guess just -- it seems like the sort of -- when you look at 2017 versus 2016 lines, all of the sort of benefit comes in at the very end, at the very high revenue per core agent and less so at the little sort of bulge in the middle there. I just wanted to see what was driving that. That was actually -- the little bulge in the middle was actually slightly down on 2016. So just wanted to get some details on that chart. And then just one quick question on the recent announcement this week from Axel Springer and Purplebricks, and I just wanted to get your views strategically on that if you could.
Well, the charts, Bob, really are just meant to show more the customer movement that we're intending to focus on. They're not really meant to be over interpreted for revenue or ARPU guidance. It's pictorially showing the problem that we inherited, which was too many -- too much revenue into little -- in our small customers and not enough in the medium to large. The differences between '16 and '17, again, I wouldn't overread except the fact that we've delivered very good revenue growth relative to '16, and we're tracking towards 6% to 8% on the residential side in 2018. And the one reason it's not standing up a little probably higher or faster than you'd think is because of the strategy that we want to continue to reduce the membership component of the membership platform and really get the customers associated and understanding VIA. So I wouldn't over interpret that slide. We're extremely happy with where ImmobilienScout residential, in particular, is recovering, both in terms of customer number, listing share, traffic share, revenue growth and ARPU growth and the ARPU growth and revenue growth increasingly coming from VIA. The reason it sort of kicks up at the other end goes to -- the other end goes to my comment before that 20% of German agents contribute 80% of gross commission. So that's the thing to really focus on to change the revenue line. Now you won't really see the slope of that line change a lot by focusing on them, but you will see the revenue lines [indiscernible] [are playing]. And the metrics that we'll focus on in 2018, which is revenue growth and mix of revenue, which is the 2 key revenue [ones], which will obviously be supported by ARPU growth. In terms of Axel Springer's acquisition of Purplebricks, I can only use the word surprising. I think it might be very tough for them to explain to their customers in Germany why they now own a brokerage business. But anyway.
The next question comes from Andrew Ross from Barclays.
Just a couple left from me. So the first one is on Q1, which is clearly a big selling season with a lot of renewals. So can you give us a sense as to what the customer numbers are for both residential and business at the end of Q1? And then the second thing is back to your guidance of 6% to 8% growth for core residential revenues, can I just delve down [indiscernible] property, PPA, I mean, you've got core residential revenues. So within the core residential piece, Greg, I think you said at the Capital Markets Day that you expected ARPU to trend in the high single digits for those agents in '18 accelerating in '19, assuming stable membership. Now clearly, membership isn't stable, but on the basis that you made that comment, are you still happy with it? Do you still think that ARPU will grow high single digits this year with all the changes you've made to membership in VIA?
Yes, but also remember in the residential that we will report going forward, it includes the agents, property management and our PPA business. So anything to do with the residential market. It's not just core agents in the new residential number. But yes, in terms of the ARPU growth, and just so that we can clarify for you, Britta and Diana, exactly what's in the new residential business. In terms of quarter 1, unfortunately, this call's about '17. But suffice to say, we're giving you full year guidance and if we weren't on the guidance, we wouldn't be making the guidance based on what we know about quarter 1.
[Operator Instructions] There are no further questions in the conference call, dear speakers, so I now give you back the floor.
Great. Well, thank you very much to everyone for attending, on behalf of Christian, myself and the company. And we look forward to seeing most of you on the roadshow beginning the 9th of April. Thanks a lot.
Thank you very much.
Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may now disconnect.
Bye.