Hypoport SE

XETRA:HYQ

Earnings Call Transcript 2022-Q1

[Operator]

Dear ladies and gentlemen, welcome to the webcast results Q1 2022 of Hypoport SE. At our customer's request, this conference will be recorded.

[Operator Instructions]

May I now hand you over to Ronald Slabke, who will read you through this conference. Please go ahead.

[Ronald Slabke, executive]

Yes. Welcome from my side to our first quarter results. And as you may know already, we started pretty well with record numbers and a record quarter in the year 2022. We achieved a high double-digit growth on top and bottom line, plus 26% on the revenue side, plus 40% EBIT to now EUR 70 million. This all in a pretty positive market environment, a lot of headwinds, especially in the mortgage business. But all in all, all subsidiaries were taking market shares in this environment and delivered a strong qualitative and quantitative performance in these past 3 months.

So when you hear this from me and you look on the chart of the share price, you could be a little bit irritated [ with ] what's going on. And I think there is some kind of misunderstanding how sensitive the German mortgage market is to interest rates and the sharp changes in the interest environment, which we saw in the last, actually, 4 months, including December, let's say, leaves the market here with some misleading expectations, how the world looks like going forward in Germany and especially in the mortgage business.

So that's why let's start with the market environment. I will try to explain what -- how it looks like right now and what we expect looking forward. So first of all, we have a huge demand for housing here in Germany. The need for housing is increasing. We have a net migration to Germany. Not just because of the Ukrainian war, as well because of a very active labor market, which is a need for talent and workers from all over Europe. We have a positive birth rate in Germany, first time for a long period last year. We have an increasing life expectation. People live longer and need longer housing. So altogether is driving demand for housing up.

And Germans have 2 ways to sort this, they can rent or they can buy. Typically, it was a 50-50 market between these two, but the renting market got heavily regulated over the last years because of sharp rises in rents expected. And this regulation should keep rent increase down, but it is, well, closes this market, makes it less attractive for investors and for new constructions. So that everyone who wants to have attractive living environment now needs to buy, he can't rent anymore. And this was completely different previously.

And this is actually another understanding of the German market and property market is that you change your home or you buy your home just once in your life. You need a trigger event for this. So you do this when you move together or you do this when you get children. It's not relevant what the interest rate says in this moment. Germans are not looking on interest rates. Germans are not optimizing the living situation because of interest rate. They buy because of a trigger event and then they stay under their debt in this home, in this apartment.

So these trigger events [ are ] still popping up in a natural way. The chance to solve it in the renting market is extremely low now. You have to acquire a home. What you may change in the future, because of rising interest rates, is what you are able to afford. So you may buy an apartment or a house, which is just further away from the city center or your workplace, which is smaller than it would have been 2 years ago, or which is of less quality, is older than it was -- it would have been when you would have before the interest rates went up, but you will buy.

So what we will do to the house prices in Germany, right now, they are still rising. First quarter, we saw again a price of more than 10% in house prices compared to the last first quarter. For the near-term future, we expect that this will slow down the increase. We don't expect a drop in the house prices because there is just too high demand and too low, the supply side, for a drop in house prices.

What we will see what changes is that not so many people are competing anymore for a specific apartment in a city center, so less competition there. But still, there's more than one family left who wants to buy it. And so we expect actually an increase in transaction numbers. Why the prices would hopefully slow down in the speed of increasing. This would give Germans as well the confidence in doing this step. Because as well, for the last years, you can say, we saw in a steady increase in search time and the families to decide which property to acquire because they had to get used to this constantly rising prices. Thanks to declining interest rates, it was okay today.

Now in the first quarter, we see for the first time that it's pretty expensive if you wait, so you need to decide fast. So for the -- for the future, we expect as well short sales cycles in the market and in combination with increasing sales speed as well as increased number of transactions.

So this all aside, the German mortgage market is not as sensitive to industry changes as the American, the U.K. or the Netherlands market is. And this is -- from our perspective, one of the biggest misunderstandings which we see right now when people look on our business. So this said, we expect a pretty solid market environment for the rest of the year in the mortgage market. So going forward, how did the different segments perform in this market environment? And we start at the core, the credit platform. And here at the center, there Europace system, which is -- it's mortgage business, but as well as other product areas like saving products and personal loan business. Plus, in this segment, the funding platform and ramp capital in their corporate finance business.

First, mortgage business, EUR 32 billion in transaction volume in the first quarter, up 25% compared to last year, so 10% market share gain again. Our double-digit market share gain continues if the market grows or declines. We are going up. This is supported by all 4 segments in the -- on the sales side, and it's supported from all product areas. And this business for you here, new constructions, which are a pretty stable supply to the market, just with this 300-plus -- 300,000-plus units to less -- to fulfill the 2 million missing ones, 15% of the total volume purchase. Actually, in the future, this will -- from amount perspective, this will increase, thanks to rising construction costs.

Purchase side is 41%, the largest stack. As I said already, Germans buy because of a trigger event. We don't expect here any significant changes in the volume. We have a refinancing side. Germans have to refinance their mortgages every 10 years. This is a pretty stable number. So we refinance right now the 2012, 2013 mortgages. You are able to secure interest rates up to 4 years in the future.

For the last years, the so-called forward mortgages were pretty seldom used because Germans, they're getting used to falling interest rate and expected low interest rate in the future as well, so didn't secure the interest rates a couple of years in the future. Now with the change in the direction of the interest rate development and the expectation of increasing interest rates, this went up. So in this 23% of follow-up financing is an increasing number.

And as long as Germans expect increasing interest rate, they will refinance earlier to secure the current level of interest rate. So this is not a onetime issue for the first quarter. This will happen in the next quarters as well as long as we expect rising interest rates. So this all said, strong numbers for the first quarter and a pretty solid outlook as well for this product area for the next couple of quarters.

Yes. When we look on the sales channels, an important development of the first quarter were the market share gains of the brokers. They have the more agile sales force. They adapt faster to this growth rate which we saw than a traditional employed branch network advisers in the banks. So brokers took more market share during the first quarter. You will see this in a moment when we look on Dr. Klein figures.

But as well, the branch based banking system supplied strong growth to our transaction volume. Largest growth corporate banking sector, plus 48%, more than EUR 4 billion in the first quarter, something we reached in 2019 a whole year for comparison. So our success in the corporate banking sector continues, and we are getting more and more to this point where a substantial amount of the total businesses advice there using our platform. And the discussions about migrating completely to our platform will heat up.

On the savings bank side, plus 31%, an increase compared to last year's growth figures. And then you take into consideration that they were not -- let's say, they lost some market share that we're growing, but this is pretty high speed, where the gain traction here in this segment. Slightly less or significantly less digitalized now or migrated to Europace and that's why digitalized than the competitive banks, especially in tough market conditions. This will come back to us and will help us because the local savings bank and the local cooperative banks are close to those competitors.

And then the one sees how the others performed pretty well using our technology. This is -- creates some high incentive to speed up the migration also with this one. Yes, and commercial banks are steadily increasing their volume on Europace and we are in constant talks with all of them to finally migrate their full sales force and branch networks to us. No big events for the first quarter, but then nice development on the volume side, which runs for Europace.

So next product area, personal loans, even a stronger growth in this first quarter with our focus on advised personnel loans by independent financial advisers like in a mortgage business or in branch networks. We are not so much linked to the point-of-sale market. We talk about clients, which -- let's say, bought a lot of things on the POS using a loan and need a restructuring and healthy solution for their household debt and income in this market is, this, let's say, increasing volatility on the income side and as well, a willingness on the sales side. We are in the growth market for the next couple of years here and delivered a pretty solid growth took here with 40% plus for the first quarter.

So corporate finance platform. This REM CAPITAL as a debt adviser for German Mittelstand. We saw a great second half of the year 2021 after we had to prepare a lot of our clients and projects of them for the new subsidy rule set of KFW starting on 1st of July last year. And in the first quarter, we still profit from this, especially when you compare this with the weak first quarter '21. So this -- there are still, let's say, a lot of work to be done, providing German Mittelstand this -- the subsidies still decided by the old government last summer.

The new government right now did a lot of promises about new programs coming. Still there is nothing relevant out there with the 2 major topics and one of them being climate change and the necessary change of our energy mix as well related to the Russian war in Ukraine. There is a huge need for our government to act and bring the necessary programs on track so that the German Mittelstand is able -- the German industry is able to adjust and adapt to the changing environment and to fulfill the promises that Germany did this with the world regarding the energy side and their climate efforts, climate change efforts. So saying this, for the next couple of quarters, we expect less revenue and support from this -- under these programs are there, and can be applied for by our clients. Then we expect, again, very strong figures from our Corporate Finance unit.

The funding platform is in a better now. So we are using this together with our partner, EKB Bank already. We expect the first -- closed transactions in the second quarter 2022. So next product area is coming. And 1 area of investments that we are doing here right now is slowly getting up to provide as well, let's say, in the first moment of revenues. But beside this, and even considering that we do some heavy investments in this area in sales and developing our platforms, we see record numbers on top and bottom line. This had a nice effect on scalability as well, especially supported by the Corporate Finance business. So plus 31% in revenue to EUR 60 million for the first quarter and plus 47% to EUR 50 million in EBIT. So this was a very, very perfect start in the year 2022, with all the uncertainty around us.

So next segment and operating in the same market like the Europace system with the mortgage world. The Dr. Klein finds a system. If using Europace for the transaction, adding some layers of technology to attract clients and handle advised processes remotely, the 2 added franchises of Dr. Klein delivered strong growth in the first quarter of this year, plus 34%, taking a lot of market share again.

So after a strong growth in 2020, where we took a lot of market share, thanks to our technological advantage, 2021 was the consolidation to handle all this newly achieved growth. And now we can use this, let's say, new size of operation and the new professionality of operation that we achieved in 2021 to perform, again, an outstanding growth track and gaining market share heavily here.

The plus 8% advisers for the first quarter shows that we are on track, even scaling further our sales force. And there right now, [ twain ]. They didn't participate the additional adviser in the growth first quarter. They will support the growth in the third quarter of this year. So as long as our franchisees purchases keep hiring additional advisers, we expand our advice resources this way and are able to support stronger growth in the near-term future. This is always a promise that the growth on the [ perfect-time ]business will continue in the next quarter.

Okay. First quarter was plus 22%. On the revenue side, small outperformance even on the profitability side. We still profit from the regulated pandemic environment where not everything is possible. We say, for traveling and on conferences for the franchisees makes the franchise system a more profitable business than it's usually long-term was. So let's see what we will see in the whole situation and our society is normalizing, how much will be online, how much will be offline and how the margins will adjust to this, let's say, this 55% EBIT margin level is pretty high for this kind of a business model. We would expect this on the long run to come down slightly again.

Okay. Now to our younger segments. First, starting with real estate. Some words here to the German market one more time. Real estate and the Europace system operates in the owner-occupied housing market, which is roughly 50% of the market, something around 21 million units and -- which is, in our expectation, growing because especially the smaller landlords here in Germany are under huge pressure from the regulatory side.

Rents are more and more regulated. The government is trying to, let's say, arrange the energy changes in a way that rents stay stable and landlords have to pay for the necessary investments. They limit the -- they heavily limit the chance to increase rents here in Germany even when the demand is extremely high. And even when house prices go more and more up and so it would be pretty attractive to sell the apartment. Politicians keep regulating the renting market.

And from our expectation, this will direct a lot of smaller landlords out of the business. They will not continue to run their apartment. As soon as a rentee is leaving an apartment, they were going to sell it to companies who wants to occupy them by themselves because the implied return rate is, in the metropolitan areas, now somewhere around 1% only. And then you see that on the capital market, you can get for government bonds, higher returns, then it gets a pretty, let's say, a pretty difficult decision to stay in the renting market with all the regulation on one side and the returns on alternative asset classes. So this -- we expect this to shrink.

Second sector where in this is the institutional housing sector, which is providing the social housing here in Germany, roughly 6 million units. They are highly regulated as well, a little bit more even in the normal landlords because of the fact that they provide to the lower 1/3 of the market housing and they are typically municipal-owned or cooperative banking -- cooperatives. And in this case, they operate in a different, let's say, regulatory environment.

And let's say, with them under regulatory pressure, rising interest rate, rising costs on maintenance and new constructions, we expect that they will slow down their supply to the market. They will not sell off. This is not possible. This is not realistic, but they will reduce their effort to build new homes as long as the government is not compensating the cost changes that we see right now. And it's the second declared main topic for the current government to solve this housing crisis. So here, 10-digit numbers needed, double-digit billion euro amount necessary to bring this industry to significantly provide additional social housing. So if this comes, then this is a growth market for us. If this doesn't come, it will stay a stable market environment for our mortgage platform for this industry.

Okay. Looking on the different -- looking first on the different market on the homeownership market. What we are doing here is using our strong position from the Europace side coming with roughly every third German home-financed via our platform to expand to the property sales side and to the valuation side. Property sales side, typically linked is that to our real estate agent of banks using our platform. They lost market share in the first quarter. Actually, they may have even lost last year, some market share. So they are under pressure because consumers tend to look for ways to avoid paying a commission, which was as well-regulated beginning of last year.

And other brokers are more agile in using online marketing and tooling to optimize their sales process to acquire homeowners which are willing to sell. And the credit industry is underperforming here, which is no surprise to us. We offer the solution. That's why even when they are declining and then the number of properties sold by our platform is going down, our revenue is increasing because the amount of services and platform segments, which are used by the progress of the banks is increasing.

Where we gained market share is the property valuation side. We are getting closer to a 10% market share there. The strong link between the mortgage business and this appraisal business helps us to drive the growth of Value AG here forward. So detailed numbers on the sales side, on the property sales side first. We are growing in a number of clients even when the merging savings bank and cooperative banks are driving the numbers of clients down. We have a net gain of 20 partners in these industries.

Still a couple of hundreds to go to be fair, but they are at risk. The acquisition of, especially cooperative banks are slowly increasing in pace here. Numbers of -- or volume of transactions supported went down to EUR 3.4 billion. I explained this already, but our revenues are up 90% to EUR 5.5 million in this area, thanks to more and more services that we provide and more and more technology and tools that we offer to them and only partially we are linked already to their success.

We would like to be linked more to their success. And let's say, there are challenges in this market here. It's not just increasing the way how they use us, but as well, increasing their willingness to change to a transaction-based pricing model, because then their costs would go down if they are not performing well with our tools. They would grow and they would perform well and then we are together in the same boat with them.

As I said already, Value AG is performing well. Number of clients, still strong double-digit growth, more than 500 partners now in the credit industry is using our valuation services partially, often, for the beginning. But the first contract is needed to then step-by-step, take over all the necessary services linked to valuation. The volume that we handled is up in the first quarter by 16%. Our revenue is up 20% to EUR 7 billion, new record. And you can see here that the strong link to the mortgage business is helpful to conquer this market here and step-by-step, standardize the processes and bring this all together in a digital flow and make sure that let's say, [ earnings ] before tax effects is not leaving our ecosystem anymore.

So now we are at this point of the social housing industry, what I said already, general market environment is under pressure, too much regulation, rising costs, rising interest rate. But let's say, if you could use the first quarter for a nice growth -- actually, already high level from the first quarter 2021, more than EUR 600 million for social housing refinanced and made out of this revenue of close to EUR 6 million. The sharp rise in interest rate led to a pretty number of attractive offerings from insurers and pension funds for this industry, which we could match them with the needs of the industry and got a pretty -- pretty good performance here for the first quarter.

All in all, the segment is growing double digit, and new record numbers. Actually, it was even positive in the first quarter. This is not something which we expect for this year, to be honest. We see that we still need heavy investments in all platforms that we provide here and are willing to do this to speed up the growth track for all of them so that the total numbers gets more important, that the, let's say, for the group, our impact on the whole market gets more important. And especially on the homeowner side, the integration of the whole process of acquiring a new home with all our 3 platforms is standardized and offers a unique proposition to all participants of this market here in Germany.

So last, Insurance Platform, an industry where, for a longer time, we already invest heavily in platforms to support the different areas of the insurance business. Here, we adjusted our focus in the last quarter, Smart InsurTech is now clearly focused on only private insurances. The industrial insurances that we handled as well in the past in this unit are spin-off in a separate unit. And the pension schemes, which are linked to employers, are run as well in a separate unit, so that each of the 3 units can very efficiently focus on just their target market. Smart InsurTech in private insurance area could speed up the migration process. Compared to the last quarter's, we are now at EUR 3.5 billion in migrated volume in the platform.

From the sales side, still just the third roughly of the total volume, which is in our on-premise solutions or let's say, 2/3 are still an on-premise solution on only 1/3 has finally migrated. It still takes a pretty long time to do this with them because they have to adjust to this new environment. They have to invest in their IT infrastructure, which they keep on-premise or in some individualized solutions on their side. This slows down this migration path, but step by step. We are going forward.

And yes, on the insurer side, we could increase the validation rate from 16% last year to 24% this year. So 1/4 of this EUR 3.5 billion is now validated, means all data that we have on our platform are linked to the core system of the insurer. These are not -- let's say, you can trust this data now. And based on the trust data, automate processes, while all on-premise solution and all other software solutions out there using typically outdated data, wrong data and every automation based on this kind of data is pretty risky for the adviser side and in the end, for the consumer.

So with this these validated data, we are unique in this market and our process is based on validated data, adds a lot of value to the sales side of an insurance broker. And with an increasing volume here, versus will enable higher attractiveness of the system in general.

So industrial insurance something we accidentally acquired with programmatic acquisition strategy that we did. Often, the companies had some -- the software solutions had some impact there as well. Here, we were pretty surprised when we analyzed this last year and found out that we have a market share somewhere between 6% and 7% in this insurance world, in the special insurance world and that these partners are very interested in keeping us as a provider of their software solution and that they are willing to even go far with us and find solutions for a joint platform to integrate this market better than is right now.

So in this process, we are with the specialized insurance brokers on one side and the industry partners here from the insurance industry side. We are looking for a joint effort in the platform, which will change how industry insurance stand here in Germany based on this technical infrastructure that we provide here already. More about this in the next quarters. We hope to announce here at the start of a new platform within this year.

Okay. And last, the area of pension schemes, which are linked to the employer and a very special market of insurance here in Germany for a long time already. They are the employer, the HR department is another party is added in a pretty complex, highly regulated insurance product range. Let's say, our acquisition of ePension and integration in our sales activities, we enable here, a digital solution, which is the market leader in Germany on this side. And slowly, we are digitalizing a pretty stable insurance market. So there's not the growth coming from new pension schemes. Sold a lot, but there's a lot to be digitalized and put on the ePension platform to have efficient processes between the insurer and the HR department and keep the employee, which is the insured person, up-to-date and informed what's going on and not do this anymore with offline processes, but in 1 single digital platform unite all this information and the workflow is just unnecessary.

For the total, the segment was growing double digit and new record numbers as well here. The growth was supported partially by an acquisition that we did in the first quarter, but as well the organic growth is double digit finally here. So slowly, our heavy investments are living up, and we are getting on the right track with this segment. Still, we will invest EUR 0.5 million in loss for the first quarter. This will keep on this level. We see that we need to invest to digitalize this whole industry.

We are the only one who is in the process of offering a solution for all these different insurance product to the industry as an independent provider, as an independent infrastructure. We don't see anyone else trying to do this. We invested a couple of years already, and we don't expect anyone to show up in our rear mirror to try to copy us here. So still a couple of quarters or maybe even some years to go, but this will be a successful business as it is in our mortgage business as Europace right now. It just -- it took us longer than we would have expected after all the acquisitions we did already.

Okay. In total, you know the numbers already, strong growth, new record high, especially interesting when you look on the long term. This EUR 136 million for the first quarter was the total revenue of 2015. So it's not long ago that we need a whole year for this amount of revenue. EBITDA of EUR 25 million, this is as well -- actually, the first time we achieved this in 2015, 2016. So this -- it's not long ago. So we grow double digit. We do this now for a very long period and do these heavy investments in our near-term future. Last year, EUR 45 million, this year, maybe a couple of million more. We heavily invest in all segments in sales of our platform to support the future transactions, not the current one. And we invest heavily in software development in all areas to enable our platforms for additional clients, additional product range, additional processes to increase the revenues out of each transaction that is going through our systems.

So in general, we are pretty confident with our 2022 forecast after this great first quarter, more than EUR 0.5 billion in revenue and EBIT margin above 10%. When you see what we delivered in the first quarter. You may ask why we are not increasing our forecast, let's say, this -- we have an unstable environment still. There is a war ongoing here in Europe. There's terrible consequences for the people there, but as well, there are a lot of uncertainty. Politics has to deliver here something to stabilize this. We will use all opportunities given to us during this time. This may cost some money to use these opportunities. So for now, we stick to our guidance here, and let's see what is coming.

For now, I would say, opening up the Q&A session, and I hope you have some questions about the first quarter or our perspective on the near-term future.

[Operator]

[Operator Instructions] And we have received our first question, please introduce yourself.

[Gerhard Orgonas, analyst]

This is Gerhard Orgonas from Berenberg. Can you hear me?

[Ronald Slabke, executive]

Go on stage.

[Gerhard Orgonas, analyst]

Sorry. I missed the first 10 minutes. I was wondering, have you talked about April? There's been a sharp increase in interest rates. If the guidance increased also, a reason because of what you see in April, are we falling off a cliff in terms of mortgage transactions or not. And secondly, related to that, what is the interest rate level that would worry you about the market? Is it 3%, 4%, 5% that would kill the mortgage market?

[Ronald Slabke, executive]

Yes. so I didn't talk about April by now, but let's say, we are not issuing monthly numbers. But what I can tell you, there is no cliff. We don't see any cliff. So not -- we didn't see it in April and we didn't -- we don't expect it for the next month. What we see is that a lot of people are looking for homes, looking for apartments. So especially the apartment market is pretty stable when you look on the search perspective, because of the decline in efficiency and availability in the renting market.

Yes, people may need to choose smaller apartments, smaller homes in the near-term future, but they will have to buy something, because the renting market is closed. And this is not linked to any interest rate, whatever it gets. So is there a level where we get worried, let's say, the current level of long-term interest rate for a typical mortgage here in Germany is now around 2%. This is -- we are up a full percent coming from one, you can say. The negative interest rate which you saw in Bund, they we are not transferred today the mortgage market. So it's -- the sharp increase in bond didn't fully come to the mortgage market here.

Yes, let's say, people, let's say -- okay, let's look like we found this on this. People will have to refinance their mortgages, which were closed 10 years ago. At this stage, they will not vanish out of the market. People will need to buy homes. If they have a trigger event, it means they want to move together, they want to separate or they want to have children or they got children. This will not change. Whatever the interest rate will be, even when we see 6% interest rate, people that have to buy homes. So I don't see any cliff with any interest rate looking forward.

I would say that the question is even more on the economic side, on the macroeconomic side, which interest rate would affect the European economy so much that we would see a strong recession because of a too high interest rate. From the German mortgage market, the interest rate is not relevant for the demand side.

[Gerhard Orgonas, analyst]

Okay. And in your press release, you talk about the particular opportunities that you have some volatility. Is there anything in particular you can point to that -- where the volatility helps you?

[Ronald Slabke, executive]

Now let's say, this kind of uncertainty and changes in the market brings a lot of players to adjusting to the situation. So when you look on this changes in the interest rates. The sources of funding may change in the near-term future. This creates needs for sales organizations to be able to access these different funding models. And the Europace is a perfect solution to be flexible on this side. This is a huge chance for us just to support our organic growth.

In case of, let's say, short moments of high and low volume in the market. Our structure is more adaptable to this than the typical competitors when you look on Dr. Klein. So Dr. Klein could use this first quarter much better than a typical branch network. So we talk about this kind of trends which we see in the market, this kind of events. And yes, even on the M&A side, you could say, true with markets markets may bring certain kind of start-ups with good teams, but a fragile funding to the moment to say that they are looking for a new haven and for the right team, we are always a good haven to ramp up our talent pool. So there's lots of options coming.

[Gerhard Orgonas, analyst]

Okay. I've got 2 more short questions, if I may. One of them is on Europace. You're saying that you're now a 45% market share with private banks. This was about 30%, I remember a couple of years ago. Have you grown? Have your banks grown because of Europace or have you added more banks in particular.

[Ronald Slabke, executive]

Which -- I didn't get the segment you talked about.

[Gerhard Orgonas, analyst]

The Europace, when the pie chart, where you have grown within the private bank segment.

[Ronald Slabke, executive]

Yes. Okay. Now this is no significant change in general partnerships, let's say, but a relative -- better performance of especially the Deutsche Bank Group and the part of Deutsche Bank Group, which use Europace compared to the ones which not Europace and the other private banks, which have less and less mortgage business. So it's not a big event or a migration of a big bank that we would announce. It's just the different performance of the different channels.

[Gerhard Orgonas, analyst]

Great. My last question is on FIO. Can you describe a little bit what services or what new services you provide, so that you can add revenues even though the volume is going down? What was the type of services you have?

[Ronald Slabke, executive]

Yes. Now let's -- it all starts with the acquisition of leads of potential sellers of properties. So acquire them online, acquire them in your branch network, acquire them based on information of your current account or the current account of your clients. Yes. So technology in this area is -- has a huge demand right now.

Second is automation of the sales process and increase of the conversion rate of the sales process. And this means services to provide additional information automatically generate, let's say, optimized pictures, generate floor plans and things like this. So this kind of service work and the conversion rate is things like monitoring how well certain advertisements of properties perform, automate this process of trying different advertisers for the same property and see what is more, generate more interest from the buyer side and so on.

[Operator]

[Operator Instructions]

It looks like we haven't received further questions at this point. I will hand back to you, Mr. Slabke.

[Ronald Slabke, executive]

So we finish exactly after 1 hour. Thanks for all your attention. See you here again in 3 months when we talk about the record first half year of 2022 of Hypoport. We look forward in, let's say, sunny second quarter when I look at outside there are lots of opportunities out there and an organization which is keen to keep growing. And here, we see the results in 2 months. Thank you.

[Operator]

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