Q2 2026 JDC Group AG Earnings Call
Speaker #1: Company CEO, Dr. Sebastian Grabmaier, and CFO, Ralph Konrad, as well as COO, Dr. Ramona Evens, will guide you through the figures in a moment, followed by a Q&A session via audio line and chat.
Speaker #1: And with that said, I hand over to you, Mr. Grabmaier.
Speaker #2: Yeah, thank you, Mara, for the warm welcome. Also, welcome from our side, from the management board of JDC. You can see it's challenging times, but again, we could deliver a record half-year and also a very good Q2 2026.
Speaker #2: So my name is Sebastian, co-founder and CEO of JDC Group, and with me in the call is my partner, Ralph, and my colleague, Ramona.
Speaker #2: So, Ralph says hello.
Speaker #3: Hi, hi. Ralph here. Responsible for finance, M&A, and IT. And Ramona,
Speaker #4: Hi everyone. I'm Ramona, and I'm the COO and responsible for the operations of the JDC Group.
Speaker #2: Excellent. Yeah, you can see that all our KPIs are knowing just one direction up, right? So obviously we are a platform company, we are taking in all the data of all the product companies, that's more than 250 insurance groups, the investment platforms, the marketing banks.
Speaker #2: So now we serve about 2.5 million customers with more than 400 employees and we have basically every financial product in the market that has some quality available on the platform.
Speaker #2: And obviously now we are quite engaged for the last 2 and a half years to have more and more AI tools supporting our intermediary clients and also our end clients, via our Alice Minds app.
Speaker #2: So you can see that obviously the economic environment in Germany is still challenging. You can see that especially the consumer climate is not up again.
Speaker #2: We have some bad disappointments that we lived through in Germany by our government. I think it's from all democracy in the world. Still, the least loved government with like 16% support rate and more than 75% now are not content with the work of the government.
Speaker #2: So this means that the atmosphere the political surrounding is not really positive for consumer business. And you see some effects of the de-industrialization of Germany in the labor market.
Speaker #2: So you see that it's still on a very high, so employment is still on a very high level and still record level, but still the quotas of the unemployed that goes up a little bit.
Speaker #2: And also the macroeconomic environment is not really giving us tailwinds inflation is still up due to high energy prices. So yeah, and the insurance market, capital markets are rather flattish even if we saw some record highs also in the German DAX.
Speaker #2: So geopolitics are a burden and that's always interesting and that's the very famous German angst that wars wherever they are are first hitting German economy more than any other.
Speaker #2: Even of countries that are closer. So overall the environment is quite difficult but still we're very positive that we could deliver very good results against the backdrop of these factors.
Speaker #2: Yeah, you can see on the broker platform there is or there was some pressure on new orders. We'll show you that we could have a turnaround here.
Speaker #2: From minus figures in new orders we are now at positive figures. We'll show you in a minute. But still the high volume business is not really back in the market.
Speaker #2: So especially life insurance and pension planning there is a little delay and we see that this will go up by Q4. The latest, but right now it's still quite low and there's it's always corresponding in higher cancellation rates as obviously the cancellations of the past come to lower standards or volumes this year.
Speaker #2: And this is also then yeah, having some impact on the turnover figures as we always reporting net figures. And also the investment assets they go up and up that's still volatile but this is rather a positive impact right now.
Speaker #2: And on the lead platform we see that the surge volume for financial products is as at a historical low. Even if the overall surge volume is going up, financial products are not in favor of the consumers right now.
Speaker #2: And also this means that the acquisition cost for contracts is increasing. So leads are becoming more expensive and this means also that this there's some pressure on the on the lead markets as well.
Speaker #2: And obviously then the marketing appetite for financial institutions is quite low and but I think this will turn around especially we talk more about the Altersvorsorgendepot so the new pension regulation of the German government that will start January 1st and will lead to a big wave of marketing euro spend starting after the summer break.
Speaker #2: So against this backdrop again I think we're doing quite fine on the platform. So the number of orders that we had to report the first time in many years are minus in Q1.
Speaker #2: We had the turnaround. So over the first half-year we are now at a plus 5%. So that's coming back. But again not the high volume orders but a lot of P&C orders.
Speaker #2: Here on the number of contact could be misleading. The reason for this little minus here is we did some quality measures that means we have a new filter that we use to bring down the number of revocations.
Speaker #2: So basically the customer initiates a transfer of contract and then he has a withdrawal period and these revocations hurt the insurance companies as obviously it's quite an effort and then if the client revokes it then the transfer has to be reversed.
Speaker #2: So we put in some filters in here that we just pass through contracts with a very high probability of being transferred in the end to the insurance companies and this does not have an economic effect in the end because we lose the transfers that are revoked anyway.
Speaker #2: So this economically is rather a flat number. And but very very good for the long-term view is that the number these figures that we show on the volume of the assets on the management it's up 18%.
Speaker #2: That means the trader fees we receive on investment will be up considerably in the next quarter to come. And also the annual net premium which is a direct KPI for all the recurring revenue that we are receiving in the next quarters is up 11%.
Speaker #2: So now we've quite yeah proud as a management team that we can show that all the yeah little slag or or downturn in in the or pothole in the new business we can more than compensate by the recurring income that is also promising more income in the future.
Speaker #2: Yeah. And then you can see this is a new record half-year. It's not only the best first half-year we ever had. It's also topping the second half-year in 2025.
Speaker #2: So turnover is up 18.7% and then Ralph will in a minute explain the proforma figures that we showing because we did a little different yeah we we we basically treating the accruals by performance fees a little bit different this year than last year.
Speaker #2: So this 4 million effect there but we're also going to detail here. And also EBITDA is up almost 70%. So very good numbers. But obviously development is mostly driven by FMK so FMK just performs as it should.
Speaker #2: We have very nice figures also not only in turnover but also EBITDA just as planned. We're very happy here and also even if our platform is still suffering as I said from this crisis environment yeah we are at a very good path to develop the platform further.
Speaker #2: And again new business will be back in Q4. So we're really happy that we also can stay at our guidance as you're used to.
Speaker #3: Yeah. Now I explain what Sebastian explained a minute ago. When our customers our brokers go to their customers they can arrange contracts as a management contracts with performance fees means that the customer pays a performance fee if the performance of the depot is more than X or Y or better than a hurdle Z.
Speaker #3: We calculate these performance fees. We we manage that. We process that. We pay that out. So it's part of our P&L. And in the first half-year we had accruals for these performance fee of 4 million euros.
Speaker #3: First half-year 2025 and 600,000 euros in in EBITDA. And although the market develops very good you see the line is the MSCI developments and we expect that the performance fees will be higher than in 2025.
Speaker #3: We nevertheless decided not to do this accruals in this year. Because as Sebastian mentioned we have this geopolitical uncertainties and at performance fees payday is the 31st of December.
Speaker #3: And yeah this was our decision for cautious reasons. And that's the reason why we show the figures proforma we just deduct in 2025 4 million euros in turnover and 600,000 euros in EBITDA.
Speaker #3: Having said this let's go into the numbers. The turnover grew by 25.5% to 68.6 million euros in the second quarter. 22.8% in the first half-year 230 143.5 million euros.
Speaker #3: You can see here what Sebastian mentioned that new business is coming back. The growth is increasing. Growth in the second quarter is better than in the first quarter.
Speaker #3: And better than in the total first half of the year. Especially in advisor tech segment we grew by 30.6% to 58.3 million euros. 26.1% to 124 million euros in the first half-year.
Speaker #3: Leading us to a gross profit growth of 29% in the second quarter and 26.7% in the first half-year. EBITDA development is very nice from our point of view.
Speaker #3: Plus of more than 100% in the second quarter from 2.9 to 6.4 million euros. And the development in the first half-year is with 82.7% also nice.
Speaker #3: From 7.9 to 14.5 million euros. If you are interested in the contribution of FMK here we want to be transparent on this. It's a turnover in Q2 of 12 million euros and an EBITDA contribution of 3.5 in the first half-year.
Speaker #3: It's an turnover contribution of 22 million euros. And an EBITDA contribution of around 7 million euros. Okay. Let's look at the development by quarter.
Speaker #3: And what we can see here is that 2026 shows very normal seasonal pattern so far. We starting with a good Q1. This was a record Q1 as you remember.
Speaker #3: Then even as Q2 is also the strongest Q2 in JDC's history it's weaker than the first quarter. Now we are in the summer season we expect a weaker Q3 than Q4.
Speaker #3: And in this year especially a very good fourth quarter. For two reasons. The first is that as already mentioned new business is coming back.
Speaker #3: And the second reason is that we expect relevant effects from the regulation Altersvorsorg Depot on both the broker platform and FMK. And Ramona will give you some more detail on this later on.
Speaker #3: Yeah. How is the composition of turnover growth? The 120.9 million euros became 143.5 million euros. The main contribution was our new segment rating comparison lead business by 22.6 million euros.
Speaker #3: And thereof the majority of course FMK. Advisory contributed 8%. The major customers contributed 9%. And we have still a weaker IFA business better than in the first quarter but still weaker than in the previous year with a minus of 4%.
Speaker #3: And if you look at the turnover split 51% now is coming from the IFA business. More than 25% from major customers and in the meantime more than 20% by our new yeah segment rating comparison.
Speaker #3: And the lead business. Let's go into the advisor tech numbers. Advisor tech grew by 30.6% in the second quarters to 58.3 million euros. Which is a growth of 26.1% over the first half-years.
Speaker #3: Both first half-year and second quarter are record high numbers as mentioned. The gross profit increased by approximately 40% which is a very good development to 14.8 million euros in in Q2.
Speaker #3: And in the first half-year by 34.7% to 31.8 million euros. The costs are up a little bit 4% in depreciation 5% in personal and 13% in 13% in in other operating expenses.
Speaker #3: Then the reason is mainly that we invest a lot in IT. The depreciation is increasing because of the cost of the IT platform. Personal expenses are up mainly because of the development in our IT team.
Speaker #3: The AI team and it's the same with other operating expenses. There we have a second issue and that is that we increased the spendings marketing spendings for the promotion of the JDC platform in the broker market.
Speaker #3: Yeah. EBITDA was up 100% from 2.4 to 5.9 million euros. In the second quarter and by 90% from 7.4 to 14.1 million euros. In the first six months.
Speaker #3: Yeah. Advisory shows also a stable development a good development. Revenue grew by 9.4% in the first and the second quarter. And in the first half-year by 8% from 26.7 to 28.8 million euros.
Speaker #3: The gross profit developed in the same direction leading us to an EBITDA development of 11.9% in the second quarter from 1.3 to 1.5 million euros.
Speaker #3: And from 2.5 to 2.7 million euros in the first six months which is a gross of 6.3%. Yeah. Let's come to the cash flow statement which is next I think.
Speaker #3: Yes. We started the year with a cash of 36 million euros. We could show very good development in operational cash flow in the first half-year.
Speaker #3: With 8.5 million euros. 2 million euros more than in the previous year driven by the operational EBITDA development. We had a very small investment activities with minus 1.2 million euros.
Speaker #3: Which is 1.4 million euros less than in the previous year. But we had a high negative cash flow from financing activities with 8.4 million euros.
Speaker #3: And the reason is that two reasons. The first is you might remember we had this tender offer where we bought back 220,000 shares or 222,000 shares.
Speaker #3: For in total 5 million euros. That's part of this number. And the second is we issued our Nordic bond with a size of 70 million euros in August 2025.
Speaker #3: So the interest payments for the Nordic bond are included in the first half-year 2026 but not included in the first half-year 2025. And then we ended up at a cash balance of 35 million euros.
Speaker #3: And when I looked at it I thought it's that's that's not a very high number. But the reason is for if you look at the liquidity curve of JDC end of June is the low point over the year because the trailer fees for the second quarter they will now they they start in in July and August.
Speaker #3: And as of today I just looked into the accounts two hours ago we are at like 45 million euros cash on hand in the group.
Speaker #3: Yeah. We have no changes in our bond structure. We still have our German Mittelstands bond that is due 2028. And the Nordic bond that is due 2029.
Speaker #3: The Mittelstands bond has a coupon of 7%. And the Nordic bond has a coupon of now 6.69%. It's it's a rolling coupon. It's Euribor plus plus 450 basis points.
Speaker #3: And as Euribor has increased a little bit our coupon has increased a little bit if you compare this to to previous calls that we that we showed you.
Speaker #3: We have call options on both bonds but no decisions made there yet. Yeah. The development of the share price on long on the long term I think we can say it's still long-term positive trends.
Speaker #3: We are not so happy with the development of the share price over the last 20 months or 24 months. Because share price did not follow the the operational performance of of the group.
Speaker #3: Now we saw little turnarounds at the price of 20 share price going up again. Yeah. We're working hard on on operational performance and I hope that's that will show up in the share price as well.
Speaker #3: The shareholder base is still stable. No changes. Management has 11% Provincial VKP 6% Great West 27%. What we now know is that Teslin added some shares and are now at more than 7%.
Speaker #3: So that's new for us. So we will change the the chart here. And we hold 369,000 treasury shares on our hand. Ramona.
Speaker #2: Thank you Ralph. And a very warm welcome also from my side here. And building on the financial results you've just seen I'd like to share three operational highlights that helped bring those numbers to life.
Speaker #2: And hopefully they also provide some perspectives on the opportunities we have ahead. First topic is that we believe just go one back. Yeah. The first topic is that we think that we are very well positioned for the Altersvorsorge Depot.
Speaker #2: That's Germany's new state subsidized private retirement account. It's in German a lot easier to say. Second is that FMK is becoming a visibility asset in AI driven search environments.
Speaker #2: And we brought some numbers to illustrate that for you. And the third spotlight that we like to share to you with you today is AI and I guess operational excellence remains a key driver of our scalability.
Speaker #2: And we have achieved significant efficiency improvements through AI. Over the last years and we would like to share some examples with you. About that.
Speaker #2: Now Gemma next one. Thank you. So Altersvorsorge Depot for our non-German audience. The Altersvorsorge Depot is the new state subsidized private retirement account in Germany.
Speaker #2: It's launching on January 1st of next year. And it's going to replace the old Riester pension. And there are two broad groups of product providers that offer solutions for this.
Speaker #2: It's on the one side the insurance carriers and on the other side banks. And especially also the new NEO banks. And the good news is regardless of which route the customer takes JDC stands to benefit.
Speaker #2: So in Germany the traditional way of building retirement savings is going through insurance products. Because they also cover the longevity risk. And if a customer decides to go that route and work with a broker that's just our bread and butter business.
Speaker #2: So there's nothing new there for us really. But if the customer decides to take out a brokerage account with a bank which he can do in this new scheme then we can benefit through our subsidiary FMK.
Speaker #2: As banks and especially NEO banks are among its largest customers. So that's the good news is that as a company we are in a unique position to win in both scenarios.
Speaker #2: And then let's just shed some let's just shed some light on how we support our brokers. To become ready for DAVD we are doing a lot of trainings right now to educate our brokers and those trainings I'm very high demand.
Speaker #2: Our head of broker says just wrote me a couple of hours ago that the last training yesterday had 400 attendance. It's a very long time that that we have trainings that were so much in demand as this one.
Speaker #2: So the entire market is really discussing this topic and everybody is getting ready for this. And as well we also provide tools for the brokers to compare on the one side like what's more attractive the Riester or the new AVD.
Speaker #2: So for some people it makes sense to close an an retirement plan this year before the new AVD comes into place. But it also helps to decide should I switch plans or is it reasonable for me to take out a new plan.
Speaker #2: So we have built some sophisticated tools to help the broker to really give a a good consultation to their end customers. So but that's just a little bit business as usual.
Speaker #2: And the second part Gemma so now we also have FMK in our group and FMK is also already ready for the for the for the demand.
Speaker #2: All the all the websites they're already live so even if you can buy the product only in January now you can get all the informations you need all the contents on all the websites is already live.
Speaker #2: And starting next month they will also be at educated calculator available on all their websites. So FMK is prepared as well and the market potential is clearly substantial as you can see also on the website.
Speaker #2: And of course our ambition is to capture the largest possible share of this opportunity so again insurance and banks and JDC stands to profit in both ways.
Speaker #2: We cannot we cannot really tell the customer which way to go the customer decides in the end. But in this scenario we are in a pretty unique position in the market to benefit either way.
Speaker #2: So that's about the AVD the next highlight I would like to share with you are the developments in the AI driven searches. And now with the help of external providers we are able to bring greater transparency to FMK's visibility in the large language model based searches.
Speaker #2: We all know that FMK is already highly successful in the traditional Zia environment. And now we can also see that FMK is very well positioned in the emerging AI driven ecosystems.
Speaker #2: So and for personal finance related prompts in ChatGPT and Google AI in 70% of the answers one of FMK portals appears as the cited source.
Speaker #2: So very impressive result and puts FMK also very well ahead of the competitors as you can see here. Compared to finance tip or even check 24.
Speaker #2: And there are several reasons for this and just let me highlight two of them. The first of them is that FMK provides the financial comparison content for major media brands such as Handelsblatt and NTV etc.
Speaker #2: And these brands of course have built like journalistic credibility over decades. So there are very well presented in the training of the ecosystems of Google and OpenAI.
Speaker #2: So FMK is recognized as an expert and not as an advertiser. And I guess that's very difficult to to replicate. That's the one reason for why FMK is so successful in the AI tools.
Speaker #2: And the second one is also that FMK has developed a fully AI ready content infrastructure that makes it very easy for these LLMs to access understand and process its content.
Speaker #2: So of course the tools like the content of FMK. So right now in Germany Gemma one back right now in Germany the LLM tools are not getting monetized yet.
Speaker #2: So there is no advertisement. So we expect this going to be changed with ChatGPT over the next couple of years. Years weeks so we expect ChatGPT to be the first one in Germany to launch advertisements.
Speaker #2: And and I guess FMK will also be here in the pool position to be one of the first partners who are able to to get that volume in the market.
Speaker #2: Now Gemma thank you. And the third spotlight on is on the AI and over the last couple of earnings call we have presented AI tools especially designed for brokers.
Speaker #2: And today I would like to show you how AI is also helping us to scale our core platform business. I brought two examples. And Gemma the first example is contract transfers and in 2020 in 2023 we processed fewer than 400,000 transfers.
Speaker #2: And this year we are expecting about 720,000 transfers. In other words we are processing almost twice as many transactions as before. And not only has the team managed this without any additional staff but we even have reduced the number of FTEs by about 15%.
Speaker #2: So and overall as a result our personal cost per unit has declined by by almost 50%. So I will spare you the technical details on how we did this but one important thing is that whenever we use AI solutions they are not standalone tools in the back end.
Speaker #2: They are fully integrated. And I guess this is also why they deliver tangible results. That's about the the contract transfer and Gemma the next topic that I brought with you is also something very nice.
Speaker #2: It's the rate of straight through processing or dark processing or let's call it dunkelverarbeitung in Germany. It's a little bit the holy grail of the operations.
Speaker #2: So that means that from end to end there is no manual interference. The entire process is completely done in an fully automated way. So when when in 2000 in 2023 our processing ratio was with documents 88% which is already a very high number.
Speaker #2: And now in in just a few years we have raised this to 94%. And obviously you can imagine moving from 0 to 20% automation is relatively straightforward.
Speaker #2: But approving from improving from 88 to 94 is a completely different challenge. As every additional percentage point requires a very high level of sophistication in the automation capabilities.
Speaker #2: So we are very proud about that development. And happy to proceed further in the next couple of years. So and before I hand back to to you Sebastian I'd like to thank our colleagues across the entire group because because behind every number we have presented today are people who work very hard and very diligent and embrace all the new technologies that we have and the new way of working.
Speaker #2: So thank you guys very much for your work and it's a pleasure to work with you. Now back to you Sebastian.
Speaker #1: Yeah thank you very much Ramona. As everybody can hear she's not only a chief operating officer but also head of HR. Thank you Ramona.
Speaker #1: Yeah coming to the guidance obviously we have an ambitious guidance out there. We still expect turnovers to reach 300 to 330 million euros and therefore EBITDA to grow to 35 to 38 million.
Speaker #1: I think we are still on track especially against the backdrop that we see this rebound in the new business. We see that yeah quarter to quarter we will have more new business and then in Q4 when all the marketing euros come in not only will this profit or benefit FMK directly.
Speaker #1: We expect that their best months to come. Especially November December when all these marketing campaigns are in full force. But also this will have a positive effect on the rest of our sales channels.
Speaker #1: Especially the broker channel because the overall yeah appetite for financial products especially retirement planning products will come back if this is in the in the news in all kind of advertising campaigns.
Speaker #1: People will think about their pension plans especially in the months which are focused to these topics especially November December. So we think that especially this drive towards return oriented investment in ETF products will give all these yeah retirement markets a strong boost.
Speaker #1: And even if these some of the market share goes to standard products as you might know the state made a regulation that for every kind of product there has to be a standard product with a very low commission rate.
Speaker #1: But this is only like the start of the advice or advisory job because then obviously as Ramona pointed out the client has to decide whether the old RESTA regime is better for him or the new AVD regime is better for him.
Speaker #1: That depends mostly on the number of kids you're subsidizing. But then also then the standard product is is very simple and basic and basically ties you into a very low key investment product as compared to other products that give you also cover for a variety risk where the the payments do not just stop at 85 years but give you payments over until your lifetime for example or give you a guarantee on your payments that you pay into the system.
Speaker #1: So we think there's a lot of demand for advice ahead and this will benefit all kinds of sales channels especially the also the broker channel.
Speaker #1: So this is why we think we can stay with this guidance and we just like yeah run through these a little bit draw times that we see now and then we're looking forward to have a really good and thriving year in business 2026.
Speaker #1: Right now we are at the end of our presentation but we're happy to take all questions that you might have and I could see Mara that there were some first questions already.
Speaker #2: Yes there are. There are also a lot of raised hands right now. So first of all thank you very much for your presentation. And ladies and gentlemen now it's your turn.
Speaker #2: We are opening the Q&A session. I would if you would like to ask questions in person via audio line you can click on the raise hand button below.
Speaker #2: Additionally we are you are also welcome to post your questions in our chat and I will read them out loud for you. I would say we are starting with Mr. Hinkle.
Speaker #2: I just sent you an invite to unmute yourself. So you may do so now. I can see that you have unmuted yourself. Can you please say something because we cannot hear you at the moment.
Speaker #3: Can you hear me now?
Speaker #2: Yes perfect. Hello.
Speaker #3: fantastic. Thank you very much. Yeah I have a couple of questions if I may. First of all I would like to discuss a little bit the contribution of FMK is my interpretation correct that the new segment rating comparison and business lead business is that is that the contribution of FMK then in the first half of the year or is it.
Speaker #1: Not not totally. But most of it yes. Yeah we have some some other the turnover of Mong and Morgan and our software fees that we are also included but as mentioned in the first half year we have around 22 million euros of turnover from FMK.
Speaker #3: Can you also say something on the EBITDA contribution of FMK?
Speaker #1: Yeah I did it. During the presentation but again EBITDA contribution in the first half year is around 7 million euros and in Q2 turn turnover contribution was 12 million euros and EBITDA was 3 and a half million euros.
Speaker #3: Perfect. Thank you. Then I I admit I have a little bit of difficulty to understand the guidance. So you say that it will will be probably be at the lower bound of the of the guided corridor.
Speaker #3: At the same time you say and I think with with with all good right that there you expect positive effect from the governance governance sponsored retirement product.
Speaker #3: Is that because of these accruals that you will not book this year that you that you lowered the guidance a little bit or is it really that you see here the risk of of of as you as you alluded to the macroeconomic climate etc.
Speaker #3: So the question would be is it because of the accruals or more technical item or is it because of a world climate etc.
Speaker #1: I think the important point is that we did not lower the guidance right. It's just that we give the expectation that we see this little bit slow down in the new business.
Speaker #1: But as you said right we do hope that the performance fees come in and there's a very strong now yes also sentiment that this will all go right here right.
Speaker #1: So if if the the the the world capital markets stay as they are there will be a a higher single digit number in of millions coming in as turnover and also almost a million in in EBITDA from what we see right now.
Speaker #1: But obviously right I don't want to hear end of the year if something goes wrong that how could you book it in in the first half year if it was not done deal right.
Speaker #1: So it's just a number of yeah just a question of precaution as Ralph said and we we'll get there eventually. And also we think that yeah the new business will come back as you said due to the regulation so yeah happy to keep the guidance as it is but obviously like if we have now 143 out of 300 to 330 right then we want to be cautious and say like well it might not be in the upper end.
Speaker #4: But maybe Sebastian let me add to the question that if you calculate very easy with the rule of three it's the best the best rule and you use the proforma figures 2025 so on the deduction of the 4 million euros turnover and the 600,000 EBITDA you'll end up within the guidance.
Speaker #4: So there was another question in the in the chat if we think that it would be now more difficult to reach the guidance we are still confident to reach the guidance because of this easy calculation of course.
Speaker #4: And the effects that we explained the first is we see new businesses coming back. We have this big Altersvorsorg depot thing at the end of the year that will drive the business and we have all these possible performance fee that we did not accrue now in the first half year and that's the reason why we still keep the guidance.
Speaker #3: That's understood. Thank you very much. And my last two questions were probably for Ramona. The the the first one on AVD on the AVD product.
Speaker #3: You outlined two scenarios where how how customers can get get to this product. Which scenario would be the better one for JDC? Is the traditional broker model or the one over the the banks and this route to the market.
Speaker #3: And second question on that the strong performance of the FMA portals in AI searches. How sustainable would you think that is? I mean we learned from the search machines Google etc.
Speaker #3: that this can change very quickly. How sustainable is now the this very strong performance of FMK in AI portals? Thanks.
Speaker #2: Yeah thank you very much for your questions. As I said we are very open to both lines of business and it very much depends on let's say on the marketing budgets of the large neobanks.
Speaker #2: We think that they are going to invest a lot of they are going to invest a lot to like first wave of AVDs into their portfolio.
Speaker #2: So it's not really like for us it's both sides it's okay because both sides are one of business in the insurance as well as in the banking segment.
Speaker #2: So I'm I'm actually very I don't have a strong preference on what the customer decides to do and in the end it's also it's it's very hard to steer a customer towards a certain channel check 24 that has tried to do that in for a very long time.
Speaker #2: And still like less than 10% of German insurance business is online. So in my if you ask me what I think is going to happen is that the customer behavior is very steady in Germany and and customers are afraid that they live longer than they have money and that's one of the big pluses for the insurance company side.
Speaker #2: So I don't think that customer behavior will change drastically. So I feel that the majority of the business will probably go to the insurance business and the banking business is an add-on.
Speaker #2: But we will see in the future how the customer decides. That's for your first question. And the other one how sustainable is the AI progress?
Speaker #2: Right now the LLM business is a little bit like zero. So of course there can be changes. However I don't think that the advance the progress and the the advanced stage that FMK is in right now it's not very easy to to go there.
Speaker #2: And as I said FMK is operating under brands like Handelsblatt and NTV and they have a very long journalistic reputation and it's very hard for a newcomer to you know get the same reputation as the largest economic newspapers in Germany.
Speaker #2: So I'm pretty sure that they do have an an advantage here. And it's very difficult for for any other newcomer to get into the business in that in that way.
Speaker #1: And if I may Ramona if I may add it's important to understand that disadvantage is not capitalized yet. Yeah because ChatGPT does not offer advertisement in Germany.
Speaker #1: LLM advertising is now beginning all over the world and we hope someday in the future maybe this year the ChatGPT will open the advertising in in Germany and then FMK will be there and the the high ratio of being the source will 70% will be the reason that we will make relevant turnovers there.
Speaker #3: Okay. Thank you very much.
Speaker #2: Thank you so much. We have another raise in hand by Mr. Vorberg. I just sent you an invitation to unmute yourself.
Speaker #3: Yeah I hope you can hear me.
Speaker #2: Yes perfectly. Hello.
Speaker #3: Great. Hi. Another question on guidance please. You mentioned that the performance fees that you have not accrued for in H1 but can you clarify whether those are already included in your guidance and by how much?
Speaker #1: Good question. Yes they are included in the guidance. And they I think we calculated in in the business planning at a comparable level of the last year.
Speaker #1: No no no. No. We have calculated them lower but I'm not I'm I'm not sure. Sorry Marius I I have to deliver this afterwards.
Speaker #1: I can give you the the detailed numbers later on.
Speaker #3: No worries. Second question on the AVD as well. I also see a big shift here when it comes to pension savings. And you mentioned that you probably will see a lot of it going to insurances.
Speaker #3: Do you have already an idea on monetization from those AVD accounts that we will see? Do you think that you will get a one-off fee once a customer assigns a contract?
Speaker #3: Do you plan to participate in the ongoing payments or what is your view on that?
Speaker #1: It's it's though though the it's it's very hard to tell as as basically the market is marveling what's going to happen. I think there will be some market share for all the neobrokers and the new banks especially the younger clients obviously right because they are agnostic whether they they buy insurance or or a yeah capital markets product and they will rather turn to ETFs but that's not a client yet.
Speaker #1: So I think that's rather as Ramona said an add-on to the existing business. So it does not really matter what if insurance companies cannot conquer a lot of these new clients businesses.
Speaker #1: And then if you look at the insurance side then the big question is how much will be covered by the standard product that is really low in cost and therefore does not give you big one-offs.
Speaker #1: We rather think that as Ramona pointed out that people want to go if they want to go to insurance product they do not want to the payments to end at age 85.
Speaker #1: I think that's a threat to especially a lot of female clients because obviously if you're young today you you can expect to live 90 plus and it it's it's it would be very hard to to have a pension system that cuts you off when you need it most when you have the the the the most expense for for your health build build.
Speaker #1: So I think that people will rather go to one guaranteed or 80% guaranteed product and then long vitality products that also pay 85 plus and if this products and that's important to know the commission is not capped or limited or the costs are not limited.
Speaker #1: Therefore we expect that on the advisory side in the broker side maybe 75 to 80% of all business will go into quite conservative or similar products as we see in the markets today.
Speaker #1: And only like a small portion will go to standard products and a small portion will go to capital markets or or sole capital markets products but obviously all these yeah views are very difficult as they they they are far out in the future and we will see how it comes out.
Speaker #1: But on the other hand yeah we talked about this we are not expecting this huge big party where where turnover triples next year. We don't see this either.
Speaker #1: But in the end having more market because there's more consumers asking for retirement plans and have a little bit lower market share I think this will give like a decent plus development for the broker markets.
Speaker #4: Sebastian could you a short shortly state on on commission issues regarding the R4D? There was a question in in the chat that commissions are they going down with the R4D or not?
Speaker #1: Yeah so we expect that the on the obviously the standard state product has a lower cost base right. And if you see a 1% cap per year on the cost base there's not much one-off for commissions left.
Speaker #1: But obviously in a advisory world where most of the products are not the standard product but are products that are let's say more modern life insurance products we expect the commission rates to go down a little bit.
Speaker #1: Let's say 15 to 20% but then there will be a lot of more market that overcompensates for a little bit lower commission. That's our best guess here.
Speaker #4: Okay.
Speaker #3: All right. And do you expect this to be a more recurring fee or a one-off fee?
Speaker #1: No. Well it will also the the so what we could learn from the last reforms is that the especially the broker market is very yeah very lazy to to to change.
Speaker #1: And and this is what also the insurance companies learned and now what in their talks we have with them what they offer is that the the model is quite the same only that the commission rates are slightly lower.
Speaker #1: And that's also what we're expecting.
Speaker #2: So that means basically a one-off.
Speaker #1: Slightly lower but still high. That's important to understand.
Speaker #3: Okay. And what maybe one last question from my side. When I look at AUMs and the premium volumes they are up double digit. Whereas organic revenues grew only like single digit.
Speaker #3: Could you explain this gap and when should we expect this to close or more precisely should we expect revenues to pick up speed accordingly to the operation development in AUM and premium volumes?
Speaker #1: Yeah. So that obviously this is this this little yeah gap in the new business and as we said we expect new business to be back in Q4 right.
Speaker #1: So it's summer will still be rather okayish but but then in Q4 we will see a pickup and then the the the picture will normalize if you want.
Speaker #1: And but but again we we like this increases in the base for our recurring business especially the insurance premiums and the the the volumes of the assets because that's the income of the future on top right.
Speaker #1: So it's yes one-offs are important for this year and this quarter but the the future lies in all these recurring payments that we are aggregating.
Speaker #3: Great. Thank you.
Speaker #2: Thank you very much Mr. Fulberg. We have another raise in hand by Mr. De Jong. I just sent you an invite to unmute yourself.
Speaker #2: Can you hear me?
Speaker #4: Can you hear me?
Speaker #1: Yes I am.
Speaker #2: Okay. Hello.
Speaker #4: Hello. Good good afternoon gentlemen. And Ramona of course. Yeah. Just just a clarification on on the AVD side. Should I really should should I assume that that is completely new clients in contrast let's say to the the the the the increase in new business that you expect also in in in the second half of the year which is probably existing clients?
Speaker #4: Is is that right to assume?
Speaker #1: Well the the four is important thing to notice. There's about 12 million clients that have a rester contract. Right. And they have to they need a checkup whether rester is still the best system for them or whether they should change in AVD starting January.
Speaker #1: And on the other hand as Ramona pointed out there will be new clients for rester also because now it comes clear that the regime is changing and as I said if you have many kids and you have to expect a lot of subsidies from the state then you should still go into a rester client although the AVD is the new thing and and so much better as everybody says you should still go in a rester contract.
Speaker #1: So yes there is a lot of advisory demand on the existing client base but then obviously the the AVD tries to capture all these ETF driven investment new kind of clients on top that come on top of the insurance clients that that insurance would would capture anyways.
Speaker #4: Okay. Thanks. And Ramona if you look at the the LLM space what are the competition what's plow direct doing what's Netfons doing are are they also active in that field or or is is there any competition coming coming for for FMK or how should we see that?
Speaker #2: Like the competition that that that FMK with its current business model had are like competitors like finance model finance tip or checkpoint check 24 the ones that I showed to you on the slide.
Speaker #2: But they are not nearly as as they are not nearly as successful as FMK. And so I have to ask again you mentioned two or three names I like just acoustically I didn't I didn't get them.
Speaker #4: I think plow direct and Netfons.
Speaker #2: okay. I don't think that they are in any way near a a similar business model. Please correct me Ralph or Sebastian if.
Speaker #4: No they are not not they are of course also active in generating leads for their customers but not in the size that FMK is able to.
Speaker #4: And regarding the AI efforts of course all our competitors as well invest a lot into AI to improve their internal processes and make the work more easy for their brokers.
Speaker #4: So that's we are we are all very active in this space. Okay. And then finally on on the 20 million bond so you you have call option later this year.
Speaker #4: What what would would be the considerations to let's say to redeem or to call it or.
Speaker #1: Yeah depending on on cash situation how many cash do we generate this year and I personally don't think that it makes sense to redeem it with the 7% and pay 101.5% and then refinance it with a Nordic bond with a rolling interest rate which could be more than 7% must not be but could be I don't think that's that it will that's that will happen if we have enough cash on hand and and it makes sense to redeem it then we will do it if not I don't think that we we will refinance it with the Nordic bond.
Speaker #4: Okay. Perfect. Thank you.
Speaker #1: You're welcome.
Speaker #2: Thank you very much Mr. De Jong. We have a couple of questions in our chat box left. The first would be is the major customers revenue purely contract transfers of large customers existing contracts to the platform.
Speaker #2: Would it be fair to say that EBITDA is no longer a good proxy for FCS?
Speaker #1: That's the second question. Let's go to the first question. Yes it's only from the large customers but no it's not only contract transfers. It's also new business from the large customers.
Speaker #1: That's the major customer business. And the second question is is it fair to say that EBITDA is no longer a good proxy for FCF?
Speaker #1: For free free cash flow. I don't think it's fair to say that but what we can observe is with the improving relevance of FMK the the the cash flow profile of the group changes a little bit.
Speaker #1: Because they don't receive the commissions before they pay them out. They at first have to invest into Google marketing and then get the money from from their customers on the one hand and the second reason is that we have to cash we we have tax losses carried forward and FMK pays taxes.
Speaker #1: So that are the two reasons why it's different. And yes it changes a little bit but I think we have to work on Chester that was your question to make this more clear.
Speaker #1: And give you maybe better guidance on how EBITDA and cash flow work together.
Speaker #3: Plus interest that we pay now. But obviously.
Speaker #1: Yeah. And the next question of Jasper was the expected tax rate for 26 and 27. Thanks to the back office I can answer it.
Speaker #1: And our expected tax rate for this year is around 15% and for the next year the answer was hard to say between 15 and 20%.
Speaker #1: So I think if you collect a little bit above this 15 16% then you're on the right side.
Speaker #2: Thank you very much. Another question would be I understood onboarding of R&V Versicherungskammer Bayern. And Allianz is still slow. What can you do that the relevant people have more motivation to move to your platform?
Speaker #1: Well that's very individual. Right. So obviously we don't want to answer questions for individual client groups but we can say that we're very happy about the Allianz project that picks up speed and and so we get a quite good integration into their tighten agent network.
Speaker #1: So we're very happy with that. But obviously you're right as Provincial develops quite nicely Versicherungskammer is yeah laying back a little bit. And also R&V could be much faster that's two.
Speaker #1: What can we do? We talking to the project groups we talk to the board members and that's the interesting part that that the client is more happy than the service provider and the service provider like pushes the project more than the client.
Speaker #1: But this is something we have to live on. It's it's it's intrinsic to our B2B2C model. The good thing is obviously the customers coming for free but the speed is is decided by our clients.
Speaker #1: Intermediate clients. And this is also one of the reasons why we bought FMK to have the lever in our own hands. Right. So yeah.
Speaker #1: But but but fine. It's to put it positively there's a long highway for growth.
Speaker #2: All right. I just saw that we have another risen hand. Due to time I would say we do the risen hand and then maybe go back to the questions.
Speaker #2: I don't know how your time allows it if that's okay.
Speaker #1: We can go on but maybe we do a like a crash on that on on the other questions. Maybe yes by right you said like you said the costs have risen quite a lot in recent quarters.
Speaker #1: We we don't think so Ralph. Right. So yes they grew but not as fast as the earnings grew. Or the.
Speaker #3: Yeah if the company grows of course the cost grow and if you then have a temporary weakness in in new business which is turnover today and not over the next years then it might seem that's the the costs grow faster than they should.
Speaker #3: But that's indeed not the fact. But we we have seen this as well. And we have started cost reduction programs in the advisor tech and in the advisory segment.
Speaker #3: And I think at least let's say one and a half or two million euros cost will be saved for the next year. So we are diligently observing this.
Speaker #1: So my next question for you I guess.
Speaker #2: How is it going with the FMK JDC Plus project? Short answer it's going very smoothly. We are we are everything is according to plan.
Speaker #2: We have seven digit validation sums. And six digit commission sums that we have already gained. And last earnings call I went into a little bit of detail that the infrastructure that we built up in the past six months and now we are of course there in the loop of of enhancing and optimizing the business on the infrastructure and also on the personal side.
Speaker #2: So yeah everything is on track.
Speaker #1: Okay. And then Thomas has a question on capital allocation. Yeah. So we learned a lot in the last chair buyback that the tender was very interesting that it was misunderstood by one of one of the other investors.
Speaker #1: So I think the the the range is one we want to take the opportunities in the market for further M&A. There's interesting targets out there and that's the best use of our free cash flow and also the money that we have in the bank.
Speaker #1: Obviously right now yeah and share buyback second and dividends is last and same goes for the payback of the outstanding bond as Ralph said.
Speaker #1: Right. So that that's not the wisest thing to do with our money actually. So that was a short answer but happy to get more.
Speaker #1: Direct. And also is there any news to Sumita's not really we're very happy with the development. We're buying brokers like every second month. And the first initial commitment should be invested in the course of this year.
Speaker #1: And then we'll see whether we we add up here. So Mari I think we can take the risen hand if.
Speaker #2: I think so too. Yes. So Ms. Martina Teja please you may unmute yourself now. I just sent you an invite to do so. Can you hear us?
Speaker #1: And?
Speaker #2: I just sent you an invite again. Sometimes it takes a couple of clicks.
Speaker #4: So if this is Anna Martin Ortega she's one of our employees so maybe that was just a hand risen by mistake. It happens.
Speaker #2: Maybe. Maybe. Good. Okay. So I would say with no further questions we will come to the end of today's earnings call. Thank you very much for your interest in JDC Group AG.
Speaker #2: And also big thank you to the management board for your presentation and the time you took to answer all of those questions. Should you have any further questions at a later time please feel free to contact Investor Relations and I wish you all a successful day.
Speaker #2: And I'm handing over to you once more Dr. Gratmaier once again for your closing remarks.
Speaker #1: Yeah. Thank you Mara and thank you again for your taking part here in this earnings call. Yeah. And also thank you for trust as our shareholders.
Speaker #1: We think we have better times ahead. Obviously there's great parts or part of the figures are really great. We're really happy about the acquisition of FMK as you can see that's a great contribution to our growth to our EBITDA growth.
Speaker #1: And also we are very confident that the platform business will be coming back especially against the backdrop of the new regulation in Q4. There will be direct effect for FMK that we're looking forward to.
Speaker #1: But also to the entire broker and advisory market. So yeah we are very confident that the guidance we gave you beginning of the year still holds and that we see good times ahead.
