Yesterday, Smartbroker published weak final H1 figures that were fully in line with prelims and estimates:

• € 23.4m sales (-16% yoy) are in line with prelims and the result of 1) the soft development of the Media segment with € 14.8m sales (-15% yoy vs eNuW: € 14.2m) on the back of only 1.1bn page impressions (-27% yoy) and 2) lower sales in the Transaction segment of € 8.7m (-16% yoy vs eNuW: € 9.2m). The reasons for the latter were a lower customer activity (17 trades/customer p.a. vs 22 in H1´22) and reduced marketing budgets that limited customer growth (+3k).
• EBITDA came in weak at € 1.7m (vs € 4.6m in H1´22), mainly driven by the lower topline that couldn´t be fully compensated by reduced marketing spendings (€ 0.3m vs € 3.2m in H1´22) and lower material expenses (€ 9.8m vs € 11.5m in H1´22).

Growth for the remainder of the year should be limited as the current focus is fully on the migration of existing customers to Baader Bank. Once the migration is completed, we expect marketing spending to increase, in order to fuel new customer inflow. The Media segment looks set to remain rather flattish, burdened by the challenging market environment with reduced customer activity (visible in less page impression), less IPO´s and lower transaction volumes. This is already well reflected in management's guidance for FY23 of € 46-51m in sales and € -1m to € 1m in EBITDA.

Given the current market situation, paired with additional development costs for Smartbroker+, we consider 2023 as transition year. Looking into 2024, Smartbroker is seen to be the growth driver of the Group, as Smartbroker+ is offering a unique combination of the service range of an established full-service broker at a neobroker pricing that should drive customer inflows and transactions.

Importantly, the synergy effects between the Media segment and the Smartbroker should fuel both segments: While CAC of Smartbroker should decline, thanks to the reach of the media portals, new customer of Smartbroker are expected to mainly use the embedded media portals within the app, increasing page views and interactions and making the portals more attractive for advertisers.

The investment case is fully intact and the launch of Smartbroker+ is a milestone in the company´s history. BUY with unchanged PT of € 15, based on DCF.