- Verivox encounters a decline in revenue and significant financial losses
The reduction in business was initially hinted at. When financial platform Verivox released its report in February the year prior, accountants had already expressed concerns about a weak fourth quarter of 2021. Specifically, the energy contract mediation sector was struggling at the time. Due to the substantial price increase in the electricity and gas wholesale market, several suppliers suspended their tariffs on the platform, as reported. Consequently, fewer new contracts were signed, leading to Verivox reporting a decline in revenue, from 120 million to 111 million euros, contrary to initial plans.
The company also anticipated lower earnings for the following year, though within a minimal range. According to initial projections, turnover would at most decrease "slightly" and "in the mid single-digit percentage range" in the year 2022. Looking back, this was an underestimation: 2022 brought a terrible business year, as demonstrated in the recently released 2022 financial report.
A decrease of nearly one-third in turnover
The energy crisis, which persisted beyond the new year, put a heavier strain on Verivox than initially anticipated. In 2022, Verivox reported a turnover of around 70.5 million euros - a decrease of about 40 million euros, or 37%, compared to the previous year.
Verivox cites the Russia-Ukraine conflict as the primary reason for this. The report states that the conflict worsened the situation from April 2022 onwards, as gas supply via the Nord Stream 1 pipeline was significantly reduced, causing wholesale prices to rise further. Additionally, the closure of German nuclear power plants and low water levels for full coal-fired power plant operation also contributed to the difficult financial situation. However, political price caps implemented at the end of 2022 began to alleviate the situation and "initial signs of a recovery and the return of tariffs and savings potential" on the platform became noticeable.
High reliance on a single product
The report reveals the high dependence of the comparison portal, established in 1998, on a single product. Although Verivox is one of Germany's largest providers of tariff comparisons, customers can also secure mobile phone tariffs, loans, and insurance policies via the portal. However, the majority of the revenue stems from commissions from mediated electricity and gas contracts.
In many households, energy costs are a significant expense. Consumers frequently search for cheaper tariffs and switch providers, sometimes even annually. As a result, Verivox is particularly susceptible to external market shocks, such as those experienced on the energy market in 2022.
Despite emphasizing in the report that it has grown in other business areas during the same period, Verivox did not make up for the heavy loss. For example, advertising earnings increased by 45% to around seven million euros in 2022. However, this could not offset the substantial annual loss. Consequently, Verivox reported a deficit of around 30 million euros in 2022, compared to a profit of nearly eleven million euros in the previous year. This increasing negative trend was even more pronounced compared to 2021.
Ongoing sales discussions
The crisis atmosphere no longer prevails at Verivox, which has been part of ProSiebenSat1's digital division for several years. A spokesperson confirms that the company is now back on a growth trajectory. Verivox is benefiting from the recovery of energy markets since 2023, leading to a significant increase in the number of concluded contracts. Furthermore, Verivox has expanded its insurance and banking product range and a large-scale marketing campaign has boosted brand awareness and business. Verivox's revenue in 2023 more than doubled to 162 million euros, surpassing pre-energy crisis levels. The first half of 2024 has also shown promising growth rates across all areas.
However, Verivox remains cautious about returning to profitability. The marketing campaign may have incurred high initial costs. Nonetheless, a financial turnaround would be beneficial for Verivox, as ProSiebenSat1 plans to sell its subsidiary at a profit. Potential buyers are likely to be private equity firms, according to industry sources. A Verivox spokesperson declined to comment on the details of the sales talks, stating only that "the process is proceeding as planned."
This article was first published in Finance Forward, the magazine for the new financial world, created in collaboration between Capital and OMR.
In response to the energy crisis, Verivox's turnover significantly decreased in 2022, with a decline of about 37% compared to the previous year, amounting to around 70.5 million euros. This steep decrease can be largely attributed to Verivox's heavy reliance on commissions from mediated electricity and gas contracts.
Despite ongoing sales discussions with potential buyers, including private equity firms, Verivox reported a deficit of around 30 million euros in 2022, due in part to the high initial costs of its marketing campaign. However, the company is currently benefiting from the recovery of energy markets since 2023, leading to a significant increase in concluded contracts and a revenue of more than 162 million euros in 2023, surpassing pre-energy crisis levels.
