PensionBee Group plc Q3 2024 Results

RNS Number : 3582J

PensionBee Group plc

23 October 2024

 

 

PensionBee Group plc Incorporated in England and Wales Registration Number: 13172844 LEI: 2138008663P5FHPGZV74 ISIN: GB00BNDRLN84

23 October 2024 PensionBee Group plc Q3 2024 Results

Successful Strategy drives Strong Financial Performance

PensionBee Group plc ('PensionBee' or the 'Company', together with its subsidiaries the 'Group'), a leading online pension provider, today announces a trading update (unaudited) for the quarter ended 30 September 2024.

Summary

●    Assets under Administration increased by 41% year on year to £5.5bn (September 2023: £3.9bn), underpinned by strong Net Flows from new customers (YTD £538m) and existing customers (YTD £153m) and supportive markets. ●    Group Revenue for the quarter increased by 37% year on year to £9m (Q3 2023: £6m). Annual Run Rate Revenue increased by 41% to £34m (September 2023: £24m).1 ●    Group Adjusted EBITDA was positive for the quarter (Q3 2024: £1m vs. Q3 2023: £(1)m), with PensionBee expecting to achieve Group Adjusted EBITDA breakeven for FY 2024. ●    Invested Customers increased by 16% year on year to 260,000 (September 2023: 223,000), demonstrating strong continued growth driven by PensionBee's data-led, efficient customer acquisition approach and the strength of PensionBee's household brand, with PensionBee's prompted brand awareness reaching an all time high of 58%.2 Net Flows per £1 of Marketing Spend3 increased by 10% year on year to £85 (YTD Sep-23: £77). ●    Net Retention Rate4 which captures all underlying cash inflows and outflows was >100%, supported by continued strong customer satisfaction (4.7★ Excellent Trustpilot score5) and ongoing product innovation. ●    Cash balance of £14.6m as of September 2024. ●    Following its SEC registration in July, PensionBee commenced live consumer testing in the US market, the world's largest Defined Contribution pension market, in partnership with State Street Global Advisors, one of its long-standing asset management providers and one of the world's largest money managers.

Romi Savova, CEO of PensionBee, commented:   "Our substantial growth has continued over the third quarter, with Assets under Administration reaching £5.5 billion and 260,000 Invested Customers. As we continue to consistently execute on all elements of our strategy, having achieved two consecutive quarters of positive Group Adjusted EBITDA this year, we expect to deliver Group breakeven on the same basis for the full year 2024.   We are delighted to be expanding the reach of our award-winning customer proposition, innovative technology platform and unique marketing approach, having entered the US market, the world's largest Defined Contribution pension market, in partnership with State Street Global Advisors. We are pleased to see a positive consumer response to our marketing approach and to have developed local features to facilitate easier rollovers. The opportunity we have ahead of us, to help millions of Americans enjoy a happy retirement, is transformational for the next decade of PensionBee's growth."

United Kingdom Operational Highlights   In the UK, PensionBee has further advanced its strategic goals, continuing to grow its customer base and Assets under Administration, leveraging its established position as a household brand.

Efficient Investment in Customer Acquisition and Growing Brand Awareness:   PensionBee's UK business continued to grow its brand and acquire customers efficiently, investing £2m in diversified marketing activities across the quarter (£8m across 2024), bringing the cumulative marketing investment since inception to £63m. Across the year, there has been a focus on reaching customers with higher account sizes, resulting in growth of 21% in the average account value to c.£21,000 (Q3 2023: c.£17,000). Cost per Invested Customer continued to be stable (Q3 2024: £244 vs. Q3 2023: £244), highlighting the strength of the Company's marketing capability, the efficiency of spend, and the importance of household brand awareness in driving customer acquisition. Prompted Brand Awareness reached an all time high of 58%2 over Q3 2024 (Q3 2023: 51%), demonstrating that PensionBee continues to be embedded in consumers' minds as a trusted household name in the UK.

Leadership in Product Innovation   PensionBee has continued to innovate to meet the needs of its UK customers by releasing helpful and engaging tools, designed to enhance the customer experience, such as new performance analytics. Over the third quarter of 2024 the Company has continued to make further improvements to the pension transfer journey, introducing further system efficiencies to automated processes. Streamlining the process has enhanced the processing speed and accuracy by reducing manual data entry.

Focus on Excellent Customer Service:   Across the quarter, the delivery of excellent customer service has continued to be prioritised, as evidenced through the achievement of a 4.7★ Excellent Trustpilot rating from approximately 11,300 Trustpilot reviews5 and the maintenance of rapid customer response times.6   Ensuring excellent levels of customer satisfaction is central to PensionBee's ambition of retaining and serving its customers throughout their lifetimes. As such, PensionBee maintained a Net Retention Rate >100% across the year to date (Q3 2023: >100%).3

Investment in and Development of Leading Technology Platform:   PensionBee has continued with its ongoing investment in the scalability of its technology platform, which continues to underpin its competitive advantage. Efficiency improvements through internal automation, security and pension transfer improvements, have delivered a 22% productivity improvement year on year (Q3 2024:1,305 Invested Customers / Staff Member vs. Q3 2023: 1,072 Invested Customers / Staff Member).7

United States Operational Highlights

PensionBee entered the US market, the world's largest Defined Contribution pension market, in partnership with State Street Global Advisors, one of its long-standing asset management providers and one of the world's largest money managers. PensionBee will pursue a substantial growth opportunity to reach millions of underserved Americans across the US, capitalising on its existing strengths to harness substantial consumer appetite for an easy retirement solution.   PensionBee Inc. has had its SEC registration granted, enabling federal operation. Its US technology platform has been built and is operational, having been fully tested with the completion of retirement account transfers.   Initial US marketing has begun, with new channels having been established (including organic and paid search, organic and paid social, PR and brand advertising) and the calibration of these channels is underway. Channels are demonstrating a positive early consumer response. New search functionality for 401(k) accounts has been developed and initial provider-specific journeys for rollovers have been validated and prepared for customer usage.

Financial Update

PensionBee has continued to deliver consistent and predictable Revenue growth, driven by the compounding nature of its Assets under Administration ('AUA'), positive Net Retention, ongoing Net Flow generation across cohorts and a stable Revenue Margin over Q3 2024. Its Net Retention Rate >100% across the year to date (Q3 2023: >100%)3, highlighting the long-term compounding nature of the asset base. Compounding growth has translated into predictable Revenue, with Revenue for the year to date of £24m (YTD Sep-23: £17m) and Annual Run Rate Revenue growth of 41% year on year to £34m (Q3 2023: £24m).

Predictable and Recurring Revenue Base

Note on Charts: Represents Cohort AUA from bottom to top, Cohort 2016-2019, Cohort 2020, Cohorts 2021, Cohort 2022, Cohort 2023, Cohort 2024 and Market Impact (darkest orange).

PensionBee's scalable business has continued to drive operating leverage and profitability. The Cost Base8 for Q3 2024 has remained stable at £8m (Q3 2023: £7m), achieved with a combination of relatively stable money manager and technology platform costs, increasing at 9.5% year on year relative to Annual Run Rate Revenue growth of 41%, together with more efficient deployment of marketing costs for the quarter.

Business Scalability to Drive Margin Improvements

The combination of strong predictable revenue growth combined with business scalability and strict cost discipline has continued to drive high growth and to generate a second consecutive quarter of positive Group Adjusted EBITDA at £1m for Q3 2024 (Q3 2023: £(1)m).

Note on Chart: Marketing Expenses are offset by £200k from the marketing reimbursement as provided by State Street.

Business Scalability Translates into Improvement in Profitability

Group Financial Guidance Framework

The Company is pleased to reiterate the guidance framework as previously presented at its recent Capital Markets Day:

Revenue Objectives:   ●    PensionBee expects Group Revenue to exceed £30m for the full year 2024. ●    It has an ambition to reach >£100m of Group Revenue in the short to medium term (by year 5), with a longer term (5 to 10 years) ambition to exceed £250m.

Profitability Objectives:   ●    PensionBee expects to reach Group Adjusted EBITDA breakeven for the full year 2024. ●    It has an ambition to reach an Adjusted Group EBITDA Margin of approximately 20% in the short to medium term (by year 5), with a longer term (5 to 10 years) ambition to reach c.50%.

Group Financial Summary

As at Period End Sep-2023 Sep-2024 YoY change AUA (£m)9 3,902 5,484 41% AUA Retention Rate (% of AUA)10 96% 96% Stable Invested Customers (thousands)11 223 260 16% Customer Retention Rate (% of IC)12 97% 96% Stable Cost per Invested Customer (£)13 244 244 Stable Revenue Margin (% of AUA)14 0.65% 0.64% Stable Annual Run Rate Revenue1 24 34 41% LTM Revenue15 22 31 40%     Over the 9-month Period Ending Sep-2023 Sep-2024 YoY change Opening AUA (£m)9 3,025 4,350 44%    Gross Inflows (£m) 923 1,020 10%    Gross Outflows (£m) (231) (328) 42% Net Flows (£m)16 692 692 0%    Market Growth and Other (£m) 185 442 n/m Closing AUA (£m)9 3,902 5,484 41%     Over the 3-month Period Ending   Sep-2023 Sep-2024 YoY change Revenue (£m)17 6 9 37% Cost Base (£m)8 (7) (8) 6% Adjusted EBITDA (£m)18 (1) 1 n/m Adjusted EBITDA Margin (% of Revenue)19 (17)% 9% 26ppt*     Over the 9-month Period Ending   Sep-2023 Sep-2024 YoY change Revenue (£m)17 17 24 40% Cost Base (£m)8 (26) (25) (4)% Adjusted EBITDA (£m)18 (9) (1) 87% Adjusted EBITDA Margin (% of Revenue)19 (52)% (5)% 47ppt*

 

Notes

*	A ppt is a percentage point. A percentage point is the unit for the arithmetic difference of two percentages.
1	Annual Run Rate ('ARR') Revenue is calculated using the recurring Revenue for the relevant month multiplied by 12.
2	PensionBee prompted brand awareness tracker, September 2024. Prompted brand awareness measured through a consumer survey asking 'Which of the following have you heard of?' with respect to UK financial services brands: Aviva 85%, Scottish Widows 78% Standard Life 70%, PensionBee 58%, Hargreaves Lansdown 48%, Vanguard 46%, AJ Bell 44%, Nutmeg 41%,  Interactive Investor 17%.
3	Cumulative Net Flows over the relevant period divided by Cumulative Marketing spend over the relevant period.
4	Net Retention Rate, a measure of underlying growth on a cash basis, demonstrates that customer cohorts are growing over a long period of time. The Net Retention Rate takes into account all cash movements including, initial account consolidation, additional account consolidation, voluntary contributions, netted off by, customer attrition to other providers, withdrawals made by retiring customers and, death distributions. The Net Retention Rate excludes capital market growth. A score above 100% indicates that cohorts, on average, have grown on a cash basis over the relevant period. Mature cohorts are cohorts that have been with PensionBee for more than 12 months as of the reporting date.
5	Trustpilot score of 4.7★ out of 5 (based on 11,319 reviews) recorded as at 14 October 2024.
6	Customer response times of 13 seconds average live chat waiting time (of 4,410 live chats over Q3 2024), 55 seconds average phone waiting time (of 12,845 phone calls over Q3 2024) and 85% of email cases closed within <72 hours (of 47,736 emails over Q3 2024).
7	Productivity, measured using Invested Customers per Staff Member metric, is calculated using an LTM average for the total workforce. Management information as at 30 September 2024.
8	Cost Base is the total operating costs, including Money Manager Costs, Advertising and Marketing Expenses and Technology Platform Costs & Other Operating Expenses, for the relevant period. Marketing Expenses are offset by £200k from the marketing reimbursement as provided by State Street.
9	Assets under Administration ('AUA') is the total invested value of pension assets within PensionBee Invested Customers' pensions. It measures the new inflows less the outflows and records a change in the market value of the assets. AUA is a measurement of the growth of the business and is the primary driver of Revenue.
10	AUA Retention Rate measures the percentage of retained PensionBee AUA from transfers out over the average of the trailing twelve months. High AUA Retention provides more certainty of future Revenue. This measure can also be used to monitor customer satisfaction. As of Q3 2024 AUA Retention is at 95.8%.
11	Invested Customers ('IC') means those customers who have transferred pension assets or made contributions into one of PensionBee's investment plans.
12	Customer Retention Rate measures the percentage of retained PensionBee Invested Customers over the average of the trailing twelve months. High customer retention provides more certainty of future Revenue. This measure can also be used to monitor customer satisfaction. As of Q3 2024 Invested Customer Retention is at 96.3%.
13	Cost per Invested Customer ('CPIC') means the cumulative advertising and marketing costs incurred since PensionBee commenced trading up until the relevant point in time divided by the cumulative number of Invested Customers at that point in time. This measure monitors cost discipline of customer acquisition. PensionBee's desired CPIC threshold is £200-£250.
14	Revenue Margin is calculated by using the last twelve months of Recurring Revenue over the average quarterly AUA held in PensionBee's investment plans over the period.
15	LTM Revenue means the income generated from the asset base of PensionBee's customers, essentially annual management fees charged on the AUA, together with a minor revenue contribution from other services over the last twelve months.
16	Net Flows measures the cumulative inflow of PensionBee AUA from consolidation and contribution ('Gross Inflows'), less the outflows from withdrawals and transfers out ('Gross Outflows') over the relevant period.
17	Revenue means the income generated from the asset base of PensionBee's customers, essentially annual management fees charged on the AUA, together with a minor revenue contribution from other services.
18	Adjusted EBITDA is the profit or loss for the period before taxation, finance costs, depreciation, share based compensation and transaction costs.
19	Adjusted EBITDA Margin means Adjusted EBITDA as a percentage of Revenue for the relevant period.

 

A copy of this Q3 2024 Results Announcement will be made available post-market close on 23 October 2024 for download at: pensionbee.com/uk/investor-relations/results-and-reports.   Enquiries
Press  Becky O'Connor Laura Dunn-Sims Steven Kennedy [e-mail] [phone]   Analysts and Investors [e-mail]

About PensionBee

 

PensionBee is creating a global leader in the consumer retirement market with £5.5 billion in assets on behalf of 260,000 customers.

 

Founded in 2014, we aspire to make as many people as possible pension confident so that everyone can enjoy a happy retirement.

 

We help our customers to combine their retirement savings into a new online account, which they can manage from the palm of their hand.

 

PensionBee accounts are invested by the world's largest investment managers, collectively looking after more than $10 trillion in savings between them. Each PensionBee customer has a personal account manager ("BeeKeeper") to guide them through their savings and retirement journey. PensionBee has an "Excellent" Trustpilot rating based on over 10,000 reviews.

 

As a public company, we aspire to the highest standards in everything we do because our customers deserve peace of mind. Our team of approximately 200 pension professionals, based in London and New York, has one focus: you, our customer.

 

PensionBee is listed on the London Stock Exchange (LON:PBEE).

 

Forward Looking Statements

 

Statements that are not historical facts, including statements about PensionBee's or management's beliefs and expectations, are forward-looking statements. The results contain forward-looking statements, which by their nature involve substantial risks and uncertainties as they relate to events and depend on circumstances which will occur in the future and actual results and developments may differ materially from those expressly stated or otherwise implied by these statements.

 

These forward-looking statements are statements regarding PensionBee's intentions, beliefs or current expectations concerning, among other things, its results of operations, financial condition, prospects, growth, strategies and the industry and markets within which it operates.

 

These forward-looking statements relate to the date of these results and PensionBee does not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of the results.

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