Mony Group H2 2024 (Q&A) Earnings Call Transcript

Quartr
Provided by Quartr
February 17, 2025

There are 8 speakers on the call.

Operator

Morning, everybody, and thank you for making the time for joining us this morning. Look, hopefully you've had a chance to watch our results video, which we posted at 7AM. But before we end up the questions, perhaps you just allow me to do a quick recap of the main points we were making there. So firstly, 2024 was another strong year for the group with revenue up 2% to AUD $439,000,000 and adjusted EBITDA up 7% to AUD 142,000,000. In addition, we've made further progress in line with our company purpose, which is all about helping households save money.

Operator

In 2024, we've actually saved customers an estimated 2,400,000,000.0. Now this growth has been driven by our two sided marketplace strategy. On consumer side, we've seen momentum across our member base propositions. That's the MoneySupermarket, Super Save Club, that's the app from Money Saving Expert and QuickCo. And by growing numbers across our brands, we are encouraging consumer loyalty, retention, repeat purchasing and this is delivering positive results.

Operator

We're especially excited about our progress at the Super Say Club. We have now surpassed 1,000,000 members, and these members are generating higher revenue per user and we're attracting more traffic directly, and that is critical in reducing our reliance on expensive third party marketing. We've also made great progress on the provider service side that's across B2B, Market Boost and Tenancy. In B2B, our revenue was up 49% in the year. We now have 35 providers live.

Operator

Market boost is being used by over 80 providers and in tenancy we have grown revenue by 6%. Now this two sided market focus is underpinned by our leading data and tech. And we said last year that our data transformation had been completed. We've announced the spawning, but our broader tech transformation is also now largely complete. And this positions us well to benefit from AI, both internally, but more importantly by using it to further advance our customer proposition.

Speaker 1

So key to our strategy

Operator

is the strength in our breadth and this continues to provide us with an important differentiator as different markets begin to move through their cycles at different times. It's really critical for us. And that is translating into a highly effective Brazilian business with strong operating cash flows, we've got efficient capital allocation and we're positioned well to continue to deliver sustained and profitable growth. So as a result in 2024, we're once again growing the dividend this time by 3%, but also this morning we have been able to announce a £30,000,000 up to £30,000,000 share buyback, which of course will provide additional value for shareholders. So what we're saying at the tone in which we're saying it, you'll hear that we remain excited about the opportunity for growth across our two sided marketplace.

Operator

We see that we're well positioned for sustained the profitable growth both into 2025 and beyond. So with that, can I open for questions?

Speaker 2

Thank you. You. And the first question comes from Luke Holbrook from Morgan Stanley. Please go ahead. Your line is now open.

Speaker 3

Good morning. Thank you for taking my question and thanks for providing a lot more information on the SafeSave Club. I think that's really helpful. Now you've got 1,000,000 members signed up. One of the things that I would slightly surprise me was that you wouldn't see a higher than 1% improvement in gross margin for every million customers signed up given the retention and the frequency KPIs that you're outlining today.

Speaker 3

Is it possible that that metric that you're issuing is slightly conservative? And then my second question is just more on capital allocation. You've been quite clear on the four capital allocation priorities that you have. But given you're now in a net cash position, you've done a $30,000,000 buyback, but it feels like you could have gone beyond that, either growing the dividend more or done a special dividend. I'm just wondering how you're thinking about the balance sheet into next year and maybe just why you've been a bit conservative in that regard as well?

Speaker 3

Thank you.

Operator

Yes. Thank you, Luke. I'm going to throw both of those over to Val just to say at the start though, that it's important to remember that margins are a function of mix within this business. So our Supersafe Club will provide a certain benefit as Niall will go on to describe. Obviously, the impact on the overall margin is a function of everything else that's happening, the growth in B2B, what we're doing with Quikco, etcetera.

Operator

Now why don't you take that up and then also get into capital allocation?

Speaker 4

Perfect. Thanks. I mean, I think, Luke, let me just I mean, I'll extend Peter's point in microcosm in the same way that the group is margin as a function of the mix, supersede of club margin going forward will also be a function. So what we're sort of putting forward here is the FY 2024 effect of adding 1,000,000 members and we're seeing that flow through. So, if you look at what is actually happening, it's having the effect that we wanted to have.

Speaker 4

We're growing the revenue per user because users, members are coming and doing more with us. So you can see out in the uptick in cross channel inquiry and they're also cheaper to acquire. So this year, which is the first year, that's 14% lower. And in this first year, we've had to acquire those members for the first time and then see them come back and do another thing beyond that. So, as those cohorts mature, clearly, we hope that they will come more directly to us.

Speaker 4

But at any given year, we will hopefully also be adding more members to it. So, there'll be a mixed effect in any given year going forward as well. So, we'll see that play out as we go through. And I'd say we're kind of trying to give you as much as we can here with the guidance around how we see the 2024 cohort. So that's on Super Save Club.

Speaker 4

I think then on to capital allocation, look, I think the buyback reflects our sort of ongoing commitment to sustainable shareholder returns. And in fact, you should just see this as a logical outcome of the capital allocation policy because you're kind of calling out in your question there. We looked to invest in the business for organic growth. We absolutely make sure we pay the ordinary dividend. We screen for attractive M and A to do.

Speaker 4

And as you know, we've got a very, very high hurdle around that. And then we love to do enhanced distribution. So why are we announcing it today? We're announcing it today because we've gotten to that point where we've paid off the quick return loan. We now have a net cash position, so we've got a very clean balance sheet.

Speaker 4

And announcing at the level that we've announced that gives us sort of flexibility going forward to continue with our policy, to consider further M and A as appropriate and also to provide further enhanced distributions.

Speaker 3

Understood. Thanks very much.

Speaker 4

Hopefully, thanks for the question, Luke.

Speaker 2

Thank you. We will now go to our next question. Please stand by. And the next question comes from the line of Andrew Ross from Barclays. Please go ahead.

Speaker 2

Your line is now open.

Speaker 5

Great. Good morning, everyone. I wanted to ask about the competition you've kind of called out in the statement as being a factor behind the softer gross margin in the second half. And I hope you can give us a bit more as to kind of which verticals you're seeing that competition in, just to kind of make sure we fully understand what's happening. And I guess whether you see that as a temporary or a permanent factor.

Speaker 5

And I guess as an extension to that, when we then kind of think through the gross margin dynamics in 2025, I would appreciate any color as to how to think about that because clearly Super Safe Club is working directionally as you wanted to. It's clearly giving you a tailwind to margins. But then in aggregate, the group margin has come back in the second half. So what are the kind of puts and takes that we should think about when we think about the overall gross margin into 2025 and beyond? Thanks.

Operator

Thanks, Andrew. I'll take the first bit. I'll hand the margin dynamics over to now. So look, I think at the highest level, the competitive structure of our market hasn't enormously changed. You'll know insurance, we have three price comparison competitors.

Operator

You know that in Money, our competitors are broadly ClearScore and Experian. But we have one significant competitor in terms of home services. And structurally, we haven't really seen any new players come into the market or any significant changes in how the existing players operate. But I think what we have seen, as we pointed out, is a heating up of this PTC market. Now to some degree, that is not unusual.

Operator

That sort of heats up and cools down at different points in time. But if you go back sort of four years to when I started here, you'll remember that a very core part of the early strategy was to make sure that we replatformed a lot MarTech. So we can begin to rely on direct traffic more than expensive third party media. We need to wean ourselves up on that of that. So that's what the algorithmic bidding on PPC was about.

Operator

That's what the SEO replatforming was about. That's what all the focus on data and CRM was, of course, all the work that we had done on the brands. But in saying that, obviously, PPC markets, as I say, kind of heat up, they cool down, but fundamentally, they get more expensive over the years. I think what we've seen in the latter half of 2024 and certainly into 2025 as well is perhaps our largest competitor on the insurance side losing market share and as a consequence then competing very, very heavily in the PPC markets, which has caused this sort of heating up essentially. And we then obviously have to think what that means for us.

Operator

Now, of course, we will always be very thoughtful about how and when we compete in terms of profitable growth. But importantly for us, this is all about our member based propositions. So the reason that we're doing Super State Club, the reason we're doing that, the reason we're doing QuickCo is we want to give customers reasons to begin to come directly, so we can begin to get that get that our rep traffic working as strongly as we can do. So it really reinforces the importance of the strategy that we're following. That's what we're doubling down on.

Operator

That's why we're so pleased that 1,000,000 members. That's why we're wanting to continue to grow that in Supersafe Club over 25. That has to be the answer to the competitive dynamics. Now, do you want to just talk about margin dynamics?

Speaker 4

Yes. I think a little bit as Peter was alluding to earlier, margin is a function of mix. When we think about that going forward in the second half this year, which you called out your question, Andrew, we had sort of two big things going on. One is that PPC cost escalating and the other is B2B. So we won the auto trader we announced the auto trader contract in May.

Speaker 4

So, clearly that's been growing as we've gone through the second half. And as you know, that's a sort of structurally lower margin. So, at any given period, I think we'll see that mix effect coming through. You can see in some of the numbers we put forward today, we have worked very effectively over the last number of years to offset headwinds. But as Peter said, the sort of the underlying trajectory of increasing cost in third party media is there over a number of years.

Speaker 4

So it's leaning into the clubs to offset some of that as we go forward.

Speaker 2

Thank you. Thank you.

Operator

Thanks, Andrew.

Speaker 2

We will now take our next question. Please stand by. And the next question comes from Rahul Chopra from HSBC. Please go ahead. Your line is now open.

Speaker 4

Yes, good morning. I have

Speaker 1

a couple of questions. In terms of insurance, you had 2% exit rate during the quarter. Could you just break down in terms of what you're seeing within car versus home insurance? Because I would imagine home insurance still had a higher premium inflation compared to cars. So just want to a sense of what's happening between those verticals within the insurance will be helpful.

Speaker 1

That's first question. In terms of the second question, in terms of provider services, obviously, you did call about the growth rates. Could you give a bit more sense in terms of where the scale of this business in terms of revenue numbers and the margin dynamics between B2B, Market Boost and MNC? Just wanted to understand the dynamics around that, please. Thank you.

Operator

Brilliant. Thanks, Rahul. Again, I'll throw the second question on provider services, service denial and let me start on insurance. So look, you'll know, Rahul, that we don't actually provide segmental or product level guidance. We're only as a guiding to group adjusted EBITDA.

Operator

But look, insurance, as everyone knows, is 50% of the group and of group revenue and half of that again, so 25% of group revenue is car essentially. So it is important to sort of just say what we're seeing there and how we kind of see things over the next twelve months particularly. So what I call out is clearly the Revolt documented headwinds in terms of car insurance premiums that are coming off record highs and that is something that we will see into 2025. But I think two stats that you should really equally focus on. The first is that your average car insurance premium is now 48% higher than it was pre GA.

Operator

So customers are paying more for their car insurance than they have ever paid for. And secondly, versus pre JIT, we've seen a two plus and over two times increase in the number of products, which are available to consumers to begin to buy when they come and actually search on-site in terms of what's available. So what that means is that car insurance has never been more expensive and that's good for lots of different new products out there for customers to begin to save money. And I think that is something which is really, really critical. The other thing I point to is the other half of our insurance business that is not car insurance.

Operator

So that's home, travel, life, pets. There is a whole range of services which we offer consumers where we do see growth opportunities. So whilst obviously motor insurance is a significant part of our insurance portfolio, it is not the whole story by any stretch of the imagination and there are a number of dynamics there in terms of how that should work. And I think that reflects in some of our tonality this morning in terms of where we are. And then of course, if we go a level again, the point in strength and our breadth is that we also have opportunity in money in home services in our other verticals as well.

Operator

So please see that in the round as much as you can. Niall, do you want to talk about provider services?

Speaker 4

Yes, brilliant. Ruhu, provider services, remember in there we're talking about three things. So we've got the B2B business where we're providing our platform to other audience providers. So Rightmove, AutoTraders, we talked about as big wins last year. Market Boost, which is our data offering to providers that helps providers to grow their business on our platform.

Speaker 4

And then the tenancy business, which is selective placements where providers are looking to achieve certain things by putting a placement on our sites. So, that sort of we don't break out the scale of those businesses, but they're growing quite well. In terms of the question you're asking around sort of where is the margin coming from, clearly the B2B business is different because in that business we split the CPA effectively with our partner. And so, we're achieving C and CPA, but we split that with the audience provider. And we're very happy to do that because we believe that we can then pass that traffic through the platform that we've got at very, very marginal cost.

Speaker 4

Also, whilst it's a drag on gross margin, it's still a very profitable business for us to do. So, very happy with progress this year across provider services and hopefully more to come. Thanks, Raul. Thank you very much.

Speaker 2

Thank you. We will now go to our next question. Please stand by. And the next question comes from Kieran Donnelly from Berenberg. Please go ahead.

Speaker 2

Your line is now open.

Speaker 6

Yes. Thanks for taking my questions. A few from me. Just in terms of M and A, I guess, could you just outline what you're looking for in potential acquisitions? Is it tech capabilities or access to new vertical?

Speaker 6

Or is it something along the lines of, I don't know, maybe a money saving expert to try and lean into that member based offering and kind of acquire new members through something like that? Just kind of ideas in terms of priorities for M and A going forward. And then just a few on Super Save Club. I guess, could you just outline what you see as kind of the key levers for growth in the member base going forward? And also, do you have an idea in terms of how many of the 1,000,000 members you have today?

Speaker 6

Were they previously kind of MoneySuperMarket or QuickCo active users? Just trying to get a sense of where the member acquisition has come from thus far. And also just one clarification, when you're quoting the member numbers, is that as of today or is it as of the December year end? Thanks.

Operator

So now that perhaps super safe, I'll go on to you and I'll just quickly do M and A. So back to that Kieran. Look, so our approach to M and A is we sort of look at a lot, we consider a few, we do very little, which is exactly what I think you would want us to do really and we have a very high bar that we look to evaluate any opportunity against. Our thoughts are, are there any markets that we're not currently accessing? Are there any key technologies that we don't have within the existing portfolio that we want to begin to go deeper into our value chain?

Operator

We just look at sort of areas where our consumer groups we don't currently access, I should add that as well. So we just look at things that sort of make logical sense. I think if you look at sort of the big acquisitions, the money saving, Ex Works, Decision Tech, CYTI and Quikco, you hope to see that all begins to stack up. So there's a sort of broad pipeline that we have a look at, but really we have very, very high hurdles for that to cross, which is why we're very, very considered about what we do. So I hope that answers your question.

Operator

On SuperSeat Club, there's quite a lot there actually. Now you did a bit that you think you should do and then throw it back to me if you can. Yes, okay.

Speaker 4

So I think you're asking about sort of levers for growth. I think the first thing here is obviously we want to get more members into Superseal Club. What have we been doing this year? We've been using the marketing spend that we were going to spend anyway to bring people into the club. So, as people have bought a product, we've offered them the opportunity to join the club and then a percentage of those have converted into club members.

Speaker 4

So, we still see that as a perfectly valid continuing exercise as we go into 2025 as kind of primary things. But more importantly than that, when they are there when they are then in the club, we are getting they are doing more with us now than they were before. So clearly, if you think about just the file size, we'll be trying to add members, but then we'll be asking members to do more, which will obviously grow the revenue off the club. In terms of where the existing users or where they not, I mean, I think when we talk about 14,000,000 active users, that's an inquiry based metric. So people who had run an inquiry across those two brands over the previous twelve months.

Speaker 4

So, that's a big, big number. There's probably a bigger market will be beyond that people who've ever contacted us. So, a lot of these users will have been previous at some point an MSN user, but we've never it's never been our intention to sort of only focus on people who weren't MSN users. We absolutely want those users in the club and we want them to do more with us. So it's about getting more wallet share over a period of time.

Speaker 4

So I think probably it weighs towards MSM previous users, but it would do because we've

Operator

got a big file. Yes, the only thing I'd sort of add to that, I think implicit in your question Kieran, yes, still haven't politely, you've probably not said it directly, but we're just attracting the super users. And obviously, we can through our work on data, bring it again to understand that and that is not a concern that you should have.

Speaker 6

Great. Thanks. And just that one clarification in terms of the million users, is that as of today or is as of the December?

Speaker 4

Yes, at the December it was very, very close to the even million, today it's over a million.

Speaker 6

Okay, okay. That's really helpful guys. Thanks a minute.

Speaker 2

Thank you. As there are no further questions on the phone lines, I would now like to hand back to the room for any questions on the webcast.

Speaker 7

We have a question from Ross Broads at RBC. With the Super Safe Club growing healthily, are you able to give us a steer on your share of direct traffic and how that is evolving?

Operator

I'm trying to pick that up now.

Speaker 4

I think the Super Save Club, obviously, the point is to get people in and get them coming directly. And what we're seeing here is that more people are coming to us directly when they are using the club. We don't really break out source mix, but we believe that over the long term Super Saver Club will be a positive to our direct traffic.

Operator

Yes, I think that's the point. I talk in my part of the presentation about the number of people we're seeing coming directly to club. So club is now only one of our 14,000,000 users. Obviously, as that grows, we would expect to see the direct traffic continuing to grow, but we haven't broken that down at this point.

Speaker 7

The next question is from Jess Pock at Peel Hunt. PVC inflation of 19% H2 over H1, how does this level of inflation compare with past periods? Can you give any color on which segments are more impacted?

Operator

So I think it's general jets and I think that is kind of quite a lot, but it's not that it hasn't heated up and cooled down before. So you should see this very much as a market that begins to do that. But I think it's kind of the underlying direction of travel, the PBC costs that we are also trying to flag. So fundamentally, yes, I think the 19% is a loss. I think it is quite focused on general insurance on the car and on the home side of things, but also we're seeing that generally across the piece as well.

Operator

We're seeing some of it coming through in money. We don't anticipate it's going to continue at this level, but it's very hard to call, but it's the underlying that I think we should focus on. I think that is done. So assuming that we have no more questions on the line, can I just double check that from our moderator?

Speaker 2

Hello. I can confirm that there are no further questions on the phone lines.

Operator

So brilliant. Then it just is left for me to say thank you everybody for your time this morning and joining us. We are coming out to see a lot of you over the next couple of weeks. So we look forward to continuing the conversation then once on one. So thanks for your time.

Operator

Cheers. Take care.

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