REG - PensionBee Group plc - Q3 2024 Results

PensionbeeAnnouncement

23/10/2024 16:30

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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
 Spend(3) increased by 10% year on year to £85 (YTD Sep-23: £77).

 ●    Net Retention Rate(4) which captures all underlying cash inflows and
 outflows was >100%, supported by continued strong customer satisfaction
 (4.7★ Excellent Trustpilot score(5)) 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 reviews(5) 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 Base(8) 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 Revenue(1)             24        34        41%
 LTM Revenue(15)                        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*

 

 

                                     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

 press@pensionbee.com

 +44 20 3557 8444

 Analysts and Investors

 investor@pensionbee.com

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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