PensionBee Group plc

Hello, I'm Romy Sovova, the CEO of PensionBee. Welcome to our trading update for the first half of 2021. For those of you who are new to the PensionBee story, we are a leading online pension provider in the UK. We exist to make pensions simple so that everyone can look forward to a happy retirement. We enable our customers to combine their pensions into one new online plan with money managed by the world's largest asset managers. We aspire to build a lifetime relationship with our customers, generating predictable and scalable revenue streams for our company and for our investors. As you know, we raised £55 million in a successful IPO on the high growth segment of the London Stock Exchange. We were incredibly pleased with the investor support we received for our strategy to continue our rapid growth trajectory and the ensuing results for the first half of 2021. Our customer-centric offering continued to resonate with the UK population and we benefited from the ability to grow into the enormous UK defined contribution pensions market. As a result, we delivered strong financial performance for the first half of the year, as reflected in the growth rate of our customer base, assets under administration and revenue. Turning to our financial and operational highlights for the first half, I am pleased to report that our assets under administration increased to £2 billion, reflecting a compound annual growth rate of over 100% for the period since 2018 and underscoring the growth story of PensionBee. These assets were invested on behalf of 92,000 customers. Our active customers exceeded 150,000 and our registered customers increased to over half a million, creating a healthy pipeline of future invested customers for PensionBee. The growth in assets has translated into a growth in revenue. We are internally monitoring our annual run rate revenue, which is our annualized monthly revenue. Because our retention rate has consistently been above 95%, we have good reliability of our future revenue streams. meaning our annual run rate revenue provides a solid foundation for considering the underlying revenue generation capability of PensionBee at that point in time. As of June 2021, our annual run rate revenue was over £12 million. Examining the first half of the year in particular, our invested customers grew by over 80% and our assets under administration grew by close to 120% year on year, with similar increases reflected in our annual run rate revenue. The growth in our AUA reflects of course healthy markets, but also an increase in the average pension pot being transferred to PensionBee over the past year. Underpinning our growth has been the successful execution of the strategy we have been operating over the last years and which we communicated at the IPO. First, our efficient investment in customer acquisition and brand awareness. As in 2020, the majority of our marketing spend was deployed in our top three channels – TV, Art of Home and Paid Search. You may have seen one of our Feel So Good campaigns somewhere near you, as we advertised on over 4,500 billboards across the country, creating close to 450 million impressions. As always, we used our data to optimise our digital channels and to attract more and more customers efficiently. We were also pleased to become the official pension partner for the Brentford Bees shortly before their historic admission into the Premier League. We continue to innovate on our product with a particular focus on improving our efficiency. Our new transfer tracker allows our customers to see exactly which stage their pension transfer is at, reducing the need for them to proactively contact us. Similarly, our new push notifications will allow customers to take direct actions in the app without the need to interact with our team. In addition, we have deepened our integrations with several pension providers, extending our proprietary relationships and the efficiency of our mutual communication. As a result, our invested customer to employee ratio is expected to continue improving over the course of 2021. We continue to invest in our technology over the first half of the year. As you know, at PensionBee, we place a huge importance on our data capabilities and have been investing in a new data platform that allows us to monitor and visualize all of our data in real time so as to optimize our decision making. The first use case for the data platform has been the real-time tracking of our customer journey, with the objective of optimizing our cost per invested customer while continuing to deploy marketing capital rapidly. An example of this capability in action is our Google AdWords campaigns, where we can monitor effectiveness to the exact keyword and track the capacity of that keyword to deliver AUA onto our technology platform. We increasingly see a transition from cost per invested customer to cost per AUA in our future KPI tracking. I mentioned that we have invested in our product efficiency to reduce the need for customers to contact us. However, when a customer does contact us, we want their experience to be delightful, and therefore we pay close attention to our Trustpilot rating, which has remained at 4.7 stars, even with close to 5,000 reviews from our happy customers. Happy customers are, of course, customers who stay, helping us to fulfill our ambition of being with our customers for a lifetime, from the ages of 18 to 80. And finally, we continued our ongoing engagements with our asset management partners as we continued to consider the optimal product range for our customers. Earlier this quarter, we confirmed that we had received £724,000 from State Street Global Advisors in relation to an error made by FTSE Russell in one of their indices. This payment will be used to further invest in our team and product capabilities to deliver on our growth strategy. And now I'd like to hand over to our CFO, Christoph Martin, who will take you through the financial update for the first half of the year.

Thank you, Romy. Hello and welcome. I would like to cover the financial section of the trading update. PensionBee is a growth story as reflected by the strong growth over the past years and I'm pleased with the strong asset growth in 2021 to 2 billion pounds of EOE as of June. Over the first half of 2021 we have added 630 million pounds in total assets of which the majority of roughly half a billion pounds was coming from underlying net flows excluding markets. I would like to go one level deeper into the data analytics and highlight the asset growth drivers in more detail. The three main asset drivers are number one, growth from new customers, number two, growth from existing customers, and number three, market growth. First of all, we have driven asset growth with cost-disciplined new customer acquisition. Growth from new customers presented the majority of asset growth in the first half of the year with £360 million or 50% of total asset growth. Over the first half of the year we acquired 23,000 revenue generating invested customers and with coming onto the platform with a higher average pot size therefore being accretive to the average pot size figure which reached £21,600 as of June 2021 compared to £19,600 at the end of last year. Secondly, we have driven asset growth with existing customers on our platform who continued to accumulate their pension wealth with PensionBee. Growth from existing customers was strong in the first half of the year by adding £166 million. Therefore, existing customers together with new customers net inflow contributed almost 80% of total asset growth in the first half of the year. Since the inception of the company, we have seen a high customer retention rate of 95% plus. This means that customers remain on the platform and build their pension wealth with PensionBee. The first half of the year was a continuation and we remained above our 95% plus customer retention rate. In addition to staying on the PensionBee platform, customers have continued to consolidate further pension with the PensionBee POT and contributed to their pension with an overall low level of withdrawal. We therefore recorded a continuation of the roughly 5% annualized underlying cohort growth for the first half of the year, which captures consolidation, contributions, transfers out, withdrawals, and the pension BFE, and does exclude any market appreciation. This dynamics of high customer retention coupled with underlying cohort growth generates attractive lifetime value for the company. Thirdly, growth due to market depreciation, as it is customary in the industry, pension assets are invested in capital markets which performed well in 2021 and therefore benefit on the back of market depreciation. In summary, both cost-disciplined new customer acquisition of higher port size customers and existing customers retained on the platform who increased their pension wealth with PensionBee have driven strong asset growth in H1. We have turned that asset growth into recurring and predictable revenue streams thanks to our resilient contractual gross revenue margin. The contractual gross revenue margin is the all-in fee we charge our customers before applying any discount, which remained at 69 basis points for June 2021. This meant that we converted the 117% of year-on-year asset growth into 114% of annual run rate revenue growth, translating into an ARR of £12.3 million for June 2021. We have generated operating leverage in the first half of the year thanks to the scalability of the technology platform. One of our profitability measures is adjusted EBITDA reflecting profitability prior to considering any growth marketing investment. We have seen an improvement of that metric from negative 45% for the first half of last year to negative 28% for the first half of this year, underscoring the scalability of the technology platform. The second profitability metric is adjusted EBITDA and captures marketing growth investment, which I will cover separately in the next two pages. In summary, we have converted asset growth into revenue growth thanks to the resilient contractual gross revenue margin and we generated operating leverage in the first half of the year. The majority of proceeds we raise during the IPO are earmarked on marketing spend and therefore a disciplined and rigorous monitoring of that spend is critical. We evaluate the attractiveness of the marketing deployment with the unit economics return framework, which includes a cost and return component. The cost side, or customer acquisition cost component, or CPIC, how we call it, of our marketing investments I will cover on this page, while the return or lifetime value component I will cover on the next page. Thanks to our data-driven acquisition approach, we have continued scaling up our capital deployment into marketing in the first half of the year. Due to the fact that the IPO proceeds were raised in April and we started spending in May and particularly June, we saw a modest uptick for June CPIC as customers are still converting into the second half of 2021. However, the overall CPIC remained in line with our desired threshold range of 200 to 250 pounds per invested customer. In summary, we utilize a methodological approach to marketing investments to ensure healthy growth and continue to grow in a cost-disciplined way in the first half of 2021. We are generating healthy returns on the back of our marketing investments, as shown in the illustrative unit economics example. The unit economics framework works as follows. There is a cost and return component and the multiple of return over cost guides to the attractiveness of that marketing investment. With regards to the cost component, we pay a one-time cost to acquire a given customer to come to our platform, which are covered on the prior page. with regards to the return component. Once on the platform, a customer builds their pension wealth with the company over a long time, evident in the high customer retention rate of 95% plus. This translates into recurring and predictable revenue over many years. We then pay a fee to our money manager partners and bear the cost to service the customer using our scalable technology platform. The remaining profit is accruing to PensionBee and generates lifetime value for the business. Illustrative unit economics of return over cost calculation with simplified assumption indicates that PensionBee deploys marketing capital with attractive returns in the mid to high single digit return multiples. In conclusion, PensionBee uses the unit economics return framework to evaluate the attractiveness of capital deployment into marketing, optimizing for a mid to high single digit return multiple on marketing expenditure. I would like now to hand back over to Romy to cover the outlook for the rest of the year.

Thank you very much, Christophe. As you can see, we are pleased with the performance achieved over the past quarter and strides we continue to make over the longer term. As a result, we are also reconfirming the medium-term financial objectives and guidance communicated at the time of the IPO. Very simply, we remain on track and continue to execute on PensionBee's ambitious growth plan. For the rest of 2021, we expect to deliver revenue growth in line with our market guidance of high double-digit growth. We will continue our rapid investment in marketing and our product innovation to wow our customers with the features they deserve. To deliver this, we will be continuing our investment in people and in our technology as we also prepare for 2022. Our adjusted EBITDA margin is expected to be broadly in line with market expectations for the year and we remain committed to achieving monthly break-even by the end of 2023 as communicated during the time of the IPO. We will, as always, keep you updated and look forward to providing a trading update after the third quarter. Thanks for taking the time to hear about our progress over the course of this year.