PensionBee Group plc

Hello, I'm Romy Savova, the CEO of PensionBee. Welcome to our first half trading update for 2022. 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, thereby generating predictable and scalable revenue streams for our company and for our investors. Reflecting on the first half of the year, markets have, as is widely understood, exhibited unusual volatility during the first six months of this year. And yet, the need for retirement planning and pension ownership is in fact now more important than ever. Despite the very challenging market backdrop, we are pleased to see excellent growth momentum in invested customers, having added 41,000 new invested customers in the first half of this year. We are further pleased to have delivered this growth in combination with a declining cost per invested customer in the second quarter, as we continue to drive the company to full profitability in line with our anticipated timeline of 2023. not only did we deliver resoundingly high customer growth we also maintained excellent customer satisfaction throughout this period we recorded a customer retention rate of 97 and ongoing strong net flows from our existing customer base despite a very challenging cost of living crisis that has impacted everyone across the country As a result of the strong new customer growth and ongoing contributions and consolidations from our existing customer base, our AUA remained resilient, enabling us to reconfirm our medium-term financial guidance. Turning to our financial and operational highlights for the first half, I am pleased to report that our assets under administration held steady at £2.7 billion, continuing to reflect a compound annual growth rate of over 80% since 2018. We are particularly pleased to have achieved this level of stability despite the S&P 500, our main invested index, being down approximately 20% for the year to date and the FTSE 100, our second most relevant index, being down approximately 5%. We are also pleased to have attracted approximately 250,000 active customers and to have approximately 160,000 invested customers. Our registered customer pipeline is now very close to the 1 million mark. Thanks to our predictable revenue model and high retention rate of 97%, the growth in assets has translated into similar growth in revenue. Our annual run rate revenue is £17 million, also reflecting an annual growth rate of about 82% since 2018. Taking a closer look at the first half, I am pleased to report that we have added more than 40,000 invested customers, reflecting a year-on-year growth rate of over 70% and year-to-date growth of 35%. We are pleased to see the asset and revenue base each increasing by approximately 35% over the past year, despite substantial market volatility that impacts all investments. As always, our results are testament to our strategy and proposition, which continue to resonate in the enormous market of pension savers. We have previously communicated that, guided by our data model, we plan to deploy a substantial part of our marketing budget in the first part of the year. I am therefore pleased to report a deployment of about £12 million in advertising for the first half, representing a majority of our budget for the year. We deployed our budget across our prevailing top channels, search, TV and out of home. Thanks to our data, we were able to respond rapidly to a changing market environment, which affected consumer sentiment among the over 50s in particular. Our more mature target audience was less likely to take financial action this quarter, and therefore we focused on a slightly younger customer base, delivering an average new customer age of 37 compared to 39 in the first half of last year. This was achieved through deliberate changes in our paid search strategy. We deployed a greater proportion of our budget in the app store, where we tend to attract a younger audience. We leveraged our enormous brand campaign in the first quarter to support our digital acquisition activities for the second quarter. As a result, our cost per invested customer decreased to £259.60 for the quarter, in line with our expectations and guidance. We expect to continue focusing on delivering a strong reduction in our cost of customer acquisition throughout the year. Our product initiatives continued with the launch of Easy Bank Transfer in our Web Estate. Easy Bank Transfer makes it possible to contribute to your pension in 60 seconds and is now available across our product. We continue to develop our regular withdrawals feature for over 50s, which is now in the prototype phase with launch expected towards the end of this quarter. Finally, the team deployed the stronger nudge to guidance for over-50s, considering withdrawing from their pension, an important regulatory initiative. To support our ambitions, we have continued to invest in the ongoing performance of our industry-leading technology platform. We delivered further transfer efficiency improvements, internal automations and information security enhancements to support growth, productivity and information security. This is evident in our increasing efficiency with invested customers and revenue per FTE demonstrating strong annual improvements in line with increasing operational leverage. Many of these improvements were designed to support our customer service team, enabling us to continue delivering a high quality of service despite substantial growth and exceptionally volatile markets that impacted our customers' pension balances. We are pleased to have maintained our excellent ratings across Trustpilot and the app stores. With regards to our investment offering, as previously communicated, we have been searching for an innovative and distinctive impact-led investment plan and after rigorous customer testing, this search has now concluded. We will provide more details soon regarding the anticipated launch timeframe. And now I'd like to hand over to our CFO, Christoph Martin, who will take you through the financial outcome for the first six months.

Thank you very much, Romy. Hello and a warm welcome from me to everyone. I'm pleased to cover the financial section of the first half trading update. The first half has demonstrated the strong resilience of our EOE. We generated close to half a billion pounds of net inflows over the period. While this would have resulted in an AOA base of more than 3 billion pounds and close to 20 million pounds of ARR for June, as is many other companies in the wealth industry, poor markets have reduced the AOA by approximately 15% in our case, resulting in a stable asset base for us relative to the end of last year. Next, I would like to highlight the asset contributors in more detail. First of all, we have driven growth through new customer acquisition. Our agile marketing approach enabled us to onboard more than 41,000 new invested customers representing the majority of asset growth over the period at £353 million. The average consolidated pension pot was slightly smaller than usual, owing to market volatility that reduced pension pots around the country, as well as reflecting a younger average new customer. Overall, the average pot size was approximately £17,000 at the end of H1. Secondly, we have driven asset growth through existing customers who have continued to accumulate pension savings with PensionBee. Growth from existing customers over the period represented 128 million pounds of AOA. Net flows from existing customers together with new customers contributed circa 481 million pounds of asset growth over the period. We will comment on the quality of lifetime value generating, on the back of our strong retention rates and continuous net flows from existing customer base, more specifically on the next page. Lastly, as previously mentioned, we have been impacted by market volatility. As it is customary, pension assets are invested in global capital markets, which have been impacted by a number of macroeconomic factors, including increasing inflation, rising interest rates and geopolitical tensions. Global market volatility reduced the area by circa 15%. In summary, our area demonstrated resilience against the backdrop of market decline and exceptional volatility thanks to strong net flows from new and existing customers. As a long-term business, the lifetime value of our customers is of great importance. Lifetime value is predominantly driven by a high retention rate and recurring and compounding asset growth from existing customers. First, as you can see on the charts on the left-hand side of the page, we are pleased to report a continuous improvement of our customer retention rate, which is in excess of 97% for 2022. Secondly, on the right-hand side of the slide, we demonstrate cumulative net flows excluding market growth by customer cohorts. All customer cohorts delivered positive net inflows in 2022, even the very early cohorts acquired in 2016 to 2018. This serves as a good reminder of the long-duration compounding nature of the underlying business. With an average age in the late 30s, our customers demonstrate a long-term commitment to saving with PensionBee, growing their assets with us every single year. In summary, generating lifetime value on the recurring and compounding asset growth from existing customer cohorts is evident in both high customer retention rate and continuous net inflows across all cohorts. We have turned our asset growth into a recurring and predictable revenue stream thanks to our resilient contractual gross revenue margin. By way of reminder, the contractual gross revenue margin is the annual fee charged to customers before applying any discount for pension pots over £100,000. This again remained resilient across the first half at 69 basis points. As already communicated, we executed on our plan to accelerate marketing expenditure in the first half, priming us for lower-cost marketing growth for the rest of the year. On a trailing 12-month basis, we have seen an improvement in adjusted EBITDA to negative 152%. Looking at profitability, we reconfirm the guidance around adjusted EBITDA profitability being profitable before marketing investment by the end of 2022 and adjusted EBITDA profitability by the end of 2023. To conclude, we have converted asset growth into revenue growth thanks to the resilient contractual gross revenue margin and we have continued to scale the business operations. The majority of proceeds we raise during the IPO were earmarked for marketing spend and therefore close monitoring of that spend is critical. We routinely evaluate the attractiveness of marketing expenditure within the unit economics return framework, which includes a cost and return component. On the cost side, we measure cost per invested customer, which represents the unit cost of our marketing investment. I will cover the cost side on this slide while the return or lifetime value component I will cover on the next. As guided, we accelerated marketing deployment in Q1, which saw a temporary increase in CPIC to £268. As guided, we brought the CPIC down to below the £260 mark and expect the CPIC to continue to reduce over the course of 2022 for two reasons. First, a reduction in the velocity of marketing expenditure we expect the marketing deployment over the next quarters to be significantly below the h1 costs as we expect to have spent 60 to 70 percent of our total marketing budget in h1 Second, the impact of the upfront marketing investment, meaning that conversion into invested customers has a longer time period to take effect for the remainder of 2022, thereby reducing CPIC as we approach year end. In summary, as guided, we expect CPIC to have peaked at the end of the first quarter and we are now focused on continuing to reduce the cost of customer acquisition with more moderate marketing spending levels and an increase in lower cost marketing activities and capitalize on our growing brand awareness. It is very important to view the cost of acquisition together with the expected return on that investment in order to evaluate the return potential of the marketing investment as shown in the illustrative unit economics example. The unit economics framework includes a cost and return component and the multiple of return over the cost guides to the attractiveness of the marketing investment. With regards to the cost component, we pay a one-time cost to acquire a given customer to come to our technology platform, which I covered on the previous slide. With regards to the return component, once on the platform, a customer builds their pension savings with the company over the long term, evidenced in the high retention rate. This translates into a recurring and predictable revenue stream over many years. We then pay to our money manager partners and bear the cost to serve customers on our scalable technology platform. The remaining profit accrues to PensionBee and generates lifetime value. The illustrative unit economics of the return over cost calculation with simplified assumption indicates that PensionBee deploys marketing capital with attractive returns of mid to high single digit multiples. I will now hand back to Romy to cover guidance, investment highlights and further updates.

Thank you very much, Christoph. Given the performance to date, we are pleased to reconfirm our medium-term financial objectives. We continue to experience high double-digit revenue growth and consistent revenue margins. Over the short term, we expect market volatility to continue to play an important role in the revenue outturn. We had previously stated that we expect revenue to exceed £20 million given stable markets, and since markets have been very unstable, we believe it prudent to consider a range of market outcomes for the rest of the year, including further declines in our main indices, the S&P 500 and the FTSE 100. we are pleased that our revenue remains resilient against this backdrop with an expectation of 17 to 20 million pounds under a range of different market scenarios reflecting an extraordinarily high retention rate and strong net flows from new and existing customers We will continue to manage our marketing budget flexibly and with a return-oriented mindset, making that expenditure work even harder to acquire new customers. Our priority continues to be the achievement of near-term adjusted EBITDA profitability by the end of 2022 and overall adjusted EBITDA profitability by the end of 2023. As you can see, PensionBee continues to take advantage of the vast and growing UK defined contribution market. Our differentiated customer proposition and scalable technology platform have been designed to serve an enormous customer base. Our successful brand building and customer acquisition activities have enabled us to grow with a clear path to profitability and I and the rest of the executive team are committed to continuing on this path to serve our customers. We look forward to engaging with investors and to the publication of our interim results in September. Thank you for your time today.