PensionBee Group plc

Hello, I'm Romy Sovova, the CEO of PensionBee. Welcome to our 2022 results presentation. 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 pension 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 our aspiration is to build a lifetime relationship with our customers generating predictable and scalable revenue for our company and for our investors PensionBee operates in the vast £700 billion market of transferable defined contribution pensions. Over 2022, the market for transferable pensions was resilient, underpinned by automatic enrolment and growing national awareness of the importance of pensions and savings. Against this backdrop, PensionBee continued to position itself as the pension provider of choice, increasing our brand awareness to over 50% and achieving household brand name recognition. We continued to use our data platform to gain actionable insights with respect to our marketing expenditure and thereby reduced our in-period cost per invested customer in the second, third and fourth quarter of 2022. Ultimately, these achievements will support a long-term decline in the cost of customer acquisition for PensionBee. At the same time, we continue to invest in our secure and scalable technology, releasing innovative new features for our customers, such as easy bank transfer, regular withdrawals and our impact plan. We look forward to continuing our growth trajectory in 2023, which will see us making headway in achieving our 2% market share target and reaching 1 million invested customers in the medium to long term. We are also delighted to announce an upcoming partnership to offer life insurance products to our customers so they can continue to plan confidently for a happy retirement. 2022 has been characterized by our dedication to serve our customers. We continue to help them prepare for retirement. We help them to combine their pensions, make additional contributions and use their tax benefits, invest in line with their objectives and values, and make easy withdrawals. As a result, despite the volatile macroeconomic backdrop, we grew our assets under administration to over £3 billion. We welcomed 66,000 new invested customers, resulting in a total invested customer base of 183,000 invested customers. We continue to offer consumers an excellent service, as reflected by our sustained customer retention rate of over 97%. At the same time, our revenue reached £18 million, growing by 38% over the year. PensionBee has been and will continue to be successful in part because of the enormous need for our services in the £700 billion market of transferable defined contribution pensions, which has grown by more than 60% from 2015 to 2019. there is approximately £1 trillion in defined contribution pension assets in the UK, of which about £700 billion are resting in pensions that are not actively receiving employer contributions. The 25 to 30 million consumers who own these pensions are often burdened by difficult administrative processes to manage them and ultimately to prepare for retirement. Our easy-to-use online pension enables our customers to make the most of their money. We expect the need for PensionBee to continue growing, underpinned by the regulatory commitment to automatic enrolment, regular job switching that generates more dormant pensions, and a growing national consciousness of the importance of pension savings. Indeed, the awareness of pensions as a critical component of personal financial health has grown over the past year, as demonstrated by online search activity for pension-related topics. At the same time, PensionBee data demonstrates that transfers have continued to grow as the company completed 125,000 pension transfers in 2022, compared to 65,000 transfers just two years ago. Similarly, the average pension contribution increased from £507 per invested customer in 2020 to £628 per invested customer in 2022. Conversely, the average withdrawal per withdrawing customer reduced by about 20%, as consumers considered the impact of the cost of living crisis on their discretionary expenditure. Not only have defined contribution pensions remained resilient in 2022, they are set to continue growing in importance. The latest government data indicate that the vast majority of working-age people are expected to have some form of defined contribution pension savings by 2060. At the same time, there is an increasing expectation that mandatory contribution rates into defined contribution workplace pensions will rise this decade. As a result, the underlying trends for PensionBee's core target market have been and continue to be supportive. in recognition of the growing national awareness of retirement savings we have invested in making the pension b brand synonymous with pensions having grown our customer base to 183 000 invested customers And having invested £45 million in our marketing activities since inception, we are proud to have achieved household brand name recognition in the UK, as reflected by prompted brand awareness of over 50%. We have been disciplined in our marketing investment, maintaining a cumulative cost per invested customer of £200 to £250 and using our data insights to drive the appropriate return on our marketing expenditure. As a result, and fuelled by the growing recognition of the PensionBee brand, we reduced the in-period cost per invested customer in the second, third and fourth quarters of the year. We expect our growing brand awareness and use of data to continue to enable us to maintain efficiency in our marketing activities and to reduce the cost per invested customer over time. Over 2022, we also continue to invest in our technology. Our technology stack is scalable and secure, built in-house with the purpose of serving our customers. Efficiency and productivity have been and continue to be a key theme as we progress on our medium to long-term objective of onboarding 1 million invested customers. To that end, we focused on automation, further enhancements to our pension transfer journey and essential self-service features for our customers, such as rapid contributions and intuitive withdrawals. As a result, we increased our ratio of invested customers to staff members, demonstrating operating leverage in our technology. Over 2022, we maintained 99.9% uptime and a response rate of 128 milliseconds on customer-facing systems. Our rapid deployment cycle enabled us to make approximately 1700 releases in the year. As we continue into 2023, we are focused on delivering against our strategic pillars. We will continue to invest in acquiring customers efficiently. Having achieved household brand name recognition, we are well positioned to continue to reduce our cost per invested customer this year. We will further enhance our brand awareness using efficient channels and use the insights from our data to optimize our performance channels. We remain focused on delivering innovative and useful features for our customers through our product. As a trusted companion to our customers, this year we will deliver them more targeted and engaging content, helping them to grow their pensions with us by keeping them well informed. We will also offer further engaging features with respect to their investments, helping our customers to understand how they can prepare for a happy retirement through savings in the capital markets. Finally, we will soon be introducing a life insurance partnership with LifeSearch, a leading broker for life insurance products in the UK, to help our customers maintain peace of mind while they prepare for later life. This year, we will also continue to invest in our scalable and secure technology. We will continue to make pension transfers more efficient to support our objective of serving 1 million invested customers. We will also expand the use of our data platform across the business, helping our team to make more data-led decisions as we serve our customers. And of course, we will continue to invest in information security through our proprietary Be Secure program, which increases the education and technical sophistication around our cybersecurity activities at the company. While we hope our customers will enjoy their online experience, if they do need support from a human, their personal beekeeper, we will continue to maintain industry-leading response times. We are proud to pick up the phone in under two minutes and to respond to live chat in 30 seconds or less. 2022 was also important to us from an investment perspective. Having worked with our customers and BlackRock to create a plan that enables our customers to address the world's great social and environmental problems while saving for retirement, we were pleased to launch the impact plan in February. Our focus this year will be on embedding the plan into our offering and maintaining value for money across our range of investment products. I will now hand over to Christoph, who will provide a financial overview of 2022 and the outlook and guidance for 2023 and beyond.

Thank you very much, Romy. Hello and a warm welcome to everyone. I am pleased to cover the financial section of our update. In this finance section, I will start with a brief overview highlighting some important elements of the PensionBee business model and the significant market opportunity. Second, I will cover the long-term compounding nature of our AOA which is underpinned by strong net flows from new and existing customers and high customer and asset retention rates of around 97%. Third, we will review the profit and loss statement demonstrating the ability of our scalable technology platform to drive operating leverage and achieve profitability on an adjusted EBITDA basis by year end. Next, we will touch on the balance sheets and a healthy capital position that sees us reaching ongoing profitability without the need for any further primary capital. And lastly, thanks to the vast and structurally growing market opportunity that lies ahead, strong customer acquisition capabilities and our scalable technology platform We expect PensionBee to further evolve into a high-growth, high-margin business in the long term. Next, we will turn to look in detail at how our business model works. Our growth strategy is underpinned by the attractiveness of the market opportunity. Our core target market, the transferable pensions mass market, is vast at approximately £700 billion in pension assets as of 2019. We address that mass market opportunity by solving genuine customer problems. The customer journey often begins with the consolidation of prior pension pots, enabling customers to place the pension savings into one of a simple selection of funds. Our customers' pensions are then invested with our money manager partners, which are amongst the world's largest and most reputable investment institutions. We offer competitively priced solutions at an all-inclusive fee of 50 to 95 basis points. The average realized fee is 63 basis points. we pay a variable percentage fee of between 15 to 20% of debts to our money manager partners and keep the remainder on our own accounts. Thanks to the power of our scalable technology platform, we can serve an ever-increasing customer base in an efficient way, which we see in the achievement of operating leverage over time. Technology platform costs are predominantly fixed in nature and capture costs relating to our employees, technology platform subscription and other corporate expenditure. Lastly, we invest in marketing to drive current and future growth and are pleased to have achieved household brand name status with prompted brand awareness in excess of 50%. Strong brand awareness supports our customer acquisition capabilities, leading to a reduced cost per invested customer over time. In conclusion, we operate in a vast and structurally growing market and serve the needs of the mass market of the UK consumers. Our business model sees us generating recurring and predictable revenue accompanied by our ability to drive operating leverage as we continue to grow. Our high customer retention rates of 97% coupled with the nature of our customer base on average mid-career savers in the pension accumulation phase leads to compounding AOE. As you can see on the left of the page, we show cumulative net flows, including market growth by customer cohorts. All customer cohorts delivered positive net inflows across 2022, even the early cohorts acquired across 2016 to 2018. This serves as a good reminder of the long duration compounding nature of the AOE and revenue streams. With an average age in the late 30s, our customer continued to demonstrate a long-term commitment to saving this pension fee, growing the assets with us every single year. On a total AOA basis, the last 12 months have demonstrated the strong resilience of our AOA and continue to grow even despite challenging global capital market conditions. We generated close to 900 million pounds of net inflows over the period. Had markets been stable, this would have resulted in an EUA base of close to 3.5 billion pounds. However, as is the case for all companies across the sector, poor markets have universally impacted EUA. Nevertheless, we closed the year at just over 3 billion pounds of ERA, representing an increase of 17% on 2021. To summarize, generating lifetime value from recurring and compounding asset growth from new and existing customer cohorts is evident in the achievement of both high customer retention rates and continuous net influence across all cohorts. Next, we take a closer look at how we generate operating leverage on our path to profitability as we serve our customers with our scalable technology platform. A very important milestone in 2022 was the achievement of our adjusted EBITDA before marketing profitability target in the fourth quarter of 2022. A precursor to the ongoing adjusted EBITDA profitability milestone expected by the end of this year in line with guidance and expectation. Adjusted EBITDA profitability is in sight owing to the combination of our recurring revenue on the one hand and the scalable technology platform and carefully managed cost base on the other, as outlined as follows. With regards to revenue, thanks to our high customer and asset retention rates of 97% with a mid-career customer base and accumulation phase, as well as a stable realized revenue margin, our revenue is recurring in nature. In fact, despite market volatility in 2022, we grew revenue by 38% year-on-year to reach 18 million pounds. Turning to the cost pace, the technology platform costs are a key driver of operating leverage. The technology platform cost bucket increased in 2022 by 27% to £17.8 million owing to investments in product improvements, feature releases and automation initiatives. Thanks to all of those investments into the technology platform, we are well-placed to continue to drive operating leverage for 2023. Another key driver of operating leverage is more efficient marketing investment. We invested 16.6 million pounds in marketing for 2022, which allowed us to increase our brand awareness to over 50%. and which corresponded with a reduction of customer acquisition costs over 2022. At the end of the year, the marketing investment placed us into a very strong position for 2023 and will enable us to reduce marketing expenditure this year while growing to keep advantage of the substantial market opportunity ahead of us. In conclusion, thanks to high customer retention rates and associated recurring revenues, combined with our scalable technology platform and cost base, we are looking forward to continuing to drive operating leverage and expect to achieve our next big milestone of full ongoing adjusted EBITDA profitability by the end of this year. A word on our balance sheet. We have a strong cash and capital position and, as at the end of the year, had £21 million in cash, which will facilitate expenditure this year prior to achieving ongoing adjusted EBITDA profitability by the end of 2023. With regards to our forward-looking expectation and guidance, we are happy to reiterate the framework shared at the beginning of the year. The market reserve is vast with around £700 billion of pension assets as of 2019 and continues to structurally grow as evidenced by greater than 60% growth from 2015 to 2019. We expect it to continue benefiting from the structural shift from defined benefits to defined contribution pensions and growing contribution rates. Over the next 5 to 10 year horizon, we expect to capture a 2% market share of this enormous market, which would translate into serving about 1 million invested customers with an average pension balance of 20 to 25,000 pounds, resulting in revenue opportunity of 150 million pounds in the long term. Given the scalability of our technology platform and our ability to manage the cost base, we expect to achieve a long-term adjusted EBITDA margin of more than 50%. In the short term, we are focused on the achievement of full profitability on an adjusted EBITDA basis by the end of this year. Year-to-date trading has been strong, driven by net flows from new and existing customers, and we expect to continue to execute against our business plan for 2023. I will now hand back to Romy to cover the investment highlights.

Thank you very much, Christoph. As you can see, PensionBee is a leading online pension provider, solving genuine problems for its customers as they prepare for retirement. We operate in the vast £700 billion transferable pension market, serving a broad consumer opportunity. Our household brand name status, the result of years of investment, is enabling us to grow while reducing our cost per invested customer. Our scalable technology platform leaves us well positioned to deliver on our financial ambitions. Our simple long-term business model demonstrates growth and increasing operating leverage as we move into adjusted EBITDA profitability this year. Our committed leadership team is here to serve our customers and our investors. Thank you for your time today. We look forward to engaging with investors.