PensionBee Group plc

Hello, I'm Romy Savova, the CEO of PensionBee. Welcome to our Q4 2023 results presentation covering trading for the 12 months to 31 December 2023. 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. We enable them to make contributions, to invest in line with their objectives, with money managed by the world's largest asset managers, and ultimately to make withdrawals and enjoy their retirements. 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, and over the course of 2023, we continue to grow our market share. We added approximately 46,000 new invested customers, taking the overall invested customer base to approximately 230,000 invested customers. With 25% year-on-year growth in invested customers and an over 95% retention rate, we grew our assets under administration by approximately 44% year-on-year, reaching £4.4 billion in AUA. We generated £24 million of revenue in the last 12 months, representing annual growth of 35%. Our annual run rate revenue increased to £28 million. Over the past quarter and year, we have advanced our strategic goals. We spent approximately £9.7 million on marketing initiatives in 2023, bringing our total investment in the PensionBee brand to £55 million. As a result, we maintained our brand awareness and drove new customer growth. We focused on reaching millions of customers through cost-effective brand channels such as YouTube and TikTok. We have continued to use our insights from our data platform to optimize our marketing performance channels. As a result of our endeavours, the cost per invested customer continues to demonstrate a downward trajectory in line with our expectations and we recorded a cumulative cost per invested customer of £241 and a 2023 cost per invested customer of £212. Over the last quarter, we also continue to develop our product offering for our customers. We are incrementally rolling out new features that encourage our customers to engage with PensionBee. Our data shows that engaged customers are more likely to grow their pensions with us and are therefore more likely to enjoy the type of retirement they deserve. Customers can now enjoy more content in our app, including our award-winning podcast. They can also use our updated free tools and calculators to increase their confidence in their retirement plans. We've further enhanced our online withdrawal journey for customers, enabling them to pay themselves a salary in retirement directly from the app. We have also invested in the scalability of our technology through a focus on internal automation, efficiency, security and pension transfer improvements to support productivity. We continue to prioritise our customers' cyber safety and we are pleased to have re-certified to the world-leading ISO 27001 Information Security Standard at the end of the year. While automation and efficiency are a core aspect of our value proposition, we are proud to deliver industry-leading customer support, as demonstrated by live chat and phone waiting times of 15 and 23 seconds respectively. Consequently, we continue to enjoy high ratings from our customers, including over 10,000 Trustpilot reviews supporting our excellent rating. Our customers' positive feedback gives our team great purpose and inspiration. Finally, we continue to remain focused on our investment range, learning about new developments in the area and ensuring we deliver value for money. We will soon begin our annual investment plan review, assessing our plans and their alignment with our customers' needs and expectations. I would now like to hand over to our Chief Financial Officer, Christoph Martin, who will cover the financial update for the quarter and year.

Thank you very much, Romy. Hello and a warm welcome to everyone. I'm pleased to cover the financial section of the Q4 trading update. First and foremost, we are very pleased to deliver on the important profitability milestone over the fourth quarter of 2023 by generating adjusted EBITDA of more than half a million pounds in that quarter. In addition to achieving this important profitability target, we also delivered on another year on strong growth. Those achievements reflect our deliberate efforts to balance profitability with continuous high growth of the business. I would like to start by covering our growth performance on this and the next page, then elaborate on our profitability after. Last year, we demonstrated our continued ability to grow as we reached 4.4 billion pounds of AOA at the end of December, having added close to 1.3 billion pounds of AOA in 2023. I would now like to highlight the asset growth drivers in more detail. First of all, we have driven growth through new customer acquisition, adding approximately 46,000 new invested customers with net flows from new customers representing the majority of asset growth at around £729 million. The average age of customers joining our platform was approximately 40. and the average account size of each invested customer was approximately £16,000, representing an increase of more than 50% to 2022. Second, 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 £127 million of AOA, Net flows from existing and new customers contributed 857 million pounds of asset growth over the period. Third, as it is customary in the markets, pension assets are invested in capital markets and we benefited from market appreciation. To summarize, both cost-disciplined new customer acquisition and healthy net flows by existing customers retained on the technology platform have driven strong asset growth in 2023. We continue to deliver consistent and robust growth from existing customers through our high retention rates, recurring and compounding asset growth, which subsequently translates into strong revenue growth thanks to our resilient revenue margin. We are pleased to report continuous high customer and AOA retention rates of greater than 95% of existing customers who are continuously consolidating further pots, contributing into their home pension pots at PensionBee. Similar to previous periods, the data showed all customer cohorts delivered positive net inflows in 2023. This serves as a good reminder of the long-duration, compounding nature of our AOA base. With an average age of around 40, our customers demonstrate a long-term commitment to saving with PensionBee, growing the asset with us every single year. Next, we converted the compounding asset growth into recurring revenue, thanks to our resilient, realized revenue margin of around 64 basis points. As a result, we converted the asset growth into revenue growth of 35%. In summary, we continue to deliver consistent recurring revenue growth thanks to our compounding nature of our AOA, high retention rates, continuous net flow generation across cohorts and stable revenue margin. In addition to driving strong growth, we have delivered on our long-standing goal of achieving our profitability targets in Q4 2023. consistent with guidance since our initial public offering in 2021 and despite substantial macroeconomic volatility we have witnessed over the previous few years. The achievement of our profitability objective underscores the predictable nature of our business model. On this page, we shed more light on the two building blocks that allowed us to deliver on our profitability objective and the implications into next year, where we expect to deliver full-year profitability for the financial year. The first building block is to continue driving recurring revenue thanks to our compounding nature for EOE and resilient, realized revenue margin, which we covered on the previous pages. The second building block is the operating leverage in our cost base, which can be broadly categorized into three buckets. First of all, effectiveness of our discretionary marketing budget. We were able to achieve more with less in 2023 by spending almost half the marketing budget while achieving higher gross inflows compared to previous year. Second, the scalability of our technology platform and other operating expenses. Our technology platform costs are a key contributor to driving operating leverage and achieving ongoing profitability. The scalability of our technology platform is underscored by the fact that technology platform expenditures only grew by circa 9%, while revenue grew by 35% year on year. Third, money manager costs, which were variable in nature, growing only 16% year on year. Therefore, we delivered strong growth while at the same time demonstrating the ability for cost control to deliver our profitability objective. This also serves as a read-across for 2024, where we expect to deliver a profitability target with strong growth driven by net flows from new and existing customers, coupled with continuous strong cost discipline thanks to ongoing automation and efficiency improvement efforts. A word on our balance sheets. We have a strong cash position, recording £12.2 million in cash at the end of December. I will now hand back to Romy to conclude on our trading update with our guidance, a look back on 2023, our investment highlights and further updates.

Thank you very much, Christoph. We are pleased to reiterate our guidance confirming that we aim to deliver sustained high revenue growth. While we have demonstrated significant growth to date, we remain of the view that our focus on the mass market of pension savers will enable us to deliver substantial further growth as we pursue a market share of 2% of the £700 billion transferable pensions market over the next 5 to 10 years. We are preparing to onboard approximately 1 million invested customers with £20,000 to £25,000 in their pensions, creating a revenue opportunity of about £150 million in the long term. At the same time, having invested in our brand and technology over many years and having achieved ongoing adjusted EBITDA profitability in the final quarter of last year, we are poised to continue delivering increasingly profitable growth over the medium to long term. Our primary financial goal for 2024 is to deliver full year financial profitability by the end of the year, being also clear that we will consider this goal on a full year basis rather than a quarterly basis. 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. Before we conclude the presentation, I would like to take a moment to reflect on PensionBee's journey and to put 2023 into the context of our history. 2023 was a year of transition and also a year of transformation. Having established the company almost a decade ago and having grown to 4.4 billion pounds in assets under administration on behalf of approximately a quarter of a million invested customers, we are delighted to have achieved our long-standing goal of ongoing adjusted EBITDA profitability. As we look forward to our 10-year anniversary later this year, we will very much reflect on the change we have brought to the UK pensions industry on behalf of consumers, celebrating the longevity of our business and our vision to live in a world where everyone can look forward to a happy retirement.