PensionBee Group plc

Good afternoon and welcome to the PensionBee Group PLC Q4 results investor presentation. Throughout the recorded meeting, investors will be on listen-only mode. Questions can be submitted at any time by the Q&A tab situated in the right-hand corner of your screen. Just simply type in your question and press send. Alternatively, you can ask a question verbally simply by placing a question mark in the firm that you represent in the Q&A panel. We'll then unmute your microphone and invite you to ask your question to the team. The company may not be in a position to answer every question received during the meeting itself. However, the company can review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to Romney Silverberg. See you. Good afternoon.

Good afternoon and welcome to PensionBee's Q4 2025 results announcement covering trading for the period ending 31 December 2025. I'm Romy Savova, the CEO of PensionBee Group. For those of you who are new to the PensionBee story, we are creating a global leader in the consumer retirement market. We exist to help our customers prepare for and enjoy a happy retirement. We enable our customers to combine their old retirement accounts into a 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 withdraw and spend their retirement savings. Our aspiration is to build a lifetime relationship with our customers, generating predictable and scalable revenue and profit for our company and for our shareholders. We are pleased with the results of the fourth quarter, which reflects strong execution in the UK and in the US. As is expected for the medium term, the United Kingdom made up the bulk of assets and invested customers. The UK closed the quarter with assets under administration of 7.4 billion pounds, representing 27% year-on-year growth annual run rate revenue of over £50 million, representing 33% year-on-year growth, and approximately 305,000 invested customers. Over the fourth quarter, we increased marketing expenditure to £2 million, compared to £1.2 million in the fourth quarter of 2024, positioning the business for continued ramp-up in marketing-led growth in 2026 and beyond. The investment drove UK customer growth of 37% over the quarter with 8,000 new invested customers onboarded, underscoring the effectiveness of our growing marketing expenditure. Overall, we onboarded approximately 40,000 customers in 2025, increasing the number of net new customers relative to 2024. We continue to invest in productivity, introducing new automations and efficiencies across our technology platform. We generated a productivity improvement of 22% year on year, with each staff member supporting 1,621 invested customers. We are well positioned for 2026 with the launch of our new and refreshed Beehive experience, which will soon include the introduction of AI-powered chat in the app, further enhancing our long-term productivity. The UK achieved adjusted EBITDA profitability of £3.4 million with the 26% adjusted EBITDA margin for the quarter, underscoring our commitment to profitable growth in the UK. The UK also supported growth profitability for the year overall. Turning to the United States, over the fourth quarter of 2025, we have continued to focus on establishing a strong foundation for long-term growth. Our first advertising campaign concluded successfully, delivering a meaningful uplift in brand awareness in the markets where billboard advertising was deployed. Our home location of New York saw prompted brand awareness of 12%, Seattle at 9%, and Chicago at 6%. This heightened visibility converted broader market interest into a healthy customer pipeline, which we can see continues to convert over time. The company maintained its product-led growth strategy, enhancing the customer experience through the introduction of performance analytics, giving customers greater visibility of investment returns and improving transparency. PensionBee is now entering 2026 poised for growth, supported by strong early interest in our 1% match initiative, which is designed to accelerate the company's path to a billion dollars of AUA in the US as well as a number of new distribution partnerships. PensionBee has successfully secured its inaugural Safe Harbor IRA contracts, and initial clients are in the process of being onboarded, while additional clients are in the final stages of discussion. I would now like to hand over to Christoph Martin, PensionBee's CFO, who will cover the financial update.

Thank you very much for me. Hello and a warm welcome to everyone. I'm pleased to cover the financial section of the Q4 trading update. In Q4 2025, PensionBee had strong financial performance with 27% year-on-year growth in our AOA to 7.4 billion pounds and a 33% year-on-year growth in ARR to approximately 51 million pounds. This top line growth, coupled with continuous cost discipline, led to an improvement in our adjusted EBITDA margin with the group achieving profitability of £2 million at a 16-group EBITDA margin for the quarter, driven by UK adjusted EBITDA profitability of £3.4 million at a 26% margin for the quarter. These continuous achievements are derived from the core value drivers of our business which are first predictable and recurring revenue and second business scalability. Furthermore, they are testament to our ability to consistently and reliably execute against our public market guidance. The first-rated driver is PensionBee's predictable and recurring revenue, which is generated from a durable base of assets and administration, a function of the assets of existing and new customers. In Q4, we experienced a 27% year-on-year AOA growth to £7.4 billion. The vast majority of the AOA base is derived from existing customers. Those are customers who remain with PensionBee for a long period of time and continue to build up their pension savings with us, resulting in value generation for decades to come. Our average customer is in their early 40s and they build up their pension savings with PensionBee, which means that cohorts on an underlying value basis, so that is before any impact on capital markets, are resilient over time. AOAs are derived from new customers acquired through our proven cost-disciplined approach to new customer acquisition. Over Q4 2025, we onboarded circa 8,000 new invested customers onto our technology platform, representing a 37% year-on-year growth. Over 2025, customers joining were slightly younger than in 2024, aged approximately 39.7. And so the year before, in 2024, it was 40.6, so approximately one year younger, in line with our marketing strategy for 2025. The younger customer cohorts acquired resulted in a slightly lower average balance of new customers this year compared to the previous year. As a result, the compounding AOA base is subsequently converted in our revenue growth owing to our resilient gross revenue margin. In Q4 2025, we saw the revenue margin of circa 65 basis points, which enabled us to convert the 27% year-on-year AOA growth into quarterly revenue growth of 34% and annual run rate revenue of 33%. In conclusion, thanks to our compounding EOA base and resilient revenue margin, we have generated predictable and recurring revenue, which represents PensionBee's first value driver. The second value driver is PensionBee's business scalability. due to the controllable nature of the cost base. Our cost base has continued to decline as a proportion of revenue. These scalability dynamics of predictable and recurring top line growths coupled with cost discipline led to an improvement in operating margin. On a 2025 basis, adjusted EBITDA margin improved to 11%, up from 7% in 2024 for the United Kingdom. Furthermore, the operating margin pre-marketing, so this is a measure of scalability, for the UK improved to 39%, up by six percentage points from 33% last year, reflecting the inherent strong scalability and margin potential of the business. Reflecting on our long-term track record, PensionBee has delivered a revenue growth since our IPO of compound annual growth rate of 48% to December 25 and strong margin expansion in the UK with adjusted EBITDA margin improving from negative 166% pre-IPO to positive 11% today. Furthermore, operating margin pre-marketing improved from negative 35% pre-IPO to positive 39% over 2025 in the UK. This underscores the strong delivery against our growth and business scalability objectives. With respect to our guidance framework for PensionBee as a group, we have outlined the short, medium, and long-term targets. So by the end of 2029, we expect the group revenue to be above £100 million and adjust the dividend margin of circa 20% by the year end 2029, with the UK considerably contributing to those targets. And by the year end 2034, we expect the group to generate about a quarter of a billion pounds in revenue and adjust even a margin of circa 50%. Our circa 33 million in cash balance puts PensionBee into a strong position to further scale the UK business as well as invest in the tremendous US market opportunity, continuing to execute our long-term strategy and delivering our public market guidance. I would now like to hand back to Romy for concluding remarks.

Thank you very much, Christoph. We are very pleased to be concluding the fourth quarter on a high note and are very excited about the 2026 plans ahead, both for the United Kingdom and also for the United States. We'd now like to open up to questions.

Fantastic. Remy, Christophe, thank you very much indeed for the update. Just while the team take a few minutes to review those questions submitted, I'd just like to remind all the attendees that you can please continue to submit your questions and we'll have available the presentation on the platform as well. Remy, perhaps if I can just start with the first question. Gautam, thank you. It comes in three parts, so I'll break them out for you. The first one is, can I please ask about the take rates, which were slightly higher in Q4, anything to be mindful of?

Christoph, one for you.

The take rates, can you maybe ask a question of how this will be defined? Is this the new invested customer? Maybe someone can clarify this.

Let me see if Gautam can clarify that point. Let me just hit the second part of that question. CAC year-on-year was a touch higher as well. What are the drivers? How should we think about CAC long-term?

Yeah, happy to take the second one. So the CAC, so the way of how we think about marketing and customer acquisition is basically to drive growth. And so a CAC is a very important measure for that that we look at and where we have a self-imposed threshold of 250 pounds, which we are at the end of 2025. But another way that we're also looking at is what is the return on that CAC? And so a way of, again, thinking about we spend marketing to drive growth. And so another way is we spend marketing and we get cross inflows. So and if you're looking at the gross inflows and divide them by marketing, so you get basically what is the the gross inflows that you get for each pound of marketing spend. But you will find actually that the business model is very, very predictable because the gross inflows per marketing pound spent for 2025 was 114. And the average age of the customer they required was 39.7. So if you look actually two years back in 2023, the average age of the customer they required was 39 and a half. So roughly the same age and the gross inflows per marketing spend was 120. So that means actually, and then last year where the average age was 40 and a half, the gross inflows were 145. And the years before where it was lower, the gross inflows per marketing spend was lower. So that tells us that actually, if we are very mindful of what is the demographic and the average age of the customer cohort that we acquire, it gives us a really reliable and predictable indicator of what the gross inflows return would be as a proportion of marketing spend. So that's the second way that we're looking at. And I think that tells us a lot about the predictability of

the the nature of the business fantastic thanks christoph and the final part of the question um how is us expansion tracking to your internal plan should we expect to see material revenues from the us in 2026 how will costs track against this

Great question on the US. The US is, of course, still in the early phases of its development, and I would point you towards the medium term guidance that we have for the group overall. The medium term guidance, of course, sees us achieving a £100 million revenue marker with a 20% EBITDA margin. And I think, as you can see from the numbers that we've reported today, simply kind of doing more of what we have currently been doing would very much kind of be in line with the achievement of that guidance. And so when it comes to the US, we will continue to focus on the kind of key development milestones that we see for the business over the 2020 year. six timeframe that includes establishing the direct to consumer repeatable marketing funnel, which we are now starting to see coming through on the back of the advertising that we did last year, but also with the B2B contracts on the Safe Harbor IRA side, where we have signed the first ones and are in the process of onboarding. And so you can expect to see quite a lot of progress on the US in terms of initial milestones being reported over 2026. I would, as I have done in the past, contextualize the US business with the goal of and our goal of growing it more quickly than we grew the UK business at a similar stage of its development. Some relevant milestones there. It took us about a year and a half to acquire the first UK customer. Within two years, we had about 20 million pounds of AUA. Within three years, we had about 100 million pounds of AUA. And so I think that you can see us moving the US business much faster against those initial milestones. And I think that that's what we will be reporting against as we scale it up to a meaningful level.

Fantastic.

Can I maybe add one point? I think there was also a question on the cost. And I think the key point to highlight there is that we approach the US in a really, let's say, capital discipline and deep risk approach, generating a lot of synergies, number one, from the technology platform. that we have developed in the UK and bringing it over to the US and as well as having the commercial relationship with our local partner who refunds the marketing investment. so and then the third one is the the one percent match that we're rolling out and you need to be mindful is that that one percent match yes it comes from our balance sheet but what you actually get is every highly predictable return from it because a minimum return from it because uh the requirement for the one percent match is a five percent hold and so that means that is already you know paying back your acquisition costs as well as generating some returns on it To quantify this a little bit, so the US for the full year was an investment of 4.5 million pounds. There was some transfer pricing in those numbers. So if you take that out and look at the pure cash number, it was about 3 million pounds. So that means actually we spent a low single digit for expansion to tap in the world's largest pension market. um so that's number one and then included in the number as well is a 3.8 million investment in marketing but again this got refunded thanks to the relationship that we have with our partner so i think one thing to be very mindful of is how we approach the us expansion in a very capital disciplined way and therefore also you know they risk that expansion uh by being very mindful generating synergies having a very interesting uh commercial agreement and then the structure around the one percent match

Fantastic. Thank you very much indeed. Next one we've got here. What are the key operational levers to reach your medium term target of 20%? I think we've covered some of these on the way through, but if there's anything further to add.

yeah i'm happy to take this one so so the up the the levers to get to our 20 target uh it is really uh almost embedded in the um in the business itself because pension is of course a growth story so we will continue growing in the uh in the uk as as strongly as we can so we have publicly said we actually reinvest our profit back into the business to to overcharge growth and drive growth there. And so you actually see very clearly when you're looking at the scalability metrics and one proxy you can look at is what is the profitability as a percentage of revenue and actually track, see how this tracks over time, because this gives an indication of how strong the operating leverage is in the business. I made a reference around profitability before marketing because that is really looking at the underlying platform itself, irrespective of how much we actually spend on growth. And so if you're looking at that adjusted EBITDA, so pre-marketing margin, basically pre-IPO, it was 35%. negative 35%, and this year, 2025, it is 39%. So that tells you that as we grow the top line, given the high retention rate of our cohorts and the compounded nature of the asset base and conversion to revenue, the top line is highly predictable and recurring in nature. And then at the same time, the cost base is growing at a much lower clip compared to the top line. And that generates this operating leverage. And so this is probably the biggest lever is continuing investing in growth, continuing cost discipline, and doing more of the same really of what we have already achieved since IPO consistently year after year to just driving that operating leverage and that scalability further.

Fantastic. Thank you. Question from Paul. Marketing spending Q4 fell to 2 million from 2.6 in Q3, but new customers also fell roughly in the same proportion. Could you explain why you let the marketing spend and new customers fall? Wouldn't it be better to spend a bit more on marketing and keep the new customer growth momentum?

It's a great question in terms of marketing spend. I think one of the points that is highlighted through the question is very much how marketing spend and new customer growth are correlated. And that really points to the predictability of the revenue model and how we drive increasing customer growth, increasing revenue growth in a very, very big market. In terms of Q4 in particular, I would say that Q4 is quite a special quarter for a number of reasons. Q4 last year was, of course, kind of the time where we were eagerly anticipating a budget from the UK government. It's also the run-up to Christmas. And so advertising decisions can be made around some of the bigger events. And normally in Q4, you would seasonally see us spending a little bit less than we do in, say, Q1 and Q2. because of the timing and the nature around the sentiment of personal finances in particular. But certainly what you can see in Q4 at the end of last year compared to the year before that is that we continue to increase the level of marketing spend on a relative historical basis uh and we expect that to of course be positive as we move into 2026 uh because ultimately uh we are investing in current customer growth but also in future customer growth when we when we spend on marketing um and so we're pleased to be able to continue that momentum of increasing the marketing budget at the end of last year but also into 2026.

Thank you very much. Next question from William. Thank you, William. In 2026, what level of growth do you expect you can achieve in UK customer numbers from the 305,000 and net flows from 809 million?

Yeah, very happy to take this one. So if you take a step back and you're looking at our medium term guidance, so the 100 million pounds by 2029, and you back out or you apply also our average pot size guidance, which was 20 to 25,000 pounds per customer, you get to a number of around 600,000 by 2029. uh the end of 2029 and so i think the way of how we get to where we are today to to to that point is by increasing that net ads every year a little bit more uh roughly by ten thousand and i think this year uh for 2026 we will probably expect um the net ads to be around 50 to 55 000. let's put it let's put it this way and um And then also, you need to be mindful that's on the back of, again, discipline in the acquisition costs per customer, as well as an increase in the marketing spend. Because as we just alluded to earlier, the more we scale, the more underlying profitability we generate, and that we reinvest back into the business. So I think the expectation for this year is probably to increase the marketing budget, as we have said in the past, to around mid-double digit. and therefore drive the customer number. Then on the net flows, I think the way of how you can think about insert building blocks is looking at gross inflows, gross outflows and markets. The market assessment, I would kindly leave up to the analyst, but on the other two, I think we can give a little bit more color around them. on the outflows what you actually see is that the model is quite predictable because if you're looking at outflows as a percentage of beginning of period balance of the aoa base you see that it is around 10 percent uh 2025 but it was also around 10 10 the prior year and then when you're looking at from 2019 to um to to 2024 I think it was always the average was always about 10 percent. So this 10 percent is a very consistent, let's say, number. And then and then it depends. And then it becomes how much gross influence are we driving? And so there you have the marketing number we target for 2026. probably a slightly older demographic compared to 2025. So that means that that gross inflow per each marketing pound we spend would probably be, we expect to be larger than it was in 2025. So if you bring those building blocks together, that should give you a very informed answer around your net flows.

Thank you. And William, there's two further parts to William's questions. Second part is, of the net increase in UK customers of 40,000, what was the gross addition and the gross loss? Applying a 5% attrition rate from your reported retention ratio would imply lost customers about 13,000. Does that sound right? What are you learning from customers who leave PensionBee?

Yeah, maybe I can quickly take the definition point. So please be reminded that the value retention is about 96% to be very precise. So the attrition is about 4%. And then if you apply the 4% to the average I see number over the year and and and apply this to the 4% you get to around, you know Let's say very low double digits around the 10 11,000 mark rather than the I think 13,000 that you ask so it's a little bit lower because the because the potential the retention is higher than 95 if you actually look at the actual number. And then in terms of what we're learning from the customers that do leave, as you know, we are running various qualitative and quantitative analysis. And I think what we continuously see is that there's various idiosyncratic reasons of our customer leaving someone to consolidate with the workplace pension. Someone are happy to pay premium price to put an advisor. Some are, they want to have a very specific asset exposure. So there tends to be various idiosyncratic reasons for us. But I think the point is really when you're looking at the retention rate over the long run, it is quite resilient. It is quite stable. We reported greater than 95% retention on a value and volume basis since inception. So I think if we're looking at those numbers and it tells us that actually overall, the vast majority of the customers are actually quite happy. Fantastic.

Thanks, Christophe. Final part to William's questions. When do you think you'll have US stats like customers flows and revenue that may be able to disclose?

I'm happy to take this one. Yeah, I think we're really excited about 2026. As you know, we secured our first B2B client. So I think we're very excited about onboarding our first clients. And I think that will help us getting the snowball rolling and acquiring more clients in that new distribution channel. And then also on the B2C side, the 1% match is something that we place a little bit more prominently in the advertisement. And so I think we're very excited about And I think once we see that ramp up coming and we see the materiality of the numbers to come through, then we would place a little bit closer look at them and would also embed them a little bit more closer in their reporting.

Thanks, Christophe. Jude from RBC, two questions. Thank you, Jude. On the US, can you add any colour around the impact of flows from the safe harbour onboarding for Q126? Is there anything further to add that? On the second part, on the UK, it looks like your average new customer balance was a bit higher quarter on quarter. Is that driven by anything in particular? And how do you see that progressing next year? I think some of the points you've touched on, but if there's anything further you can just expand to.

Very happy to start with some of these questions. On the US, we'd like to add some color on kind of the safe harbor IRA contracts that we've been signing. These are the initial employers that we're onboarding. We are starting with some of the smaller and medium-sized employers. And so the level of flow will, of course, mirror the size of the employer that we begin with. That being said, relative to the starting point, you will see a meaningful change in net flows and in AUA in the US, and we'll have some more details for you on that at the end of the first quarter. And then on the UK question, it looks like the average new customer balance was a bit higher queue on queue. Was that driven by anything in particular? Customer balance in general is pretty consistently driven by the average age of the cohorts that we onboard. which in and of itself can then be driven by specific marketing channels. Q4 tends to be a very SEO and organic heavy quarter. It's usually a quarter where we spend less on paid acquisition channels, and therefore you usually do see a slightly older customer coming through. And so, you know, the changes in customer balance can generally be explained by the age of the customer cohorts.

Fantastic, Romy. Thank you. Just a follow up from William. UK reader cross of 100 million AUA after a year three in the US would seem like a really low ambition. I know you said you should be ahead of this, but I'd assume considerably ahead of this. Am I getting ahead of myself?

I think it's really important to keep the UK numbers in context. And I would point you to the medium term guidance that we have given for the group. If you look at where we stand on a revenue basis for the end of 2025, you can impute the growth rate required to reach 100 million of revenue by the end of 2029. And, you know, you would see that we have considerably been beating that, you know, on a historical basis. And so, you know, I would focus on the medium term guidance and we'll definitely let you know when it's a good time to start extrapolating more of the US numbers. In the meantime, we'll be reporting on the significant milestones that it takes to build the US business for the long term, which of course includes the completion of a lot of the product work that we did over the course of last year, but also the signing of the Safe Harbor IRA contracts that we just announced.

Fantastic. And that concludes the questions. And thank you for answering those from investors. And of course, any further questions come through, the team will be able to review those and publish responses where appropriate to do so on the InvestorMeet company platform. Just before redirecting investors to provide their feedback, which is particularly important to you, Romy, if I could just ask you for a few closing comments, please.

Absolutely. Thanks so much for joining the call today. It's always a pleasure to engage with the investor community. And we look forward to having more conversations as we move into 2026.

Fantastic. Thank you both for updating investors today. Can I please ask investors not to close this session? It should now be automatically redirected to provide your feedback and order management to better understand your views and expectations. It's only take a few moments to complete and is greatly valued by the company. On behalf of the management team of PensionBee Group, I'd like to thank you for attending today's presentation. That concludes today's session and good afternoon to you all.