MoneyHero Limited

Ladies and gentlemen, thank you for standing by and welcome to Money Heroes' fourth quarter and full year 2024 earnings conference call. At this time, all participants are in the listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during this session, you would need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would like now to turn the conference over to Meena Pan, Head of Corporate Development. Please go ahead.

Thank you, Michelle. Hello, everyone. Good morning and good evening, and welcome to Money Hero's full quarter and full year 2024 earnings conference call. Joining me on the call today are Rogan Murphy, CEO, and Daniel Leung, Interim CFO. Our earnings release was issued earlier today and is now available on our IR website, as well as WireGrowth Newswire services. Before we begin, I would like to remind you that today's call will include forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These refer to the safe harbor statement in our earnings press release, which applies to this call. In addition, please note that today's discussion will include both IFRS and non-IFRS financial measures. For comparison purposes only, for reconciliation of these non-IFRS measures to the most seriously comparable IFRS measures, please refer to our earnings release and SEC followings. All monetary references will be in United States dollars, unless otherwise states. Lastly, a webcast replay of this conference call will be available on our IR website. I will now turn the call over to Raohe, CEO of Money Hero Group. Please go ahead.

Thank you, Minho. Hello, everyone, and thank you for joining us today to discuss Money Hero Group's fourth quarter and full year 2024 financial results. We closed out the year with a robust quarter of financial and operational results, reflecting the clear progress we have made on our path to profitability. As we continue to focus on diversifying our revenue mix towards high margin products, lowering operating expenses, and improving operational efficiency. Adjusted EBITDA loss during the quarter improved substantially to $2.9 million, our best quarterly performance since going public, underscoring our improving trajectory throughout the year from losses of $6.4 million in Q1, $9.3 million in Q2, and $5 million in Q3. At the same time, Our gross margin expanded by 25 percentage points year over year, while net loss narrowed sharply to $18.8 million from $94.3 million during the same period last year. Registered members reached 7.5 million, up 42% year on year, reflecting strong user engagement while approved applications grew 21% year over year to 767,000, underscoring increasing user trust and robust demand across our platform. With such solid results heading into 2025, we are confident in our ability to regain top-line growth momentum and have set a target of achieving $100 million in revenue in 2025. and generating a positive adjusted EBITDA in the second half of the year. Now, these results directly reflect the impact and disciplined execution our efficiency strategy is having since we rolled it out in mid-2024. Our objective is clear, to transform Money Hero into a leaner, more focused, resilient, and sustainable, profitable business. We have made meaningful progress across the five strategic pillars we outlined then, consumer pull, conversion expertise, operating leverage, strong provider partnerships, and insurance brokerage. We remain the largest credit card digital acquisition partner for the majority of the banks across our geographies and are leveraging the strong market position to strategically pivot towards higher margin verticals. Revenue during the quarter fell as a result of the strategic pivot and the high base set during the same period last year is substantially improved in quality and is fueling our transformation. We launched seamless end-to-end purchasing journeys in travel and car insurance and developed targeted strategic collaborations resulting in insurance revenue growing an impressive 40% to $8.2 million in 2024, now accounting for a double-digit share of total revenue. Wealth revenue surged by 138% to $8.5 million in 2024, driven by our deepening banking relationships and robust demand for investment products, stock, and banking accounts. These verticals strengthen our margin profile while generating consistent and recurring revenue streams, both of which are key pillars of long-term sustainability. We also laid the foundation for scalable growth by materially lowering operating expenses and improving unit economics with an optimized cost structure across all markets, streamlined operations, and reduced paid marketing and reward spend. Now, looking ahead to 2025, we will maintain our focus on scaling higher margin verticals, particularly insurance, while continuing to tighten cost controls and simplifying workflows. Our product and tech strategy continues to follow a buy-over-bill philosophy, enabling faster innovation through strategic partnerships, including new initiatives in AI and automation that are already underway. Our commitment to becoming An AI-first organization is already translating into several impactful initiatives across the business. We're actively working on deploying AI-powered customer service tools designed to significantly reduce inquiry volumes and achieve higher first contact resolution rates. Additionally, we're piloting generative AI solutions to accelerate and scale content production efficiently. Throughout the organization, we are exploring opportunities to automate workflows using advanced AI tools and agentic AI to boost productivity, reduce operational overhead, and enable our teams to focus more strategically. We operate in a rapidly growing billion dollar addressable market across banking and insurance, where we've only begun tapping into our full potential. With a debt-free balance sheet $42.5 million in cash, and a more efficient, profitable, and scalable business model, we have considerable runway ahead and are ideally positioned to capture a greater share of this large and growing addressable market and deliver sustainable, longer-term value to shareholders. With that, I will now turn the call over to Daniel Leong, our CFO.

Thank you, Rohit. Good day everyone. Our strong results in the fourth quarter demonstrate the effectiveness of our strategy as we continue to make significant strides in the diversification of our revenue mix. Expand partnerships with our key providers and broaden our product offerings. We believe these adjustments position ourselves for sustained growth and as providers scale operations in different regions. We see opportunities to further strengthen our revenue mix and deepen our market presence with them. This quarter, we remain focused on executing our growth strategy and continue our comprehensive reorganization and restructuring exercise to streamline operations and reduce cost. Total revenue during the quarter fell by 40% year over year to $15.7 million, driven mainly by a shift in focus on diversifying revenue mix for high-margin products, such as insurance and wealth products, and a high base impact during the same period last year with increased investment in marketing and customer acquisition to expand market share. Revenue from insurance products increased by 10% year-over-year to $2.1 billion during the quarter, accounting for 14% of total revenue, comparing to 7% during the same period last year. Revenue from wealth products increased by 195% year over year to 2.4 million, accounting for 15% of total revenue, compared to 3% during the same period last year. On a full year basis, the impact of our strategic pivot is equally pronounced, with revenue remaining essentially flat, while revenue from insurance and wealth products surged 40% and 138% respectively from last year. We will continue to explore new opportunities to offer more new high margin products, lines to fill top line growth, and further narrow our bottom line. Cost of revenue decreased by 62% year over year to $6.6 million during the quarter. With advertising and marketing expenses decreasing by 23% year-over-year as we focus on scaling high-margin protocols and optimized reward costs associated with the credit card protocol and paid marketing spend across all markets. Total operating costs and expenses excluding net foreign exchange differences decreased to 25.2 million during the quarter from 45.6 million during the same period last year. This translated into adjusted EBITDA improving substantially to a loss of 2.9 million from 4.6 million during the same period last year. This was mainly driven by increased investments in customer acquisition, technology re-performing, and data infrastructure to build a solid foundation for our future growth and profitability. These strategic investments were balanced by initiatives to streamline other aspects of our operations, decided to enhance efficiency and drive returns. Looking ahead, we expect adjusted EBITDA to consistently improve, building on the significant progress we made during the fourth quarter. With margins steadily improving, we are well positioned to drive growth momentum heading into 2025, strengthening our confidence to generate positive adjusted EBITDA on a quarterly basis in the second half of 2025. Our comprehensive review of our organizational structure, completed alongside that successful reorganization this year, has strengthened our operational foundation and set the stage for continued sustainable growth. That concludes our prepared remarks for today. I'll now turn the call over to the operator to begin the Q&A section. Operator, please go ahead.

Thank you. As a reminder, please press star 11 on your telephone and wait for your name to be announced. And to withdraw your question, please press star 11 again. And the first questions will come from Chin Yun with New Street Research. Your line is now open.

Thanks, management, for taking the questions. So a couple of questions from my end is that first, What's the company's strategy to lower your acquisition costs and how do you plan to leverage the growing registered membership base? Second question is related to insurance. Just want to understand how much is the insurance revenue expected to contribute for FY25 and what will be the key drivers behind that. And a third question, if I may, is that given the current cash position that you have, What's your capital allocation strategy? Thank you.

Thank you for those questions. I'll take the first two questions and then I'll pass it to Danny for the last one. So your first question on our strategy to lower our customer acquisition costs. Now, lowering our customer acquisition costs is central to the efficiency strategy and it actually directly aligns really well with all our strategic pillars. But the one thing I want to point out is that CAC optimization for us is not a one size fits all approach. So what do I mean by that is we are willing to strategically invest at various CAC levels based on the potential lifetime value and also the renewal revenue stream from different customer segments. Now, a few things to note about this is we have our centralized data platform now fully operational and what this does is it gives us now the capability to accurately segment our customers so we can run more personalized marketing campaigns and this really significantly boosts our marketing efficiency. This will enable us to direct our resources towards higher value, higher intent customer segments and this should help us lowering our overall CAC. The other Key aspect is our growing registered member base, now over half a million. It's a powerful asset for us. And we are now actively investing in loyalty-based strategies because this will drive deeper customer engagement, but also effective monetization. A key initiative which we recently announced is we are launching the Credit Club in Hong Kong in partnership with TransUnion. Credit will allow us to build a valuable member base with and rich credit profiles. And this also enables us to run very highly personalized, targeted recommendations that match more precisely to our users' eligibility and credit needs. And this is not just enhancing the customer experience, but we end up improving our conversion rates that will also, again, significantly reduce our marginal CAG. Also, by leveraging these personalized recommendations and enhancing our eligibility and having these insights, we can also drive more targeted cross-sell and upsell. We spoke about how we are really focused on higher margin and recurring revenue verticals such as insurance and wealth. This will again boost the customer lifetime value. Now, taking the segmented approach, we selectively accept higher for specific segments where we see there's a clear opportunity for us to generate recurring revenue streams, car insurance being one of them. This sort of long-term renewal economics will justify initial CAC investments we would make for these segments, and the renewal revenue streams will carry minimal incremental acquisition cost. And finally, we're really intensifying our focus on SEO-driven high-quality organic traffic. What this means is it substantially reduces our reliance on paid channels, and this sort of sustainable organic growth strategy will also continually decrease our CAC, and it allows us to reinvest those savings in growth and innovation. Your second question, was on the insurance revenue and how much we expected to sort of contribute. Now, we don't provide specific product-level revenue guidance, but let me speak about insurance. Given it's already grown into a double-digit contributor now to our revenue in 2024, and we really expect insurance to become an even more meaningful driver in 2025. Here are the sort of drivers that will fuel this growth. One is a real-time car insurance platform. We recently announced the launch of our car insurance marketplace in Hong Kong in partnership with Boltec. We've introduced real-time pricing capabilities and a seamless end-to-end purchasing journey. And this is a really unique and differentiated offering that boosts customer convenience, engagement, and ultimately our conversion rates. Second, fast and friction-free travel insurance. We are continuously enhancing our travel insurance offering with simplified and now a three-click purchasing journey. This again significantly removes the friction from the whole buying experience. All of these things will boost conversion rate. It really encourages repeat purchasing behavior creating that strong recurring revenue potential. The other few opportunities with insurance which are really interesting for us is embedded insurance opportunities. Again, leveraging our partnership ecosystem, particularly with Poltec, we're looking at embedding high demand insurance products such as device protection plans directly into the consumer purchasing journey. As I mentioned, we have over 7.5 million registered members and growing. There's rich customer insights now we get from our data platform. So we're also looking at executing cross-sell and up-sell strategies. And with the credit club initiative, we're confident we can match insurance offerings to also these highly targeted customer segments. And finally, while some of these segments, we will be, as I mentioned, looking at initial upfront customer acquisition costs, what they offer will be a predictable and a substantial recurring revenue stream. And car insurance is going to be one of those high value segments that we want to strategically invest in acquiring these new customers.

Danny, I'll pass over to you for the third question. Yeah. Okay, so the third question that we have is the capital allocation strategy of our current cash position. Okay, given that we have a debt-free band sheet and cash position of approximately 42 million, we're taking a disciplined, prudent, yet proactive approach to capital allocation. Firstly, we ensure robust liquidity to comfortably fund our cooperation. Such includes maintaining sufficient reserves for operational expenses such as payroll, strategic reward programs, professional services, and general corporate purposes. Secondly, with available assets cash, we are placing funds into conservative interest-bearing instruments to yield capital preservation. This aligns with our commitment to responsible stewardship of capital and prudent risk management in the current macro environment. And also at the same time, we actively access growth opportunities that can deliver clear strategic value to our business. This might include considering target investments such as hold-on acquisitions, strategic talent additions, innovative technology partnerships, or growth initiatives with high return potential, especially those aligned with our high-margin protocols, technology platforms, and AI-first strategic directions. And ultimately, our approach balances financial discipline with strategic agility. We remain well positioned to capitalize quickly on attractive opportunities while staying conscious and deliberate to ensure all allocations drive meaningful long-term shareholder value. Thank you.

Thank you. If I may have a follow-up, just wondering what markets do you expect to drive that growth in 2025? And if you can provide any outlook from that one, that would be great. Again, thanks for taking the question and appreciate the call.

Sure. I mean, this question I would like to sort of tie it back again to our strategic pillars. And just to recap our strategic pillars, being consumer pools, conversion expertise, strong provider partnerships, operating leverage and insurance brokerage. And when we look at our sort of markets, we look at our right to win across the strategic pillars. So I'll start first with Singapore and Hong Kong, because these are mature digital first markets, and they really offer a very sort of ideal environment for us, for simultaneous sort of investment across all these pillars. Both these markets, they're sort of characterized by, firstly, financial hubs, advanced digital infrastructure, a strong consumer adoption of digital financial products. There's also a really highly developed ecosystem of local and international financial institutions, many of whom are now fully API integrated, And that really enables us also to seamless product integration and real-time user experiences and purchasing journeys. And finally, when you take a look at these two markets, it comes with the consumer sort of sophistication where we can drive a higher intent organic traffic and also sort of a robust demand for personalized offerings. So with these dynamics, we... We'll continue to invest across our pillars, whether it is enhancing our brand awareness or leveraging our expanding membership sort of base on the consumer pillar, ongoing optimization of our UX and UI, the data platform we have for personalization, the strong partnerships that we are leveraging on, including recently with TransUnion for credit products, and our partnership with Boltec for innovative insurance solutions. And finally, as we think of insurance, we really feel both these markets are primed as we expand into car insurance and other higher margin verticals, including wealth, where we can offer a very frictionless sort of experience. So we feel looking at our pillars and these two markets to begin with, we can really drive profitable growth driven by a diversified higher margin and reckoning revenue stream. Now, let me talk about the other two markets we have, Philippines and Taiwan. Philippines is really emerging as a really critical sort of digital financial services market, significant growth potential for us. And here we are especially focused on the three of the pillars, conversion expertise, In Philippines, we are investing substantially in our telesales capabilities, where we're able to optimize our conversion from an inquiry all the way to purchase. And this really enhances our unit economics and profitability. Also, we're really focused on stronger provider partnerships. We recently onboarded a major local bank, and this significantly sort of expands our partner network, but also strengthens our ability to offer differentiated financial product in the market. And our influencer-driven platform, Creatree, is driving cost-efficient customer acquisition in Philippines and also increasing our brand recognition in this fast-growing market. And finally, Taiwan presents a really unique opportunity for us. It's existing already substantial consumer pool. You know, we have one of the highest levels of organic traffic and brand recall in Taiwan across all our markets. So here our strategic focus is again on conversion expertise. So we're really investing in our UX and UI and our user journeys, targeting sort of friction points when users leave our platform post-product selection. We're exploring generative AI solutions here. to improve the funnel efficiency. Again, a market where we want to deepen our ties with local financial institutions so we can come up with more product offerings. And this is a market where we currently don't have an insurance brokerage license, but we're also exploring an entry strategy, you know, leveraging also our sort of existing partnership with Boltec. So I think in summary, we really have differentiated sort of growth strategies. We look at the local market maturity and the dynamic and the strategic pillars, and we look at various ways in which we invest in these markets. And finally, as Danny had sort of mentioned, we've really restructured and reorganized ourselves so we are leaner and more horizontal when it comes to our operating model, and that significantly enhances are operating leverage across all these markets. So that means we can simultaneously invest across these markets, but also more efficiently allocate resources as we drive growth.

Thank you for that question. Thank you. That's very clear.

And our next question. One moment. And our next question will come from William Gregosiewski with Green Ridge Global. Your line is open.

Hi, thank you. I have a couple of questions I'll ask separately. The first kind of touches on your last answer about the reorganization and allocating resources. Can you talk a little more about the impact that's had the reorganization on the cost structure and margins and what you're able to do?

Yeah, Daniel, you want to take that?

Okay. Okay, so over the last year, we implemented significant changes aimed at creating a leaner, more efficient organization and tightly aligned with our efficiency strategy. This restructuring was mainly focused on optimizing our cost base and improving productivity. It positioned ourselves for sustainable profitability. This restructuring is largely complete And I believe the benefits are clearly reflected in our results. Specifically, our employee related expenses during the quarters decreased by approximately 45% year over year. These savings resulted from strategic headcount reductions, eliminating role duplication, and restructuring teams horizontally across buckets. This allows us to scale efficiently without compromising growth potential. And by doing so, We've effectively optimized our cost structure, creating operating leverage that enables us in incremental revenue growth with minimal additional fixed cost. As a direct outcome, adjusted EBITDA loss improved significantly to 2.9 million in Q4 of 2024, and reflecting a 1.7 million improvement year over year. This underscores our disciplined execution in reducing operating expenses while continuing target investments in critical areas such as technology innovation, product enhancement, and customer acquisition. Looking forward, we will continue to prioritize productivity and margin expansion with investments in technology, particularly around AI-driven automation, workflow efficiencies, and precision target marketing. We expect ongoing productivity gains throughout 2025. The restructuring completed in 2024 provides a robust foundation. It enables us to further enhance margins and achieve greater operating leverage as we scale. So in short, the restructuring was not just a cost-cutting exercise. It was a strategic realignment that has significantly improved our efficiency. and position us for profitable and scalable long-term growth. Thank you for your question.

Okay, great. My next question is another modeling-related question. The advertising and marketing expenses were up quite a bit from last year in terms of absolute dollars and percent of revenue. Can you kind of give your thoughts on how you expect that going forward, especially with the $100 million revenue target?

Yes, certainly. Yeah, you're correct. Marketing expenses increased in 2024. This was the result of a deliberate decision to capitalize on target growth opportunities in key markets. However, I want to emphasize that every dollar spent is carefully measured against clear performance metrics. Since Q2 of 2024, we've implemented a more focused and efficient marketing strategy to ensure we are driving sustainable growth. The results are already visible. For example, in Q4 of 2024, we saw a 23% reduction in marketing spend year over year as we optimized campaigns and reward costs. And also, advertising marketing expenses in Q4 fell by 20% sequentially. We've also shifted investment toward high-margin protocols where we see better returns. And our team has streamlined operations, improving cost structures across all markets. That being said, marketing remains essential to our business model. Because we operate in a competitive digital space, we must continue investing in such as, for example, user acquisition to grow our platform traffic, promotional campaigns that drive engagement, and partner incentives to maintain strong commercial relationships. And moving ahead, we will maintain disciplined spending It will keep optimizing campaigns to improve ROI, ensuring marketing dollars generate measurable revenue, prioritize high margin growth. We are focusing on further codes where customer value justifies the acquisition cost. Also, to balance short-term and long-term gains, some expenses like brand building take time to pay off. But with disciplined spending, will directly align with profitable goals. While we have reduced spending from peak levels, we won't cut marketing to the point of stopping growth. Our strategy is about smarter spending and not just less spending. The improvement in Q4 proved we can scale efficiently and we'll continue refining this approach to target a positive adjusted EBITDA on a quarterly basis beginning in the second half of 2025. Thank you for your question.

Okay, great. Thanks for all that color. On the AI and automation, you touched on it in the prepared remarks. Can you give a little more color on what the plans are for that and the role and what kind of top and bottom line contribution you expect to have from that?

Sure, let me take that. So, look, I think one is we're very clear we have an AI-first strategy. We strongly believe this can enhance our operational efficiency as well as drive the efficiency strategy that we spoke about. And what we're doing is we're really actively beginning to embed AI into our workflows and processes. This will allow us to scale our business while we continue to maintain a stable headcount and an operating cost structure. Again, drives that strategic pillar operating leverage. Now, a couple of areas where we've already started seeing some results. One is an AI-powered customer service. We've introduced that. Significantly now, we are reducing our customer inquiry volumes, much more sort of improved self-service and proactive support. We're seeing also, I would say, improvements in first inquiry resolution rates. So that's one such initiative already underway. generative AI for content creation, we are rapidly scaling our content production capabilities. In markets like Singapore, more than half of our content now we're leveraging, you know, Gen AI. And this really enables us to deliver very highly personalized and targeted content to our users at the fraction of the previous effort and cost and turnaround time. So again, this is something that we're really doubling down on. A couple of other areas which are really interesting for us is how do we start deploying agentic AI tools? As you'll appreciate, there are a lot of also repetitive tasks and workflows we ourselves undertake. This is a great opportunity for us to really, in a very autonomous way, manage these tasks. And what it essentially does is it will free up our human resources to focus on more strategic, and creative activities. Ultimately, it's all about driving the productivity, and that is something that we're very focused with our AI for strategy. And finally, the data platform I spoke about, we have AI capabilities where we can look at much better segmentation, personalization, and as we grow this member base, this will be quite critical to drive the monetization of the space. Now, you all... would have recently seen Shopify CEO Toby Lutke, he recently emphasized how AI usage has become a baseline expectation now for every digital organization. This is equally true at Money Hero Group. The point I want to make is AI is just not a tool for us. It's a core capability that everyone in the company is now expected to master. we really feel by using this incredible capability now at our disposal, we can scale this business more efficiently. And essentially we can turn tasks that required months and days now into hours and even minutes. So we're really sort of doubling down on AI because we feel this will enhance our productivity and eventually our profitability.

Great, great. Thank you. Last question is, can you just talk about your plans to leverage the NASDAQ listing and how you plan to get the stock back up over the dollar threshold?

Yeah, sure. Just give us a couple minutes.

I think, Danny, you can take this.

Okay, yeah, I'll take this. Yeah. Okay.

So the 67 million one-time share-based payment expenses incurred in 2023 related to our Nasdaq listing was a significant but essential investment in our long-term growth trajectory. Becoming a publicly listed company has substantially enhanced our strategic position by, firstly, enhancing credibility and building trust among investors, customers, and partners with the high standards of governance and operational transparency expected from a listed company. Secondly, providing flexibility for target M&A and attracting and retaining key talents by using our shares as currency to accelerate growth in high margin segments such as insurance and wealth management. And also to increase our brand recognition, exposure, and reputation in international markets. Regarding our current share price, we believe our stock remains undervalued. and does not fully reflect our efficiency strategy and the impact it is already having in improving the quality of our top line and narrowing the bottom line. While market has been challenging, we remain confident that our ability to capitalize on the enormous addressable market opportunity. And our primary focus remains firmly on executing our efficiency strategy, driving revenue growth in profitable protocols, controlling costs, having a clear path to profitability and steadily expanding market share through strategic partnerships, innovative product offerings, and leveraging our AI-first capabilities. We firmly believe the market will recognize and reward the underlying strengths of our business model and operational performance, translating into sustained long-term shareholder value. Thank you.

Okay, great. Thank you for all the answers, and I appreciate the color on that. Thank you. Thank you for the questions.

I show no further questions at this time. I would now like to turn the call back over to Rohit for closing remarks.

Well, thank you for all your questions and for your time. I just want to finally end by thanking the entire Monero Group team. for all their hard work and dedication and commitment to our consumers, to our business, to our partners. We're really very much energized to continue this performance in 2025, and I really look forward to sharing the results the next time we speak. So thank you, everyone, for your time.

This does conclude today's conference call. Thank you for participating. You may now disconnect.