PensionBee Group plc

Incorporated in England and Wales

Registration Number: 13172844

LEI: 2138008663P5FHPGZV74

ISIN: GB00BNDRLN84

Interim Results

For the six months ended 30 June 2023

PensionBee Group plc ('PensionBee' or the 'Company'), a leading online pension provider, today announces interim results for the six month period ended 30 June 2023 (1H 2023).

The Company is pleased to announce that it has delivered strong financial and operational performance during the first half of the year, with high levels of growth achieved across key metrics, in line with the trading update released on 20 July 2023.

Performance Overview

●    Revenue increased by 32% to £10.9m (1H 2022: £8.3m)

●    Profit/(Loss) before Tax was £(9.2)m (1H 2022: £(16.9)m)

●    Adjusted EBITDA was £(7.9)m (1H 2022: £(14.9)m)

●    Basic Earnings per Share was (4.06)p (1H 2022: (7.54)p)

●    Assets under Administration ('AUA') increased by 38% year on year to £3,704m (1H 2022: £2,676m)

●    Invested Customers ('IC') increased by 33% to 211,000 (1H 2022: 159,000)

●    Customer Retention Rate and AUA Retention Rate were both stable at >95% (1H 2022: >95%)

●    Excellent Trustpilot score of 4.6★ (1H 2022: 4.6★)

●    Cash position of £14m (1H 2022: £29m)

Romi Savova, Chief Executive Officer of PensionBee, commented:

"We are proud to have helped an increasing number of customers take control of their retirement planning and prepare for a happy future. PensionBee's strong results and ongoing growth have positioned us well on track to deliver monthly Adjusted EBITDA profitability by the end of the year. The scalability of our technology platform drives margin improvement, and we are looking forward to further innovating and evolving with our customers as we champion their voices in the industry.

We are confident that our focus on serving and delighting customers will allow us to continue to grow and capture market share."

Forward-Looking Statements

Statements that are not historical facts, including statements about PensionBee's or management's beliefs and expectations, are forward-looking statements. The interim results contain forward-looking statements, which by their nature involve substantial risks and uncertainties as they relate to events and depend on circumstances which will occur in the future and actual results and developments may differ materially from those expressly stated or otherwise implied by these statements.

These forward-looking statements are statements regarding PensionBee's intentions, beliefs or current expectations concerning, among other things, its results of operations, financial condition, prospects, growth, strategies and the industry and markets within which it operates.

These forward-looking statements relate to the date of these interim results and PensionBee does not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of the interim results.

CEO's Report

We exist to make pensions simple so that everyone can look forward to a happy retirement. Our aspiration is to build a lifetime relationship with our customers, generating predictable and scalable revenue for our company and for our investors.

We are very pleased to have delivered strong financial and operational performance for the first half of 2023, driven by continued momentum in the growth rates of our Invested Customer base, Assets under Administration ('AUA') and Revenue. Our business has continued to demonstrate resilience, strength and substantial growth, set against a backdrop of continued challenging global capital markets, heightened geopolitical risk and an extensive cost of living crisis that has continued to impact everyone across the UK. All this of course, means that the need for retirement planning and pension ownership has never been greater.

The first half of 2023 started strongly and we demonstrated our continued ability to grow, adding £469m of Net Flows (1H 2022: £481m) from new and existing customers reaching £3.7bn of AUA by the end of June (H1 2022: £2.7bn).

We achieved strong momentum in customer growth, with efficient new customer acquisition having added 28,000 Invested Customers (H1 2022: 41,000), representing £365m of Net Flows for the first half of the year (H1 2022: £353m). Existing customers also continued to accumulate pension savings with us, representing £104m of AUA over the period (H1 2022: £128m). Our customers' pension assets also benefited from market appreciation in the first half, accounting for the balance of asset growth. 

We delivered this high customer growth whilst maintaining excellent customer satisfaction, recording a sustained Customer Retention Rate of 97% over the period (H1 2022: 97%). We have also sought to balance our growth ambition with our expectations of achieving monthly Adjusted EBITDA profitability by the end of 2023.

Our results are supported by our ability to execute and advance our strategic goals. Our customer-centric proposition, led by product and technological innovation, excellent customer service as evidenced by our Excellent Trustpilot score of 4.6★ out of 5 (based on 9,128 reviews), and transparent and straightforward fees, has continued to resonate well in the enormous UK market of pension savers. Our ability to efficiently spend on marketing has seen us maintain our household brand name status and has supported new customer growth with a declining customer acquisition cost.

We look forward to further advancing our strategy, growing our market share and fulfilling our ambition to help everyone look forward to a happy retirement.

Overview

We maintained our strong growth momentum in the first half of 2023. AUA increased by 38% to £3,704m (1H 2022: £2,676m), led by an increase in Invested Customers of 33% to 211,000 (1H 2022: 159,000). This resulted in an increase in Revenue of 32% to £10.9m (1H 2022: £8.3m) across the same period.

Profit/(Loss) before Tax narrowed to £(9.2)m (1H 2022: £(16.9)m) reflecting planned investment in marketing, in the technology platform and in our people, to drive rapid and efficient growth. Accordingly, Adjusted EBITDA narrowed to £(7.9)m (1H 2022: £(14.9)m) and the Adjusted EBITDA Margin narrowed to (73)% (1H 2022: (181)%), demonstrating the operating leverage achieved.

Advancing our Strategic Goals

Our mission is to make pensions simple so that everyone can look forward to a happy retirement. We have continued to successfully execute our five-point strategy, which supports our mission, and which drives our rapid and sustainable growth:

During the first half of the year, we spent £6.8m on marketing (1H 2022: £12.4m), taking our cumulative marketing expenditure to more than £50m, supporting brand building and customer acquisition.

We expect to continue investing in brand awareness and the maintenance of ongoing household brand name status through the renewal of our partnership with Brentford Football Club, becoming the left sleeve sponsor of the Men's first team and the 'front of shirt' sponsor for the B team, Academy and Women's team.

We have continued to apply our data-driven, multi-channel approach to successfully reach new customers, bringing educational initiatives to customers in ways which increase appeal, for example, through roadshows, podcasts and new channels such as TikTok.

The Cost per Invested Customer ('CPIC') has continued to demonstrate a downward trajectory, in line with expectations, given the depth of our marketing capability in efficient customer acquisition and the substantial brand investment made to date.

As we consider marketing initiatives for the rest of the year, we will actively focus on further reducing our CPIC, together with nurturing the conversion of our customer funnel to grow our Invested Customers.

Leadership in product innovation

During the first half of the year, we continued to develop our product offering for the benefit of our customers, incrementally rolling out new features to enable greater customer engagement. 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.

New features included improvements to enable customers to access and find our helpful content (searchable FAQs and enhanced help functionality) and a new online tax relief calculator designed to encourage customers to make the most of their pension contributions ahead of the tax year-end. While customers can now read our content in the app, they will soon be served personalised content features based on our predictions of their interests, to help them make more of their money including by educating them on helpful complements to their pension, such as life insurance.

We recently launched a partnership with LifeSearch to help our customers obtain a range of insurance products including life and critical illness cover, enabling them to continue to save for a happy retirement even if the worst happens. So far initial customer demand has been positive and we look forward to seeing this progress.

Investment in and development of an industry leading technology platform

We have continued to invest in our technology capability over the first half of the year in support of our growth ambitions.

We have invested in the scalability of our technology through a focus on internal automation, efficiency, security and pension transfer improvements to support productivity, as demonstrated by a 12% improvement in the Invested Customers per Staff Member productivity metric across the first half of the year (1H 2022: 35%).

We have continued to explore and adopt artificial intelligence tooling within our departments, using it for initial content generation, project research and coding problem resolution. We are increasingly integrating our data platform within our daily product management operations, linking core KPIs to projects to ensure our multidisciplinary development teams remain productive and impactful.

Finally, we continued to implement cyber security tools and best practices to keep our customers' data safe. We have reinforced a culture of security awareness through increasing standardisation, monitoring and automation in information security operations and compliance.

Focus on excellent customer service

We have continued our relentless focus on the provision of excellent customer service to create the best pension experience possible for our customers, leaving them delighted.

We are proud to have delivered excellent customer support, as demonstrated by rapid response times, with live chat and phone waiting times of 16 and 22 seconds respectively. Consequently, we have continued to enjoy high ratings from our customers, giving our team great purpose and inspiration. We pay close attention to our Trustpilot and app store ratings, which serve as an indicator of customer satisfaction. We are pleased to have maintained our Excellent ratings across both, with a 4.6★ Trustpilot rating having been achieved from 9,128 customer reviews (1H 2022: 4.6★).

Ensuring excellent levels of customer satisfaction is central to our ambition of retaining and serving our customers throughout their lifetimes. We demonstrated the continued strength of our customer value proposition by maintaining a Customer Retention Rate of 97% for the first half of the year. It is the high levels of recurring revenues that are generated as a result of these high customer retention levels, combined with the scalability of our technology platform, that underpin the generation of operating leverage over time.

Focus on investment solutions designed for customers

We have continued to remain focused on our investment range, keeping abreast of new industry developments, ensuring that we deliver value for money and innovating and adapting our products to suit the evolving needs of our customers.

Our ongoing programme of engagement with our asset management partners helps to determine the optimal product range. We are proud to work with the largest money managers in the world, who help us give our customers peace of mind.

Over the first half of the year, we successfully launched our Impact Plan, which invests exclusively in companies that seek to solve the world's great social and environmental problems, aligning with PensionBee's focus on using its influence to respond to customer needs. With the addition of the Impact Plan, we are confident we have the right investment range to serve the mass market of consumers.

Regulatory Developments

We are active in the industry as a supporter of consumer rights and we continue to advocate for greater levels of transparency, easier switching and fairer charging across all pension products.

During the first half of the year, we implemented the Financial Conduct Authority's ('FCA') Consumer Duty.

PensionBee's vision is customer focused and customers have been at the heart of everything PensionBee does since its inception. This culture is woven into the fabric of our approach across all departments. Our five company values - Honesty, Innovation, Love, Quality and Simplicity - provide a framework that guides our decision-making, with particular regard given to how our values shape the way we interact with our customers. The FCA's new Consumer Duty sets higher and clearer consumer protection standards across financial services through an overarching principle that requires firms to act to deliver good outcomes for retail customers.

The FCA's Consumer Principle is supported by three cross-cutting rules, requiring that firms must act in good faith towards customers, avoid foreseeable harm to customers and enable and support customers to pursue their financial objectives. Consumer Duty outcomes relate to crucial elements of the firm-consumer relationship: consumers should receive communications they can understand, products and services should meet their needs and offer fair value, and consumers should get the support they need when they need it.

While the Consumer Duty is well embedded in our general approach to business and to our customers, we invested ample time in enhancing our documentation, training our team and creating automated metric reporting to monitor good consumer outcomes and avoid foreseeable harm, in line with the duty.

We remain supportive of the initiatives of the FCA, the Department for Work and Pensions and the Pensions Regulator, leading to improvements in the pension landscape for consumers. We believe the overall direction of reforms supports our approach to putting customers at the heart of what we do, our business model, our mission and our vision.

Dividend

In line with our stated dividend policy, the Company does not intend to pay any dividends as we continue to invest in growth and execute our strategy. Whilst the Company has not paid dividends since incorporation, it intends to revisit its dividend policy in future years and may revise its dividend policy from time to time.

Outlook

We remain confident in our potential for continued growth and profitability, due to our ability to attract new customers that generate growth in recurring revenue through our scalable technology platform.

We are pleased to reiterate the guidance previously provided at the time of the 2022 full year results. Our cash balance of £14m leaves us well-placed to pursue a c.2% market share target of the substantial £700bn UK transferable pensions market over the next 5-10 years.

We remain on track to further reduce Cost per Invested Customer, expecting to achieve monthly Adjusted EBITDA profitability by the end of 2023 and ongoing Adjusted EBITDA profitability for the full year 2024. We expect to achieve long-term EBITDA margins in excess of 50%, driven by the scalability of our technology platform. This is supported by the continued positive momentum in our trading performance and growth in key metrics such as customer growth and AUA.

We will continue to support the pursuit of healthy long-term returns for our customers' pensions and the health of our environment, by promoting good corporate behaviour. We will also continue to use our corporate voice to amplify the voices of our customers across the UK, standing up for their consumer rights, and enabling them to have better, more transparent pension products.

We will continue to work tirelessly towards our mission to make pensions simple so that everyone can look forward to a happy retirement.

Romi Savova

Chief Executive Officer

30 August 2023

Financial Review

Summary Financial Highlights*

Business Performance

Customers

During the first half of 2023, PensionBee continued to demonstrate strong growth momentum. As at the end of June we recorded £3.7bn of AUA (1H 2022: £2.7bn), an increase of 38% year-on-year. £678m of AUA was generated over the first half of the year, surpassing last year's equivalent of £89m over the same period. The key growth drivers were Net Flows from New Customers, Net Flows from Existing Customers and Market Movement and Other.

Net Flows from Existing Customers further drove AUA growth as customers continued to grow their pension savings with PensionBee. Net Flows from Existing Customers reached £104m in the first six months of the year (1H 2022: £128m). Over the first half of the year, we saw slightly lower Net Flows from Existing Customers compared to the same period last year which can be attributed to younger customer acquisition in the prior year as well as normalising outflow figures this year which reached levels we observed in 2021. PensionBee's commitment to continuous product development drives engagement with our customer which is reflected in our Retention Rate of >95% (1H 2022: >95%). Our in-app content and tools such as the state pension calculator deliver useful insights to our customers.

As is customary in the industry, pensions are invested in capital markets and therefore, the performance of the market is a driver of movements in AUA. As markets regained some stability after a volatile period last year, we saw market growth account for £210m of the overall AUA growth in the first half of the year (1H 2022: £(392)m).

Financial Performance

Revenue

The Realised Revenue Margin improved to 0.65% (1H 2022: 0.63%) which was due to a mix effect thanks to our recent launch of the Impact Plan priced at 0.95%.

Profitability Metrics

Our primary profitability metric is Adjusted EBITDA, which captures Advertising and Marketing Expenses, but excludes Share-based Payments and Transaction Costs.

We have a firm commitment to reach our monthly Adjusted EBITDA profitability target by the end of 2023. As a result of strict cost discipline and strong Revenue growth figures, we delivered an improvement of 108 percentage points of our Adjusted EBITDA Margin to (73)% (1H 2022: (181)%). This places us in a strong position to achieve our year end 2023 monthly Adjusted EBITDA profitability target.

Money Manager Costs increased to £1.6m (1H 2022: £1.4m) at a lower rate than Revenue growth, reflecting realised cost reductions.

Employee Benefits Expense increased to £6.1m (1H 2022: £4.5m), primarily driven by a run-rate impact of the headcount increase in the second half of 2022. Headcount figures over the first half of 2023 remained relatively unchanged. Overall, our total workforce increased to 209 as at 30 June 2023 from 208 at the end of 2022.⁽⁶⁾

Other Operating Expenses narrowed to £4.3m (1H 2022: £4.8m), reflecting the scalability of our technology platform due to prior investments in capabilities. We have continued to invest in enhancing our scalability with an emphasis on improving our internal automation to support productivity, including the streamlining of our provider processes. This is evidenced by an improvement in the Invested Customers per Staff Member metric from 919 in the first half of 2022 to 1,026 within the same period this year, demonstrating a 12% increase in productivity (1H 2022: 35%).⁽⁷⁾

(6) Total workforce of 209 as of 30 June 2023, includes 205 UK employees and four non-UK contractors. Total workforce as of 31 December 2022 includes 204 UK employees and four non-UK contractors.

(7) Invested Customers per Staff Member calculated using LTM average for total workforce. Management information as at 30 June 2023.

Share-based Payment costs remained stable during the period £(1.1)m (1H 2022: £(1.1)m).

Transaction Costs There were no exceptional costs incurred in 1H 2023 nil (1H 2022: £(0.7)m). The costs outlined in the prior period are in relation to the Company's transition to the Premium Segment of the Main Market of the London Stock Exchange and primarily consisted of fees and expenses.

Finance Costs included fees associated with the capitalisation of lease obligations in accordance with IFRS 16. There were no significant Finance costs recorded nil (1H 2022: nil).

Taxation was enhanced tax credits in relation to routine Research and Development refunds £0.1m (1H 2022: £0.2m). No deferred tax asset was recognised for the carried forward losses.

Basic Earnings per Share

Basic (and Diluted) Earnings per Share was (4.06)p for 1H 2023 (1H 2022: (7.54)p). This decreased in line with the increase in Loss after Tax.

Regulatory Capital and Financial Position

PensionBee Limited, a subsidiary of the Company, is authorised and regulated by the Financial Conduct Authority and therefore adheres to capital requirement set by the regulator. As of June 2023, the capital resources stood at £12.8m as compared to a capital resource requirement of £1.4m, resulting in a coverage of 9x.

As of June 2023, the cash and cash equivalents balance was £14m (1H 2022: £29m).

Christoph J. Martin

Chief Financial Officer

30 August 2023