Release Date: July 22, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Mony Group PLC (LSE:MONY, Financial) reported its best-ever H1 revenue and EBITDA, with revenue up 5% to GBP223 million and EBITDA up 8% to GBP73 million.
- The company saved customers an estimated GBP1.7 billion, showcasing its commitment to helping households save money.
- Growth in member-based propositions like SuperSaveClub, MoneySavingExpert app, and Quidco is driving customer loyalty, retention, and repeat purchasing.
- Investments in data, tech platform, and marketing infrastructure have positioned the company well for future growth.
- The company increased its dividend by 3%, reflecting confidence in its FY24 performance and strategic delivery.
Negative Points
- Premium growth in the insurance sector is slowing, with car insurance growth tapering off from 35% in FY23 to 18% in H1 '24, and home insurance growth slowing from 34% to 30%.
- There are concerns about the potential negative impact on gross margins in H2 due to the growth in cashback and B2B, which have structurally lower margins.
- The SuperSaveClub, while showing promise, is not yet materially significant to overall sales.
- Energy revenues are not expected to be material this year, with regulatory and market conditions still uncertain.
- The company faces tough comparisons in H2, particularly in the insurance sector, which could impact overall performance.
Q & A Highlights
Highlights of Mony Group PLC (LSE:MONY) Earnings Call Transcript
Q: With premium growth slowing substantially, led by motor, but with home following, could you give us a bit more color on what gives you the confidence that insurance can continue to grow in 2H?
A: Peter Duffy, CEO: Premium growth in FY23 for car was significant at 35%, tapering off to 18% in H1 '24. Home lags car by three to six months, with premium growth tapering from 34% last year to 30% in H1 '24. Despite tough comps in H2, the absolute price consumers pay remains significant, with an average saving of GBP550 in H1. Strategic positioning and new B2B partners in car insurance bolster confidence for H2.
Q: As growth in insurance slows down and cashback and B2B are growing nicely, do you think this will negatively impact your gross margins in 2H?
A: Niall McBride, CFO: The mix into insurance is helpful, and we've worked on PBC bidding efficiency. Growth in cashback and B2B, which have structurally lower margins, will continue, but we will manage our margin carefully. Decisions on margin are made week to week.
Q: Can you give us a sense of the percentage of switches or revenues the SuperSaveClub represents in the early verticals like insurance?
A: Peter Duffy, CEO: The SuperSaveClub, with 500,000 members, is not yet materially significant versus overall sales. However, the customer response indicates relevance, and we expect it to become more impactful in 2025.
Q: What is your latest thinking on when energy revenues might start to be material?
A: Niall McBride, CFO: We do not expect material energy revenues this year. However, wholesale prices are coming down, and regulatory clarity from Ofgem is expected in October. We have four deals on the platform, indicating positive momentum.
Q: Could you comment on market share dynamics in the quarter and the reduction in distribution costs?
A: Niall McBride, CFO: We have been taking market share, evidenced by winning the Auto Trader deal. The reduction in distribution costs was a conscious decision to make spend more efficient, particularly in Quidco and TravelSuperMarket.
Q: Can you provide more details on the impact of the new government on your trading environment and the potential for products to pivot with an interest rate cut?
A: Peter Duffy, CEO: It is too early to call out specific impacts from the new administration. However, a reduction in interest rates by 1-2% could support consumer borrowing and discretionary purchases, positively impacting our money vertical.
Q: Are you seeing increased competitive activity in the insurance vertical that could impact conversion rates?
A: Peter Duffy, CEO: The home and motor markets remain intensely competitive, with 260 products regularly repriced. This competition necessitates platforms like MoneySuperMarket for consumers to find the best deals.
Q: How meaningful are the revenues from tenancy, and what is the growth potential?
A: Peter Duffy, CEO: Tenancy is about smarter targeting rather than increasing inventory. It is currently a high-margin product but not yet materially significant to group revenues.
Q: Can you provide more color on the AI-powered campaigns and their benefits?
A: Peter Duffy, CEO: AI is being used across the group for software development, data science, content creation, and customer services. The AI-powered campaigns are enhancing customer experience and targeting, with significant potential for future growth.
Q: Can you elaborate on the normalization of travel insurance premiums and its impact on revenue?
A: Niall McBride, CFO: Consumers are moving to lower tiers of cover, which is a headwind as we get a percentage of the price. However, this is not materially below pre-COVID levels.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
