Release Date: August 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- MoneyMe Ltd (ASX:MME, Financial) achieved a statutory net profit after tax of $23 million in FY24, up from $12 million in FY23.
- The company saw a 23% increase in new loan originations, expanding its loan book to $1.2 billion.
- MoneyMe Ltd (ASX:MME) reduced credit losses to 4.5% in FY24, thanks to a stronger credit profile and increased secured loan assets.
- The Autopay loan book grew by 40% in FY24 and now makes up 51% of the total portfolio, with faster loan approvals and settlements.
- MoneyMe Ltd (ASX:MME) achieved B Corp certification in August 2023, highlighting its commitment to sustainability and governance standards.
Negative Points
- Normalized NPAT was lower due to reduced income from a lower average loan book balance and fewer debt sales.
- The Freestyle digital credit card portfolio reduced in FY24 due to a pivot to a target market with stronger credit profiles.
- Personal loans decreased to 38% of the total portfolio, down from the previous year.
- Revenue performance was impacted by a higher proportion of secured assets and an improved credit quality within the loan book.
- The company faced a high interest rate and inflation pressured environment, which posed challenges.
Q & A Highlights
Q: Can you provide more details on the growth of the Autopay loan book and its impact on the overall portfolio?
A: Clayton Howes, CEO: The Autopay loan book grew by 40% in FY24 and now constitutes 51% of our total portfolio. This growth was driven by faster loan approvals and settlements, with the ability to settle secured car loans in under five minutes. We also increased the maximum loan offer to $150,000, targeting high-credit quality customers. This product's strong performance has significantly contributed to our overall portfolio's growth and credit quality.
Q: How has the company's focus on secured loan assets affected credit losses and overall financial performance?
A: David Wright, CFO: Our strategy of increasing the proportion of secured loan assets to 55% has led to a reduction in credit losses to 4.5% in FY24. This shift has improved the credit quality of our loan book, resulting in lower arrears and credit losses, which in turn has positively impacted our financial performance, including a statutory net profit after tax of $23 million.
Q: What are the key strategic priorities for MoneyMe in FY25?
A: Clayton Howes, CEO: Our key focus areas include extending technology leadership through increased automation and AI, focusing on high credit quality and secured assets, expanding and optimizing our funding program, modeling strong ESG practices, and expanding our product offerings, including a new credit card product and exploring direct-to-consumer distribution for Autopay.
Q: Can you elaborate on the improvements made to the proprietary technology platform in FY24?
A: Clayton Howes, CEO: In FY24, we advanced our proprietary technology platform by increasing automation for faster loan approvals and settlements, optimizing our credit decisioning engine for pricing and risk, and migrating the remaining SocietyOne loan book to achieve end-to-end operations on one platform. We also launched a new mobile app with additional features and an improved user experience, which has been integral to our distribution strategy.
Q: How has MoneyMe's focus on ESG practices and B Corp certification impacted the business?
A: Clayton Howes, CEO: Achieving B Corp certification in August 2023 has reinforced our commitment to sustainable business practices. This focus on ESG has helped us attract and retain top talent, resonate with socially conscious consumers, and enhance our access to capital and funding. It sets us apart in a competitive market and drives long-term business performance.
Q: What are the financial highlights for FY24, and how do they compare to the previous year?
A: David Wright, CFO: MoneyMe delivered a statutory profit of $23 million in FY24, up from $12 million in the prior year. Principal loan originations grew by 23%, driving a 6% increase in our loan book balance to $1.2 billion. We also reduced operating costs by 7%, maintaining a stable cost-to-income ratio of 22%. Our revenue performance remained strong with gross revenue of $214 million and a net interest margin of 10%.
Q: How has the company's funding platform evolved, and what are the plans for FY25?
A: David Wright, CFO: In FY24, we optimized our warehouse facilities, resulting in a margin reduction and release of cash for growth. We extended and doubled our Autopay warehouse to $750 million, enabling further growth in secured assets. We also completed a $178 million ABS transaction for personal loans, which was in excess demand. For FY25, we anticipate launching additional ABS deals to support capital-efficient growth.
Q: What are the key drivers behind the improved customer satisfaction and engagement metrics?
A: Clayton Howes, CEO: Our focus on creating fast and efficient customer experiences through fully digital products, near real-time loan approval and settlement, and rapid customer support has driven strong customer satisfaction, loyalty, and advocacy. As of FY24, 30% of our customers have two or more products with us, our net promoter score increased to 69, and our Google review rating was 4.6 out of 5.
Q: How has the company's approach to credit risk management evolved in response to the current economic environment?
A: Clayton Howes, CEO: In response to the evolving credit risk landscape, we have pivoted to target markets with stronger credit profiles, resulting in a reduced Freestyle loan book in FY24. We are also developing a new and improved credit card product designed to attract a segment with significant growth potential and a more favorable risk profile, expected to launch in FY25.
Q: What are the expectations for revenue growth and profitability in FY25?
A: David Wright, CFO: We anticipate further growth in FY25, which will continue to strengthen our operating leverage, driving profitability and ensuring long-term stability. Revenue is expected to grow in alignment with the expansion of our loan book originations, supported by our focus on high credit quality and secured assets.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
