Release Date: September 09, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Pebble Group PLC (LSE:PEBB, Financial) has a strong cash position and is debt-free, which supports its financial stability.
- The company has a global footprint with established operations in North America, Europe, and Asia, enhancing its market reach.
- Facilisgroup, a key part of the business, has shown a 15% CAGR since listing, with high EBITDA margins of 47%.
- Brand Addition has demonstrated excellent client retention and improved gross margins, moving from 33% to 35%.
- The company has increased shareholder returns through dividends and share buybacks, reflecting its cash-generative nature.
Negative Points
- EBITDA has remained flat year-on-year, indicating limited growth in profitability.
- The company faced a tough second half in 2023, with some customers reducing their spending.
- Revenue has slightly decreased, attributed to challenging comparisons from the previous year.
- There is a noted slowdown in decision-making for new client acquisitions in Brand Addition.
- The company has experienced attrition in its Facilisgroup partners, although efforts are being made to improve partner quality.
Q & A Highlights
Q: You mentioned improving the quality of the customer pool for Facilisgroup. Has this changed what a good partner looks like and how you recruit them? Also, has there been any change in the supplier pool for driving preferred spend? Lastly, how far can you push the gross margin for Brand Addition?
A: We have refined our partner profile, focusing on businesses with over $2 million in revenue to ensure they benefit from our technology and can afford it. This change doesn't affect our addressable market but should reduce attrition. For preferred spend, we incentivize partners through rebates and events to increase engagement. Regarding Brand Addition, we aim for a 33% gross margin, acknowledging the need to price sensibly with large companies.
Q: Can you discuss the Facilis attach rate in the first half?
A: The attach rate is crucial and best viewed annually due to GMV seasonality. We aim to grow income by increasing GMV and attach rates through preferred supplier engagement and offering additional technology services.
Q: The number of Syncore partners fell in the first half. Can you provide insight into future partner numbers?
A: While the number of partners dipped, GMV grew, indicating quality over quantity. We focus on acquiring high-quality partners and reducing attrition. We expect partner numbers to stabilize and grow as we refine our partner acquisition strategy.
Q: Brand Addition's beauty sector revenue is down significantly. Is there a specific reason for this?
A: The decline is primarily due to timing differences in order deliveries. We expect this to balance out by year-end, aligning with our overall revenue expectations.
Q: With freight rates increasing, how will this impact the second half, and what level of investment should we expect for next year in terms of CapEx?
A: Freight rates are factored into our current margins, and we don't anticipate significant changes in the second half. CapEx for new products has peaked and will decrease, with Facilisgroup's investment stabilizing at around 20% of revenue in the medium term.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
