Earnings call transcript: PensionBee’s Q1 2025 sees 20% AUA growth

PensionBee Group PLC (PBEE) reported a 20% year-on-year increase in assets under administration (AUA) in its Q1 2025 earnings call, reaching £5.8 billion. The company achieved group breakeven with a 1% adjusted EBITDA margin. According to InvestingPro data, the company’s revenue growth stands at an impressive 39.41% over the last twelve months, though analysts don’t expect profitability this year. Despite a challenging market environment, PensionBee’s stock price has decreased by 2.55%, closing at 157, with current analysis suggesting the stock is slightly overvalued. The company continues to expand its product offerings and market presence, particularly in the U.S.

Key Takeaways

• Assets under administration grew by 20% year-on-year to £5.8 billion.
• Achieved breakeven with a 1% adjusted EBITDA margin.
• Launched new products, including a Roth IRA in the U.S. market.
• Stock price fell by 2.55% to 157 amid broader market volatility.
• Revenue growth of 34% over the last 12 months.

Company Performance

PensionBee demonstrated robust growth in Q1 2025, with significant increases in both assets under administration and annual run rate revenue. The company’s strategic focus on expanding its product line and entering the U.S. market is beginning to show results, as evidenced by the launch of the Roth IRA and other innovations. Despite these advancements, the company faces challenges from global market volatility, which has affected its stock performance.

Financial Highlights

• Assets under administration: £5.8 billion, 20% increase year-on-year.
• Annual run rate revenue: £36 million, 17% increase year-on-year.
• Last 12 months revenue growth: 34%.
• Adjusted EBITDA margin: 1%.
• Cash balance: £34 million.

Outlook & Guidance

PensionBee has set ambitious short-term targets for the next 3-5 years, aiming for revenue above £100 million and a group adjusted EBITDA margin of approximately 20%. Long-term targets over the next 5-10 years include achieving revenue above £5 billion and an EBITDA margin of around 50%. The company plans to increase its marketing spend in both the UK and U.S. markets, with a goal of reaching 1 million invested customers in the UK.

Executive Commentary

CEO Romy Savova emphasized the company’s mission: "We exist to help our customers prepare for and enjoy a happy retirement." She also highlighted the company’s long-term vision: "We are creating a global leader in the consumer retirement market."

Risks and Challenges

• Global economic turbulence and market volatility could impact pension assets and overall financial performance.
• The company’s expansion into the U.S. market presents challenges in terms of brand awareness and regulatory compliance.
• Increased marketing spend may pressure short-term profitability.
• Maintaining strong customer retention rates amid competitive pressures is crucial.
• Technological advancements and platform automation require ongoing investment.

Q&A

During the earnings call, analysts inquired about the breakdown of net flows, with £131 million coming from new customers and £83 million from existing ones. Questions also focused on the expected increase in marketing spend for 2025 and the company’s strategic priorities for U.S. expansion, which include product development and enhancing brand awareness.

Full transcript - Pensionbee Group PLC (PBEE) Q1 2025:

Moderator: Good afternoon, ladies and gentlemen, and welcome to the PensionBee Group Q1 Results Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and they can be submitted at any time using the Q and A tab situated on the right hand corner of your screen. Simply type in your question at any time and press send. Alternatively, type a question mark in the Q and A tab and we’ll open up your microphones for you to ask your questions to management.

Throughout today’s presentation, you will be, as I say, in listening only mode. And before we begin, we’d like to submit the following poll. I’m sure the company will be most grateful for your participation. I’d now like to hand over to CEO, Romy Savala. Good afternoon.

Romy Savova, CEO, PensionBee Group: Good afternoon, and welcome to PensionBee’s q one twenty twenty five results announcement covering trading for the period ending thirty one March twenty twenty five. I’m Romy Savova, the CEO of PensionBee Group. For those of you who are new to the PensionBee story, we are creating a global leader in the consumer retirement market. We exist to help our customers prepare for and enjoy a happy retirement. We enable our customers to combine their old retirement accounts into a new online plan.

We enable them to make contributions, to invest in line with their objectives, with money managed by the world’s largest asset managers, and ultimately, to withdraw and spend their retirement savings. Our aspiration is to build a lifetime relationship with our customers, generating predictable and scalable revenue for our company and for our investors. Over the first quarter of twenty twenty five, we continued to record strong year on year growth in assets under administration, revenue, and invested customers as we executed on our long term strategy. Turning now to our individual country segments. In The UK, we closed the quarter with assets under administration of £5,800,000,000, representing 20% year on year growth.

Annual run rate revenue of £36,000,000, representing 17% year on year growth, and 275,000 invested customers, representing 14% year on year growth. This growth was achieved despite the well publicized global economic turbulence and even while global markets have fallen five to 10% over the past few months. Over the first quarter, we onboarded approximately 10,000 new invested customers through effective data led advertising. Our when your pension is in a good place, you’re in a good place brand campaign premiered across television and radio while we continue to optimize our core online channels. Heading into the second quarter, we continue to execute on our strategy to reach 1,000,000 invested customers in The UK.

To that end, we have begun accelerating marketing spend and intend to continue doing so as appetite for our offering remains strong. We will, of course, keep a watchful eye on economic volatility. We continue to invest in productivity, introducing new automations across our technology platform. We generated a productivity improvement of 16% year on year with each staff member supporting close to 1,400 invested customers. We also made strides with our AI initiatives, further refining our internal bot, Beatrix, who is currently supporting our operations team with the view to enabling Beatrix to eventually serve customers.

Turning to The US. Over the first quarter of twenty twenty five, we have been broadening and deepening the foundations for long term growth. We continue to build brand awareness with a particular focus on channels that facilitate national consumer reach, including social media, public relations, and search. Fueled by our engaging content, we grew our social media followership to reach 17,000 across YouTube, Meta, TikTok, and LinkedIn. We have also advanced our safe harbor IRA, our employer to consumer offering, launching through several large record keepers.

We are currently actively promoting our safe harbor IRA to consultants and a number of large and medium sized employers with a strong reception to our consumer friendly approach. Throughout the quarter, PensionBee launched several notable functionality enhancements for customers, including a Roth IRA, the ability to make seamless new contributions, and certain transfer automations. With our rapid pace of local innovation expected to continue through the second quarter, we remain on track to increase our marketing expenditure in the second half of twenty twenty five. I would now like to hand over to Christophe Martin, PensionBee Group’s CFO, who will cover the financial update.

Christophe Martin, CFO, PensionBee Group: Thank you very much, Romy. Helden, a warm welcome, to everyone. I am pleased to cover the financial section of our quarterly trading update. In the first quarter of twenty twenty five, pension, we had a strong financial performance despite the macroeconomic environment with the resilience of our business model enabling us to achieve 20% year on year growth in our AOA plus 34% year on year growth in our last twelve months to March group revenue and coupled with continuous cost discipline leading to improvements in our adjusted EBITA margin with the group achieving breakeven at circa 1% margin on a last twelve months to March 2025 basis. Those continuous achievements are further testament of our consistent and reliable execution against our public market guidance and is ultimately derived from the business core value drivers, which are first, predictable and recurring revenue and second, business scalability.

The first value driver is PensionBee’s predictable and recurring revenue, which is generated from a durable base of assets under administration and is derived from the assets of existing and new customers. In the first quarter, we have seen a 20% year on year ROA growth to £5,800,000,000. The vast majority of our ROA base is derived from existing customers. Those are customers who remain with PensionBee for a long period of time and continue to build up their pension savings with us, resulting in value generation for decades to come. This is because our average customer is around 41 and they build up their pension savings with pension b, which means that cohorts on an underlying value basis, I.

E, before any impact of capital markets are growing over time. Next, AOA is also derived from new customer acquisition through our proven cost a proven approach to cost discipline new customer acquisition approach. Over the first quarter of twenty twenty five, we added circa 10,000 new invested customers onto our technology platform. Joining customers were approximately the same age as our 2024 cohort as our q one twenty twenty five cohort reflects marketing expenditure made in 2024. As a result, the quarter new invested customer were approximately 40, and they had a similar account size to the same period last year.

For the remainder of the year, we expect the total number of invested customers to continue growing strongly and with a slightly younger age profile, which is in line with our marketing strategy for 2025. And as it is customary in the industry, pension assets are invested in capital markets, which have experienced movements year to date owing to global trade negotiations impacting pensions fees portfolio. Similar to what we have observed in past periods of heightened volatility, we observed strong underlying KPIs on retention rates and net flows, underscoring PatientBee’s strengths and resilience. As a result, the compounding AOA base is subsequently converted into our revenue base owing to our resilient gross revenue margin. In Q1 twenty twenty five, we have seen a revenue margin of 64 basis points.

This is unchanged year on year, which enabled us to convert the 20% of year on year asset growth into annual run rate revenue growth of around 17% and last twelve months group revenue growth of about 34%. In conclusion, owing to our compounding UA base, resilient revenue margin, we are driving predictable and recurring revenue. The second value driver is PensionBee’s business scalability owing to the controllability of the cost base, which is thereby continuing to decline as a proportion of revenue. Those scalability dynamics of predictable and recurring top line growth coupled with cost discipline led to improvements in adjusted EBITA margin to 1% on an LTM to March 2025 basis compared to minus 20% for the comparable metric in the comparable period in 2024. With respect to our 2025 guidance framework for PensionBee as a group outlining our short, medium and long term targets, Short to medium term, in the short to medium term, spending around three to five years, we target the group to generate revenue of above £100,000,000 and a group adjusted EBITDA margin of circa 20% by year five, whereby The UK is considerably contributing to group profitability.

In the long term, spending five to ten years, we expect the group to generate above $0.02 £5,000,000,000 in revenue and target a group adjusted EBITDA margin of circa 50%. Our roughly £34,000,000 in cash balance puts PensionBee into a strong position to further scale The UK business as well as invest in the tremendous U. S. Market opportunity to continue executing on our long term strategy and delivering on our public market guidance. I would now like to hand back to Romy for concluding remarks.

Romy Savova, CEO, PensionBee Group: Thank you very much, Christoph. We’re very pleased with the outcome for the first quarter and are very much looking forward to continuing the second quarter in a similar fashion. And I think we’d now like to turn to questions. So

Moderator: That’s great. Ravi, Christophe, thank you very much indeed for updating investors. Ladies and gentlemen, do continue to submit your questions just using the Q and A tab situated on the right hand corner screen or just type question mark if you would like us to open your microphones. The first question that we have is coming online from William Hawkins at KBW. William, we’re going to open up your microphone.

If I could ask you please to just click on the bottom, select the microphone, and, we’ll confirm that we can hear you, sir. Just requested to turn on your microphone there, William. If you would just press allow, we’ll get that turned on for you. Thank you.

William Hawkins, Analyst, KBW: Hi, guys.

Romy Savova, CEO, PensionBee Group: Can you

Moderator: hear Hi, William. We can hear you. Go ahead, sir.

William Hawkins, Analyst, KBW: Hi, Roni. Hi, Christophe. Yes, three questions to start, please. Just trying to do a bit of Sudoku on your numbers. Of the $2.14 net flows, how much was from new customers and how much was from enforced customers, please?

Secondly, you did touch on this in your prepared remarks, but can you again help me understand why the market impact seems to have been so negative? You updated us at GBP 6,000,000,000 at the January. I know the markets have been volatile, but the big volatility is an April event, not a first quarter event. And for me, the FTSE was up and UK gilts were about flat in the first quarter. So I’m still a bit confused about what drove the negative market impact in the last two months of the first quarter.

And then thirdly, could you just help me understand a little bit about the seasonality and the full year outlook for your UK marketing spend? The first quarter figure was a couple of hundred it was a couple of million higher than I anticipated, and you did refer to accelerating marketing spend. I’d assume first quarter is going be a bit lighter and then we’d be picking up through the year. Implying something’s changed there. So could you maybe help me a bit more clarity on what we’re looking for for full year marketing spend?

And, you know, how your view on seasonality has changed from from when we last had the update? Thank you.

Christophe Martin, CFO, PensionBee Group: Yeah. I’m happy to start with the first one on your detailed question around the net flows to 214. So we’re we’re happy to provide the split. So that splits into £131,000,000 coming from new customers and about £83,000,000 coming from existing customers for the first quarter of twenty twenty five. I hope that answers your question.

Thank you. Then I might briefly hand to Romy on the second one, the volatility point.

Romy Savova, CEO, PensionBee Group: Yep. Very happy to to update on that. And I think it is a fair assumption that pension companies in The UK would have more exposure to UK assets on a disproportionate basis. But if you look at the underlying asset allocations, you’ll find that most pension companies have about 4% exposure to The UK. And that’s because the majority of pension companies, us included, tend to allocate according to the global market cap of different countries.

And so you would expect to see a stronger correlation to the performance of global markets, including the S and P 500, and including movements in US assets. That being said, we remain very well diversified, including with exposure to The US and to The UK and to the rest of the world, and also on an asset class basis. And that includes exposure, of course, to equities and to bonds, and to cash and to other assets. So overall, I would, in the model, perhaps track more the, benchmark asset allocations for UK pension funds, rather than these specific UK indices such as the FTSE or GILDs. And I’m very happy to take the third question as well, which is around marketing spend and and seasonality.

And generally speaking, q one has always been a fairly high spend quarter for for PensionBee. That’s because it is just before tax year end, meaning that it’s a very opportune time to be reminding customers about the benefits of making pension contributions. And so you can see that historically, q one has always accounted for a strong proportion of of our spend, and that intention was no different was no different this year. I think what’s important to bear in mind is a little bit about the timing of the flows as well. And what we can see in q one twenty five is a bit of influence from ’24 and the way that the marketing budget was deployed there, and we did comment on the rough age profile of the net new invested customers.

What q one twenty twenty five also sets us up for and the expenditures that we have made for this quarter is a fairly strong amount of net new invested customers to be expected in the second quarter. And as I mentioned earlier, we are focused on continuing strong levels of marketing expenditure within The UK for q two and, ideally, also into the second half. We will, of course, keep a watch on on market volatility and and how that impacts us, but the current intention is to stick to the plan and continue deploying that marketing spend. And overall, in 2025, we expect to have deployed more in pound terms than we did in in 2024, thereby reaccelerating the the growth of invested customers coming through The UK business. I hope that answers.

William Hawkins, Analyst, KBW: If I may just push you on that final comment, Remi. Do do you think I can multiply the first quarter marketing expenditure by four, or are we looking to be higher or lower than that?

Romy Savova, CEO, PensionBee Group: We will need to be guided somewhat by market volatility on the exact numbers, but our intention is to to keep pushing. And so that is not unreasonable in my view, but we do wanna maintain the flexibility to watch how markets are doing.

William Hawkins, Analyst, KBW: Brilliant. Thank you for the help.

Moderator: William, thank you very much indeed for your question. Feel free now to to disconnect your microphone. Romy, maybe we just turn to a question online, if I may. With The UK business now profitable on an LTM basis, what are the key milestones you’re targeting to replicate this success in The US?

Romy Savova, CEO, PensionBee Group: That’s a great question, and I think it’s important to remember the duration of time that it took us to build such a successful UK business, and that’s very much something that we are focused on in The US with the particular emphasis on on the long term. And so in in The US, in the early stages of development, we are executing against the goals that we laid out over the past couple of quarters, and those have been very much focused, first of all, on product development and localized features. So what we tend to look at a lot internally is the speed with which we are deploying those localized features, and q one has certainly been prolific from from that perspective. We launched the Roth IRA. We launched new contributions.

We will soon be launching our retirement planner, which is one of the most used features of our app estate. We launched a safe harbor IRA for our consumer acquisition through employers, and we have launched a number of other smaller features as well. For us, the big priority from a product standpoint is really on the automation of transfers coming through, from the larger record keepers, and that’s four zero one k transfers in in particular, which is where we see a lot of dormant left behind accounts. And there, we now have a number of automations in live testing, that were developed over the first quarter and that we’re very happy to see in a live environment. And so for q two, what we are very focused on is the ongoing speed of that product deployment because it’s really in the second half of twenty twenty five that we then intend to increase marketing expenditure to align with the product build and the product investments that we’ve made over the first half.

So I would say a lot of, our internal milestones in the short term are focused on the speed with which we are developing, products. The second aspect that we are looking at, which we know is absolutely key to long term growth, is brand awareness and brand identity. And we’ve identified a number of channels in The US that have broad national reach and can contribute to awareness of PensionBee and and and who we are and what we offer. And those channels, particular, are social media, PR, and search. And so over the first and second quarter, we’ve been tracking milestones around, followership, particularly on social media, which is something that can also be tracked, externally, but also prompted brand awareness, which we are starting to measure internally.

And so the goal is to continue growing that brand awareness so that we can have a backbone to our presence and to, the trust that customers place in us as we increase spend on some of the paid channels. And so those are really kind of the the milestones that we are tracking, over over the short term. I think that over the kind of medium to longer term, We are tracking milestones that align with the financial guidance. And as you know, we are pretty religious about guidance, and you can expect us to be incredibly focused on that.

Moderator: That’s great. Romy, Christophe, thank you very much indeed. I think that concludes the q and a. If any further questions do come through, we’ll obviously make those available to you post today’s meeting. Romy, Christophe, I know investor feedback is always important to you.

I’ll shortly redirect those on the call to give you their thoughts and expectations. But before doing so, Rami, back to you just for a couple of closing comments, and then I’ll send investors for feedback.

Romy Savova, CEO, PensionBee Group: Well, thank you very much for taking the time to join us today. We’re very happy to keep engaging in in various different forums around the results for the first quarter. I think the summary from us is that we continue to execute on on our long term plan, and so far, so far so good. Thanks for joining us today.

Moderator: That’s great. Romy, Christophe, thanks once again for updating investors. Could I please ask investors not to close the session as we’ll now redirect you for the opportunity to provide your feedback in order the company can better understand your views and expectations? This will only take a few moments to complete, but I’m sure we’re greatly valued by the company. On behalf of management team of PensionBee Group PLC, we’d like to thank you for attending today’s presentation, and good afternoon to you.

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