LM PAY S.A. (Y00) Earnings Call Transcript & Summary

Hello, everyone, and a warm welcome to the Poland ON AIR conference. So in this session, we are dedicated to the LM PAY S.A., and we're truly delighted to introduce to you CEO, Jakub Czarzasty. So he will speak in a moment and guide us through the presentation and give us some insights. And with no further ado, Jakub, the stage is yours.

Yes. Thank you very much, Sarah. Thank you. Good afternoon, everybody. Thank you very much for a chance to introduce to you LM PAY today. We offer our consumer loans for medical and beauty industry across in Poland. Here, you can see a few characteristics of LM PAY. Like I said, we are existing in a very attractive and niche market because it's a medicine beauty and for the last 2 months in car insurance lending market. We've got really huge numbers of distribution clinics and hospitals. Today, it's more than 13,000 medical units. We started our business 15 years ago. So thanks to be first, we built a quite great barrier to entry for new competitors. And this is very nice figures for me always because today, we've got a 33% of returning customers. So it shows that our product is really friendly, quickly and transparently in costs for a customer. LM PAY is some kind of financing bridge between the clinics and the patients. Clinics want -- it's obvious, of course, but wants to sell more quicker and more comfortable for patients. And on the other hand, the customers want to receive complex treatment as quickly as possible, which will not take several months, but only a few weeks or days. So it's like a build a house. If you build it many years, it costs a lot. If you do it as soon as possible, it always costs less. So in both situations, it's the same philosophy. This chart always looks good because it grew, it's growing, and it will continue to grow. But the question is about dynamics because 30% is, let's say, always easy to make. But thanks to new products, and new markets, I expect that the year 2026 will be absolutely better. Of course, I don't use to promise, but I cannot wait for the next year, especially when we add the information that we -- in the next 10 days, we switched our financial partner, which will be cheaper than 35% in our cost of financials. So these 2 information together should show us great figures in the last quarter of this year, but I'm pretty sure in 2026, too. Here is a small information about our default rates, about our risks. And you can see here comparing to LM PAY and another average loan companies in my country. So we've got today a little bit less than 3% risk in DPD 90 days. And the question is why the risk is so low. So I can tell you that here is 2 very important reasons. First, it's our average MediPay product. It's a very small ticket because it's only EUR 450 per one agreement with clients. And this is the first reason. And the second that we don't have a fraud in our business because we transfer the money directly to the clinics or to the hospitals. When I presented first time our company here in Germany, I was asked by investors about reasonable of our business, especially that Poland has got quite well-developed public health care system. And of course, it's really nice developed, but this is only partly true because many treatments, especially in dentistry and beauty are not financed by a public system. But when it's refundable, we have got so long lines to make that treatment from the specialists. So that's why our system works and it is useful. So fortunately, it's good for us that we've got big lines to the specialists, unfortunately, for the patients. But I can see -- I cannot see something on the field in Poland in a public market that it would be changed in the near future. Here is the -- on the left side in this slide, you've got some instances. For example, if you've got a broken knee and you need to fix it, you cannot wait 6 months or more. And the same crazy situation with -- exactly with the rehabilitation. So when you are lucky and you fix your knee, you need to make your rehabilitation immediately the next day after surgery. In Poland, you need to wait average more than 6 months. So that's the reason it works. Polish health care market has growth average 7.3% every year and probably going to continue for next year in the same value. PMR said that so I trust them. I trust them. But if we add that to our economy, I mean, a Polish economy is one of the most dynamic in Europe today. I think that our solutions are in correct place in a correct time. A few words about the products. The lower ticket, the better. The more clients, the better. This sentence is together with my philosophy since 2019 when I decided to settle down new product, which called CNPL like Care Now, Pay Later. About MediPay, it's a small and easy. Average size is EUR 450 and the biggest margin here. MediRaty is dedicated rather to dentistry, longer procedure, but still quick. And average size here is EUR 1,500 per agreement with the clients. And of course, because we want to be reputable business for the patients who have made payments on time, we always offer cash for anything. And average size over there is EUR 1,400 with a quite great margin too. Just a little bit about the margin. So here is how we earn the money. So in MediPay, we earn in 11 months, average 25%. In MediRaty, it's typical durations of 25 months, and we earn a little bit less, and it is 23%. If we add to earning money a low risk, which is today less than 3%, and we've got an internal and external nice data about the patients. So when we add to this information a cheaper cost of debt in the next 10 days, we've got -- that's why we've got the expectations of nice figures in the fourth quarter this year and all year 2026. And this is a nice story because 1 year ago, we decided to try to find some -- another market when we can rise in our revenue. That was true. So I went to my credit risk manager, Marcin Tokarek, and asked him, Marcin, when we can lend the money and still have a low risk. So he tell me in the same seconds that Jakub, only a car insurance works. So that's why we talked with the biggest broker in Poland, which is called CUK Insurance, and we signed the agreements, then we implement our system to their systems, and we launched it in June -- 24 June 2025, so 2 months ago. And today, I cannot tell you too many information. Of course, it's raising very, very fast. But the most important is that the insurance company asked me about the possibility to implement this solution. We just measure the -- we now just measure risk and the risk is very, very low. It's a little bit more than in medicines, but it's still low. So here is our expectations to raise very fast our revenue this year and the next year. This is quite a big market like in Germany because it's more than EUR 7 billion per year. And we can see today that average ticket for that kind of product is EUR 500. Yes. And here is -- yes, in active policies, we've got almost EUR 30 million. So it's really market worth doing. So now we are -- we do, and we will see what's going on. I got some expectations and in the end of next year, our assets will be partly half of medicine and half of insurance industry in our company. Just a few information about our figures after 6 months, we've got some compare between 6 months '24 and '25. Like you can see that customer acquisitions we got 12% more. Our revenue rise 31%, but this is only still beauty. So we will see what's going on with the carriage rent next year. Recurring customers, like I said, it's today 33%. So it shows us really quickly add good products for our customers. And our EBIT today is at PLN 4.4 million. And I think that in the next presentation, I will show you net income first time because it will be the best time to make it because when our cost of debt just rapidly down, then it will be a great time to show not EBIT, not EBITDA, but net income in our financial. And here is data which was presented a few months ago, but I repeat a little bit about it. It's compared to '23 to '24. So customer acquisition is 16% year-to-year, revenue 29%. And if we don't add any other markets, it's a 30% rising revenue every year. It's still quite easy to do, but we have the insurance and recurring customers 29%, it was in 2023 and 2024, it was 30%. Today, it's at 33% in 2025. And EBIT, if you compare '23 to '24, of course, it's quite -- it's much more. But in 2024, we've got in real 3 very big one-offs. So that's why these figures looks like that. Our equity, it's almost EUR 10 million today. A very important indicator is equity ratio at the level of 28%. If we talk about the lending company, it's quite a nice indicator. And our guidance for this year, of course, everything is dependent about the explosions, 2 products, of course, insurance and our card together with Visa, what we launched 1 month ago. And the loan volume we made in 2024, a little bit more than PLN 100 million. Now our expectation is minimum PLN 130 million, rather PLN 150 million, PLN 155 million we can do. Our revenue minimum this year will be 35% more. I mean, it's minimum PLN 32 million. If we explode with insurance in the last quarter, it will be PLN 38 million, PLN 42 million. We will see. I'm waiting for 2026 because then I'm pretty sure that will be quite different and better and better. And our EBIT minimum this year, we want to get PLN 7 million, rather expectation for PLN 10.5 million, PLN 11 million in a real. And this is our steps what we need to make immediately, and we need to make in the next 24 months because with new partner of finance, we've got special conditions that in 24 months, we need to reduce our intra-group loan. So medical finance group, who is the main shareholders of LM PAY must sell some part of shares of LM PAY because the Medical Finance Group need to repay the debt to LM PAY. So every money from this transaction will go to LM PAY. And this is very nice information for investors, I'm pretty sure. Debt cost reduction. So we are making this. I hope that we started in next Tuesday with UniCredit Bank Group. And we launched 1 month ago our MediPay Mobile by Visa. And in the next 60 days, we are going to launch our Secure Pay application. It's a dedication application -- it's dedicated application to agent and the brokers in insurance, car insurance. Yes. And we are absolutely focusing every day for our revenue, at health revenue and cooperating with top profit partners. So thank you very much for attention. It took only 18 minutes. So I'm proud of myself because I always have the problem with the time. And I got some questions, and I'll try to answer for that now. I need to...

So Jakub, let me shortly support you. [Operator Instructions] So let's start with the first one. So is your remuneration based on the volume of granted loans? Do you have additional revenue sources?

No, no, no, absolutely not. I'm the main shareholder in the company. I've got the same salary for the last 6 years, but I've got some money as a debt in a company. So I earn money from this source. And this is -- yes, that's how it looks like.

All right. Thank you so much. Then we have an additional question. What -- when will we expect your half year financial statements 2025? So when will they be published? So far, we just know revenue and EBIT.

Yes. So of course, the best perspective today regarding car insurance. I think the question was about when we will publish the financial results. We will publish them end of September. Now we just published EBIT and they seem quite good and promising, but we are obliged by the also German Stock Exchange to review our financial results end of September, and this will be the precise publication date.

All right. Thank you so much. Then in your presentation, you mentioned expansion into the insurance market and further development with clinics and beauty salons. Which segments do you see as the most promising in the short and midterm?

Yes, I saw this question, sorry. It's a little bit mistake from my side. Of course, the biggest perspective today for us is absolutely car insurance market because it's a really huge market. In the medicine, as I tell you in the presentations, we can do it, but not more than 30%, 35% rising revenue every year. Of course, we launched the card. And this is a similar card in the United States, there is a special system, which calls CareCredit. So we will see because the card together with Visa opened the door to the clinics when we don't have an existing agreement. But I will keep this 30%, 35% in medicine. If we explode, we explode absolutely, thanks to Secure Pay and the InsurTech market.

All right. Thank you so much. And then next question, Capital IQ shows EPS in 2026 expected of PLN 4.23 versus PLN 0.19 in 2025 expecting. Is that a fault? What is your projection on earnings?

I need to write these questions again Capital IQ shows EPS.

If we need to clarify, we come back to the investor, that will be okay. Or we will move on with another question first.

Maybe this EPS mean EBIT?

Earnings per share, it means earnings per share. So -- but I covered the question, so we can clarify afterwards.

Yes, please.

So then next one. In your 2025 guidance, you highlighted the launch of new products such as Secure Pay and Media Pay mobile versus Visa. What role do these innovations pay is building long-term shareholder value?