MoneyMe Limited (MME) Earnings Call Transcript & Summary

Digital lender and nonbank challenger MoneyMe has reported gross revenue of over $105 million for the first half of 2024. Net income at $6 million. Let's get more on the results from MoneyMe's CFO, Neal Hawkins, who joins me now.

Neal, good to see you just talk us through the results.

Great to be with you, Juliette. And a really good result really off the back of a couple of halves that have been very strong as well for the business. It's a preliminary result at the moment. We look forward to announcing the interim report at the end of February. So $6 million statutory profit off the back of statutory profits in the last couple of halves as well. And it reflects a really good result from a robust balance sheet. The credit quality of the book is pleasingly really seeing the benefits of the focus on that. So Equifax score now above 740. And we've got -- our net losses have come down further again as we had expected, but slightly more than we expected to 4.6% for the half. So I'm really pleased. Also, it was good to see originations where we've been targeting the areas where we want to have really increase. We've now got a secured loan book of 48% of the total. So really well set up for the current environment. We've got over 70% of the book on a variable rate [ lend ], which is obviously really helpful for the current environment where you've still got interest rate uncertainty. I saw the announcement earlier this morning about inflation coming down significantly more. So we think, hopefully, the year -- a lot of the headwinds that we've seen, particularly still as part of the result that we're just announcing today, will start to dissipate as we get towards the end of the year.

Indeed, so if we do start to see cuts from the RBA from mid to the end of the year as the market is forecasting, how could that affect your business?

We think it should be extremely positive, like we say, because we've got a variable rate loan book, predominantly, that does mean that we've got a lot of flexibility to move in a way that others have got more fixed rate loan book, so -- just won't be able to do that. So it's a really positive development, and we look have that -- look forward to that happening sooner rather than later. But we're still very well set up. We've been very proactive at making sure that we pass on the interest rates to our consumers as we've needed to so that we can protect the margin for the business overall, which reflects the returns and the statutory profit that we're announcing today.

You -- sorry, you said rather that those cost efficiencies helped with this result. Just talk us through some of those and I guess the importance and adoption of AI as well.

Yes. No, it's critical. So AI is a key part of the tech stack that we've got. So MoneyMe has been a technology-led business from the get-go. It owns its own tech stack 100% and everything is all modular and how we're then able to build things through. So when we've added on a new product, we've added on lots of different products over the years, it really is an incremental move that we've been able to have. What that means is we've been able to get economies of scale, leverage that tech so that we can get the operating leverage down. You would have seen in recent times, it's now got below the 25% mark to income -- operating expenses to income ratio. So really, really positive sort of setup. AI is a key part of the story. It means you can give customers a much better experience, but you can also then get some cost efficiencies coming off the back of that. And that is still very much a journey as we all know, for us as well as others, even though I think we're well up the curve compared to a lot of our competitors.

You also have signed an exclusive deal with Snowy River for caravan financing. So a caravan potentially on the spot, talk us through this deal.

It's a really exciting setup to see these transactions come through. And it's one of many where we can see people, dealers, brokers are looking to partner with the business because of the tech, because of the experience that we can give to the customer. And so it's really good to break out into this asset class. We're particularly keen and focused on auto and that part of the market. So it's great to have that transaction now as part of the stable and look forward to developing a really good sized book with that partner.

I'm going to say, I think tourism a very lucrative market. What else can you tell us about that potential might be in the works in terms of further deals?

There's certainly lots going on. The generative AI space is definitely a key space for us, and we -- very much at the moment, we're looking to make sure that we've got the right settings for the right book, for the right returns in the environment so that then we can really sort of go for that growth when the environment is right. And as we saw with the announcement this morning, hopefully, that's sooner rather than later.

Just having a quick look at your share price, up today in an up market. But just looking at year-to-date, we have seen it up by about 5%, obviously still in January. But over the past year, you've had quite a bit of a hit, Neal. How do you hope things might turn around for shareholders?

We do expect the share price should improve over time because we do think that it just does not reflect the fundamental value of the business. It hasn't for some time. It is an issue that we share with many of our peers in the nonbank and the fintech sector. But we do expect that, that will flow through. What will happen is we'll continue to report results like we have today. We'll continue to demonstrate our capability with technology, with AI to be able to deliver returns and that will no doubt sort of flow through to the share price in due course.

So you're quite positive on the outlook, particularly given we are facing potentially peak interest rates?

That's right because we've been calibrating our setting for quite some time now, sort of go back over 12 months. So we've got a much higher credit quality book than we had in the past. That has been a very conscious decision. You can see the benefits of that now flowing through to that 4.6% loss rate that's coming through. It's meant that now the $1.2 billion balance sheet we've got now is a much more sustainable loan book than we had even not that long ago. It really gives us a really good platform. So we think we've got a really good platform to build from, and we look forward to when the environment is right for us to be able to continue the growth trajectory for the business.