PensionBee Group plc (PBEE) Earnings Call Transcript & Summary

Good afternoon, and welcome to the PensionBee Group plc Q4 Results Investor Presentation. [Operator Instructions]. Before we begin, I'd like to submit the following poll. I'd now like to hand over to Romina Savova, CEO. Good afternoon.

Good afternoon, and welcome to PensionBee's Q4 2025 Results Announcement covering trading for the period ending 31 December 2025. I'm Romina 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 and profit for our company and for our shareholders. We are pleased with the results of the fourth quarter, which reflects strong execution in the U.K. and in the U.S. As is expected for the medium term, the United Kingdom made up the bulk of assets and invested customers. The U.K. closed the quarter with assets under administration of GBP 7.4 billion, representing 27% year-on-year growth, annual run rate revenue of over GBP 50 million, representing 33% year-on-year growth and approximately 305,000 invested customers. Over the fourth quarter, we increased marketing expenditure to GBP 2 million compared to GBP 1.2 million in the fourth quarter of 2024, positioning the business for continued ramp-up in marketing-led growth in 2026 and beyond. The investment drove U.K. customer growth of 37% over the quarter with 8,000 new invested customers onboarded, underscoring the effectiveness of our growing marketing expenditure. Overall, we onboarded approximately 40,000 customers in 2025, increasing the number of net new customers relative to 2024. We continue to invest in productivity, introducing new automations and efficiencies across our technology platform. We generated a productivity improvement of 22% year-on-year with each staff member supporting 1,621 invested customers. We are well positioned for 2026 with the launch of our new and refreshed BeeHive experience, which will soon include the introduction of AI-powered chat in the app, further enhancing our long-term productivity. The U.K. achieved adjusted EBITDA profitability of GBP 3.4 million with a 26% adjusted EBITDA margin for the quarter, underscoring our commitment to profitable growth in the U.K. The U.K. also supported group profitability for the year overall. Turning to the United States. Over the fourth quarter of 2025, we have continued to focus on establishing a strong foundation for long-term growth. Our first advertising campaign concluded successfully, delivering a meaningful uplift in brand awareness in the markets where billboard advertising was deployed. Our home location of New York saw prompted brand awareness of 12%, Seattle at 9% and Chicago at 6%. This heightened visibility converted broader market interest into a healthy customer pipeline, which we can see continues to convert over time. The company maintained its product-led growth strategy, enhancing the customer experience through the introduction of performance analytics, giving customers greater visibility of investment returns and improving transparency. PensionBee is now entering 2026 poised for growth, supported by strong early interest in our 1% match initiative, which is designed to accelerate the company's path to $1 billion of AUA in the U.S. as well as a number of new distribution partnerships. PensionBee has successfully secured its inaugural Safe Harbor IRA contracts and initial clients are in the process of being onboarded, while additional clients are in the final stages of discussion. I would now like to hand over to Christoph Martin, PensionBee's CFO, who will cover the financial update.

Thank you very much, Romi. Hello, and a warm welcome to everyone. I'm pleased to cover the financial section of the Q4 trading update. In Q4 2025, PensionBee had strong financial performance with 27% year-on-year growth in our AUA to GBP 7.4 billion and a 33% year-on-year growth in ARR to approximately GBP 51 million. This top line growth, coupled with continuous cost discipline led to an improvement in our adjusted EBITDA margin with the group achieving profitability of GBP 2 million at a 16% group EBITDA margin for the quarter, driven by U.K. adjusted EBITDA profitability of GBP 3.4 million at a 26% margin for the quarter. These continuous achievements are derived from the core value drivers of our business, which are: first, predictable and recurring revenue; and second, business scalability. Furthermore, they are a testament to our ability to consistently and reliably execute against our public market guidance. The first value driver is PensionBee's predictable and recurring revenue, which is generated from a durable base of assets under administration, a function of the assets of existing and new customers. In Q4, we experienced a 27% year-on-year AUA growth to GBP 7.4 billion. The vast majority of the AUA 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. Our average customer is in their early 40s, and they build up their pension savings with pension B, which means that cohorts on an underlying value basis, so that is before any impact on capital markets are resilient over time. AUAs are derived from new customers acquired through our proven cost disciplined approach to new customer acquisition. Over Q4 2025, we onboarded circa 8,000 new invested customers onto our technology platform, representing a 37% year-on-year growth. Over 2025, customers joining were slightly younger than in 2024, aged approximately 39.7. And so last year -- the year before in 2024, it was 40.6%, so approximately 1 year younger, in line with our marketing strategy for 2025. The younger customer cohorts acquired resulted in a slightly lower average balance of new customers this year compared to the previous year. As a result, the compounding AUA base is subsequently converted in our revenue growth, owing to our resilient gross revenue margin. In Q4 2025, we saw the revenue margin of circa 65 basis points, which enabled us to convert the 27% year-on-year AUA growth into quarterly revenue growth of 34% and annual run rate revenue of 33%. In conclusion, thanks to our compounding AUA base and resilient revenue margin, we have generated predictable and recurring revenue, which represents PensionBee's first value driver. The second value driver is PensionBee's business scalability due to the controllable nature of the cost base. Our cost base has continued to decline as a proportion of revenue. The scalability dynamics of predictable and recurring top line growth, coupled with cost discipline led to an improvement in operating margin. On a 2025 basis, adjusted EBITDA margin improved to 11%, up from 7% in 2024 for the United Kingdom. Furthermore, the operating margin pre-marketing, so this is a measure of scalability for the U.K. improved to 39%, up by 6 percentage points from 33% last year, reflecting the inherent strong scalability and margin potential of the business. Reflecting on our long-term track record, PensionBee has delivered a revenue growth since our IPO of compound annual growth rate of 48% to December '25 and strong margin expansion in the U.K. with adjusted EBITDA margin improving from negative 166% pre-IPO to positive 11% today. Furthermore, operating margin pre-marketing improved from negative 35% pre-IPO to positive 39% over 2025 in the U.K. This underscores the strong delivery against our growth and business scalability objectives. With respect to our guidance framework for PensionBee as a group, we have outlined the short, medium and long-term targets. So by the end of 2029, we expect the group revenue to be above GBP 100 million and adjusted EBITDA margin of circa 20% by the year end 2029 with the U.K. considerably contributing to those targets. And by the year-end 2034, we expect the group to generate above GBP 0.25 billion in revenue and adjusted EBITDA margin of circa 50%. Our circa GBP 33 million in cash balance puts PensionBee into a strong position to further scale the U.K. business as well as invest in the tremendous U.S. market opportunity, continuing to execute on our long-term strategy and delivering our public market guidance. I would now like to hand back to Romi for concluding remarks.

Thank you very much, Christoph. We are very pleased to be concluding the fourth quarter on a high note and are very excited about the 2026 plans ahead, both for the United Kingdom and also for the United States. We'd now like to open up to questions.

Fantastic. Christoph, thank you very much indeed for the update. Just while the team take a few moments to review those questions submitted today, I'd just like to remind all the attendees that you can continue to submit your questions and we'll have available the presentation on the platform as well. Romi, perhaps if I can just start with the first question, thank you. It comes in 3 parts. So I'll break them out for you. The first one is, can I please ask about the take rate, which was slightly higher in Q4. Anything to be mindful of?

Christoph, one for you.

The take rates, can you maybe ask a question of how this will be defined? Is this new invested customer? -- number, maybe someone can clarify.

Let me see if [indiscernible] can clarify that point. Let me just hit the second part of that question. CAC year-on-year was a touch higher as well. What are the drivers? How should we think about CAC long term?

Yes. Happy to take the second one. So the CAC, so the way of how we think about marketing and customer acquisition is basically to drive growth. And so CAC is a very important measure for that, that we look at and where we have a self-imposed threshold of GBP 250, which we are at the end of 2025. But another way that we're also looking at is what is the return on that CAC. And so a way of, again, thinking about we spend marketing to drive growth. And so in other words, we spend marketing and we get cross inflows. So -- and if you're looking at the gross inflows and divide them by marketing, so you get basically what is the gross inflows that you get for each pound of marketing spend, what you will find actually that the business model is very, very predictable because the gross inflows per marketing pound spend for 2025 was 114, and the average age of the customer that we acquired was 39.7. So if you look actually 2 years back in 2023, the average age of the customer we acquired was 39.5. So roughly the same age and the gross inflows per marketing spend was 120. So that means actually -- and then last year, where the average age was 40.5, the gross inflows were 145. And the years before it was lower, the gross inflows per marketing spend was lower. So that tells us that actually, if we are very mindful of what is the demographic and the average age of the customer cohort that we acquire, it gives us a really reliable and predictable indicator of what the gross inflows return would be as a proportion of marketing spend. So that's the second way that we're looking at. And I think that tells us a lot about the predictability of the nature of the business.

And the final part of the question, how is U.S. expansion tracking to your internal plan? Should we expect to see material revenues from the U.S. in 2026? How will costs track against this?

Great question on the U.S. The U.S. is, of course, still in the early phases of its development, and I would point you towards the medium-term guidance that we have for the group overall. The medium-term guidance, of course, sees us achieving a GBP 100 million revenue marker with a 20% EBITDA margin. And I think as you can see from the numbers that we've reported today, simply kind of doing more of what we have currently been doing would very much kind of be in line with the achievement of that guidance. And so when it comes to the U.S., we will continue to focus on the kind of key development milestones that we see for the business over the 2026 time frame. That includes establishing the direct-to-consumer repeatable marketing funnel, which we are now starting to see coming through on the back of the advertising that we did last year, but also with the B2B contracts on the Safe Harbor IRA side, where we have signed the first ones and are in the process of onboarding. And so you can expect to see quite a lot of progress on the U.S. in terms of initial milestones being reported over 2026. I would, as I have done in the past, contextualize the U.S. business with the goal of -- and our goal of growing it more quickly than we grew the U.K. business at a similar stage of its development, some relevant milestones there. It took us about 1.5 years to acquire the first U.K. customer. Within 2 years, we had about GBP 20 million of AUA. Within 3 years, we had about GBP 100 million of AUA. And so I think that you can see us moving the U.S. business much faster against those initial milestones. And I think that that's what we will be reporting against as we scale it up to a meaningful level.

Yes. Can I maybe add one point? I think there was also a question on the cost. And I think the key point to highlight there is that we approach the U.S. in a really, let's say, capital disciplined and derisk approach, generating a lot of synergies, number one, from the technology platform that we have developed in the U.K. and bringing it over to the U.S. and as well as having the commercial relationship with our local partner who refunds the marketing investment. So -- and then the third one is the 1% match that we're rolling out. And you need to be mindful is that 1% match, yes, it comes from our balance sheet, but what you actually get is a highly predictable return from it because -- or minimum return from it because the requirement for the 1% match is a 5% hold. And so that means that is already paying back your acquisition costs as well as generating some returns on it. To quantify this a little bit, so the U.S. for the full year was an investment of GBP 4.5 million. There was some transfer pricing in those numbers. So if you take that out and look at the pure cash number, it was about GBP 3 million. So that means actually we spent a low single digit for expansion to tap in the world's largest pension market. So that's number one. And then included in the number as well is a GBP 3.8 million investment in marketing. But again, this got refunded, thanks to the relationship that we have with our partner. So I think one thing to be very mindful of is how we approach the U.S. expansion in a very capital disciplined way and therefore, also derisk that expansion by being very mindful, generating synergies, having a very interesting commercial agreement and then the structure around the 1% match.

Fantastic. Thank you very much indeed. Next one we've got here. What are the key operational levers to reach your medium-term target 20%? I think you've covered some of these on the way through, but if there's anything further to add.

Yes, I'm happy to take this one. So the levers to get to our 20% target, it is really almost embedded in the business itself because PensionBee is of course, a growth story. So we will continue growing in the U.K. as strongly as we can. So we have publicly said we actually reinvest our profit back into the business to turbocharge growth and drive growth there. And so you actually see very clearly when you're looking at the scalability metrics and one proxy you can look at is what is the profitability as a percentage of revenue and actually track -- see how this tracks over time because this gives an indication of how strong the operating leverage is in the business. I made a reference around profitability before marketing because that is really looking at the underlying platform itself, irrespective of how much we actually spend on growth. And so if you're looking at that adjusted EBITDA, so pre-marketing margin, basically pre-IPO, it was 35 -- negative 35%. And this year, 2025, it is 39%. So that tells you that as we grow the top line, given the high retention rate of our cohorts, and the compounded nature of the asset base and conversion to revenue, the top line is highly predictable and recurring in nature. And then at the same time, the cost base is growing at a much slower clip compared to the top line, and that generates this operating leverage. And so this is probably the biggest lever is continuing investing in growth, continuing cost discipline and doing more of the same really of what we have already achieved since IPO consistently year after year to just driving that operating leverage and that scalability further.

A question from Paul. Marketing spend in Q4 fell to EUR 2 million from EUR 2.6 million in Q3, but new customers also fell roughly in the same proportion. Could you explain why you let the marketing spend -- the marketing spend and new customers fall? Wouldn't it be better to spend a bit more on marketing and keep the new customer growth momentum?