The latest Investing Matters Podcast episode featuring financial educator and author Jared Dillian has been released. Listen here.
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In Q1 of FY22, PensionBee has reported an 18% quarterly increase in invested customers from 117k on 31 Dec 21 to 138k on 31 Mar 22, a y-o-y growth rate of 70% (31 Mar 21: 81k), and is on track to meet our forecast of 200k+ by the end of FY22 (f’cast annual growth 73%). Importantly, ‘registered customers’ (a ‘top of sales funnel’ metric) jumped by 141k from 658k on 31 Dec 21 to 799k, an increase far in excess of the previous quarter (+56k Oct-Dec 21).
PensionBee has reiterated its confidence in achieving its previous revenue guidance of £20m+ for FY22, as well as its medium-term guidance. It appears on-track to meet our previous forecasts and we maintain our fundamental value of 230p per share, over 60% above the current share price.
https://www.equitydevelopment.co.uk/research/marketing-investment-bearing-fruit-growth-on-track
If you missed the live event, you can watch a replay of the PensionBee investor presentation following the publication of preliminary FY21 results. Coming up to their first year anniversary following their IPO in April 2021, Romi Savova (CEO) and Christoph Martin (CFO) answered a range of investor questions and gave a detailed overview of numbers, which saw strong growth in revenue and Assets under Administration (AuA) for the period. They were joined by key business heads who gave investors insights into marketing strategy, new product designs, as well as technology innovations.
The presentation has been divided into chapters (see below) for ease of viewing.
0:00:03 Introduction and FY21 results overview - Romi Savova (CEO)
0:06:19 Jasper Martins (CMO) - customer acquisitions plans & marketing strategy
0:09:32 Matt Loft (CDO) - new product design plans
0:12:50 Jonathan Lister Parsons (CTO) - Technology update
0:16:23 Christoph Martin (CFO) - Financials overview
0:23:30 Romi Savova (CEO) - guidance and updates
0:24:29 Questions & Answers
Link to full video: https://www.equitydevelopment.co.uk/research/pensionbee-investor-presentation-fy21
Full research note & audio summary here: https://www.equitydevelopment.co.uk/research/pensionbee-initiationreport
We initiate today on PensionBee Group - the leading disruptor of one of the UK’s most lucrative financial sectors. Pensions house a huge wealth pool (>£1 trillion in PensionBee’s defined contribution addressable market), with customers looking for a multi-decade relationship with their provider to achieve financial security. Fuelled by £50m raised in its April 2021 IPO, PensionBee is ramping up growth.
At the end of its latest financial year (Dec 21), PensionBee had secured 117,000 invested customers, up 70% from 69,000 at the end of FY20. It had also grown its assets under administration (AUA) by 91% to £2.6bn (from £1.4bn), and its revenue by 103% to £12.8m (from £6.3m), with run-rate revenue of £16.3m in Dec 21. In fact, it has roughly doubled revenue every year since 2018.
PensionBee has built a technology platform that has started to demonstrate its operating leverage potential. While not yet profitable, it is rapidly closing in on that milestone. Adjusted EBITDA margin improved from -236% in 2018 to -129% in FY21 and is forecast to turn positive from Dec 23.
The investment case is compelling:
• PensionBee has hardly scratched the surface of its growth potential – it still has a tiny market share (<0.25%) of a huge addressable market.
• Revenue growth benefits from ‘snowballing’ effects: New customers add ‘lump sums’, then typically make regular contributions until retirement, while investment returns compound.
• AUA and revenue is likely to be less volatile than most other wealth managers as customers are mostly unable to withdraw assets, and make regular, often ‘automated’ contributions.
• Profitability is likely to ratchet up very quickly once positive as the cost base spreads across a growing customer base, and existing customer revenue grows without new marketing spend.
• PensionBee is well capitalised and should meet its growth potential without new equity.
• It is founder-led (co-founders own 42%) with their interests aligned to other shareholders.
• A transition to the Premium Main Market Segment of the LSE is a target for H1 22 (currently listed on High Growth Segment of Main Market): the Premium Segment demands the very highest listing and governance standards, and allows for inclusion in FTSE indices.
Our fundamental value is 230p per share, 63% above the current share price. This is based on discounting the future cash flows of our growth forecasts. If progress tracks forecasts, we see potential for the share price to close the gap on fundamental value. If our forecasts are exceeded, there could be further potential upside for shareholders.
#PBEE - we're pleased to announce that PensionBee Group plc, a leading online pension provider, will be conducting an investor presentation covering the company's Full Year results to the period 31st December 2021.
The online presentation will be hosted by Romi Savova, CEO, and Christoph Martin, CFO, and will take place at 11.00am on Friday 18th March.
PensionBee is approaching its one year anniversary as a public company, and this will be a great chance to hear directly from the management team how their model works, what has been achieved in FY21, and the growth ambitions they have given the scale of the market opportunity.
The webinar is open to all existing and potential shareholders. Questions can be submitted during the presentation to be addressed at the end.
Sign up here to register: https://www.equitydevelopment.co.uk/news-and-events/pensionbee-fypresentation-18march22
What a f ****p, wish I never bought a share in this shower of s**t. As soon as it returns to the original price (if ever) I am out.
Agree with that Warren, also Director buying bodes well. GLA
Once it moves to the main market next year it will trigger huge purchases from all the funds , this is a billion pound company at the start of its journey probably ending with a buyout by a big player .
Very exciting future !!!!!!
Hoping for a nice climb back above 160.
Yeah, saw one on ITV2 the other day. The Facebook marketing campaign appears to have stepped up, one ad video had 1.3 million views when it appeared on my feed yesterday.
Not aware of any new marketing - is anyone else aware of any?
Nearly 5000 reviews on trust pilot now. 2000ish more than at IPO I think. If the growth in reviews reflects the growth in customers and FUA the n should get some good results next month. DYOR
Looks like it's back on your radar then! :)
In all seriousness, I wouldn't be at all surprised to see this drop below 160. It's a good company, but alot PI's would have taken their 5-10% gain from the IPO and gleefully run. That was the risk of them marketing it to all their customers. If somebody is using PBEE to manage their pension, then it's very unlikely that those same people have any real appreciation of individual stocks. So that will be impacting the SP a bit. but it seems the market is too impatient to wait for this to start turning the future profits that it could and probably will.
I'm holding out for 150 when new regulation comes in. The FCA has failed at the helm (as always) with British Steel and a number of other scandals. They'll do what they always do which is to shut the stable door now the horse has bolted with some draconian and ill considered new regulations that make PBEE's work certainly more costly. If only for their insurance.
Bunky1981
Surprised to see this falling back towards 165p. If it falls below 165p it will definitely be back on my radar.
I took my 7% gain and walked. I'll keep an eye on it though. I'd buy in again at 150. I think this is a solid business but there are easier and faster gains to be made elsewhere. Good luck to the holders.
Doesn't matter how trendy a product or service is, the market is brutal and impatient, it demands results not forecasts. I see potential here, although I reckon it will take good 3 - 5 years for that to feed through. The big question will be if there's better returns to be found elsewhere while waiting.
Still watching, still see short term downside.
Rick.
Almost back to the IPO price now. Not good the talk of making it harder to transfer pensions.
RickEngland
Genuinely not seeing why it should take that long - once the increasing FUA trend is noticeably stronger than the increasing losses trend it will be game on - no need to start from a significantly lower share price. Took my 9% profit at 180p today as I have always had other plans for this money, but keeping PBEE on my watchlist and will likely be back - I would be surprised to get the opportunity to pay less than 165p.
In their 2020 results, pension bee reported a £10.4m loss that's double 2019 despite 82% growth . If shareholders are happy to accept the share price going down for say 5 years then enjoy the ride. I think there needs to be trends of reducing losses before investors can see real potential. That's going to need a huge swing in revenue, to cover current growing expenditure to justify a current £400m market cap valuation.
@RickEngland - As long as Nutmeg are still (somehow) trading... then PBEE looks positively loaded with cash. AUM are everything and investors will pour money in for years until it turns. Because once it does, it's massive margin stuff.
@GlenH - I'm astonished to hear that your pension is worth less than half of the total contributions after 20 years. I almost can't believe it. SJP are pretty rubbish and expensive, but they're not THAT rubbish. Are you absolutely sure you've got those figures correct?
When you say "I haven't had advice from SJP"... believe me, you have. You may not know it, or feel like it, but SJP have to give you advice in order to recommend the transfer to them. If the early exit penalty was not explained to you, then it sounds like pretty good grounds for a complaint to me. I'd rather not go into too much detail, because I don't know any of the details and we're just strangers on a forum. But I'm comfortable telling you that I've submitted a number of complaints to SJP on behalf of clients. Particularly with regards to their early exit penalties, which I think are a disgrace and something that should have been left behind in the 1900s. I've had every single one of those complaints upheld and SJP have "released" the pension without applying the charge. But I don't know your circumstances, so I can't comment on specifics. SJP are very precious about reputation though. They don't like people airing dirty laundry and seem quite happy to write a cheque to make people go away quietly.
As for the awful performance. I still just struggle to see how that's possible. Unless you are in an ultra defensive portfolio that has virtually no equities in it and high SJP charges. But even then... I'd expect it to be flat after 20 years, not halved! :/
Rick
“fashion coolness hype and hope”
The hope to secure a significant share of a huge market we can all see just sitting there. Seems reasonable - I wouldn’t bet on the market resorting to more traditional valuation metrics anytime soon. There are many far more generously valued and far less credible propositions for it to fall out of love with first!
I've done some digging. The firm lost £5m in 2019, despite huge growth. They use financial institutions such as L&G to manage their funds.
We seem to be in an era where fashion coolness hype and hope signal success, rather than the bottom line "profit". I really find that strange.
The only plus side is they raised £50 - 60m, which should last a while, depending how much it costs for ads to drive more growth.
The question is how how many billions in assets do they need, to generate enough income to report a profit? Looks to me they need 5x current revenue at least.
I like the concept and brand, but I dont expect to see a profit here for 5+ years. I might dip my toe in, if the share price more reflects a loss incurring business. I'll wait to the hype dies down. On watch list.
Rick.
@Bunky1981
Thank you for your advice, I do appreciate it.
My pension is a small one from 20 years ago and not a DB pension.
The encashment value and the transfer value are the same and about 6% less than the Unit Value. I confess I don't fully understand the transfer process from the St James's Place side and I've never had advice from them. The fact that after 20 years my pension is worth just 42% of the amount I paid in, 6% seems a small price to pay to get it out of there. If I do have to pay the 6% to transfer this is nothing to do with PensionBee but the unpleasant people at St James's Place. After a year with PensionBee I can transfer my pension elsewhere with no charges. If you think I have any grounds for a complaint with St James's place please let me know, it does seem wrong that a pension can go down 58% in 20 years.
@rossannan - I agree. They do seem to do about as much as can be asked to, to save us from ourselves. Certainly more than Hargreaves Lansdown and their ilk. I think the ethics of PBEE look solid. Hence why I'm pleased to be a shareholder.
ESG is, happily, a big factor now for the viability of a stock. Deliveroo tanking is a great example of wider forces at work. When a company's ethics are poor (how they treat their delivery drivers) it is no longer just about "woke" people not wanting to hold the stock. It means that major funds managers can't buy it either, as it jeopardises the credentials of the rest of their fund. ESG is so a la mode at the moment, that any stock with solid ESG credentials becomes very attractive to large fund managers and therefore puts the private investors in a great place. So I'm excited!
@DinkyDan - spot on. I'm also in the my 30s and our generation rarely have anything particularly interesting about modern pensions. Certainly if they're Defined Contribution anyway. The link that rossannan is useful. There are other benefits such as enhanced tax free cash (where your Pension Commencement Lump Sum is more than 25%) as well as other benefits.
I suppose the main thing is that Pension Bee just has a range of investment options that are really no different to the majority of your employer's pension scheme. However a company pension scheme is quite likely to cheaper since it's on a larger scale and often very difficult to beat on cost. So it's always worth checking your work scheme first. I'm constantly amazed by how many people don't even realise they can change or choose the funds within their work scheme and for a much lower cost than they could if they went to the same pension provider as a direct consumer. Bulk buying power!
However, pragmatically, the younger generations tend to change jobs every few years, as opposed to our forebearers who were typically more 'job for life' and also lived in a time of Defined Benefit (final salary) pensions where you didn't have to think about any of this. So for us, it's quite likely we've got 10 different pension pots by the time we're 40-50 and to realistically manage those properly, while having enough knowledge to know broadly which funds you should be looking at... just isn't that likely. That's where a service like Pension Bee comes in. Yes it has a premium to it. But for most people, being able to just pick a number on a risk scale and stick it all under one roof is highly attractive. So the vast vast majority of people could benefit from it.
One other thing to mention is that many employer pension schemes employ 'lifestyling'. This is a process where they lower the risk of your pension automatically as you approach 55-65. The idea being that you want to reduce volatility as you approach retirement as you'll being buying an annuity. Of course nobody has bought annuities really since the banking crisis as the rates are awful, and now taking your money as drawdown (leaving it invested in retirement while you skim the growth off the top for your income) is very much the norm. So I find it bizarre that Lifestyling is still endemic because why would you want to reduce your risk with 30 years of retirement ahead of you. But employer schemes have Trustees. And those Trustees are (quite rightly) more concerned with not getting it wrong, rather than getting it right. Another reason to consider 'taking control' of the investment strategy of your previous pensions.
Hope some of that helps :)