MoneyHero Ltd Q4 FY2023 Earnings Call

Thank you, Michelle. Hello, everyone. Good morning or good evening, depending on where you are. My name is Chadwick Dorai, and I am Strategic Finance Lead for MoneyHero Group overseeing our investor relations activities. We're excited to have you join us for MoneyHero Group's fourth quarter and full year 2023 earnings conference call. Today we have with us Rohith Murthy, our CEO, and Shaun Kraft, our CFO and COO. Let's start with a few friendly reminders. First off, you can find detailed results in our earnings release located in the Investor Relations section of our website. Also, we are recording today's webcast, so don't worry if you miss anything. A replay and a transcript will be posted on our website under the Investor Relations section. A heads up, during this call we will discuss some future projections and expectations for our business. Keep in mind, these forward-looking statements are based on what we currently expect and are subject to risk and uncertainties that could cause our actual results to differ. We also encourage you to look at our earnings release and SEC filings for a detailed discussion of these risk factors. Remember, these forward-looking statements reflect our own views today and we are not obligated to update them unless required by law. Also, we'll talk about some non-IFRS financial measures today. For a reconciliation of non-IFRS financial measures to the most directly comparable IFRS metric, please see our earnings press release. And one last thing, all monetary references will be in United States dollars unless we say it otherwise. Shortly, I will introduce our CEO, Mr. Rohith Murthy. For many of you, this will be your first introduction to Rohith as CEO. He was recently promoted to CEO of MoneyHero Group this past February. Rohith is the longest serving executive at MoneyHero Group, having joined the company in 2015 and has occupied numerous pivotal leadership roles, most recently serving as our Chief Business Officer. Under his guidance, Rohith has spearheaded the development and growth of two of our flagship brands, SingSaver, Singapore's leading personal finance comparison platform, and Creatory, our groundbreaking B2B brand. His extensive leadership across products and technology has significantly enhanced our core platform and operations. Moreover, his broad expertise in strategic planning, product development, operational excellence, and digital transformation makes him the ideal leader to propel MoneyHero Group into its next phase of growth. Under Rohith's direction, MoneyHero is strategically poised to amplify its market dominance by concentrating on core business growth, expanding our insurance offerings, and diversifying our business model. Rohith is dedicated to harnessing advanced technology and data analytics to streamline customer experiences and increase operational efficiencies. Additionally, he’s deeply committed to fostering a vibrant organizational culture that attracts top talent and fosters professional development. With Rohith at the helm, we are set to intensify our commitment to innovation, customer satisfaction, and strategic expansion. And now, it is with great pleasure that I introduce Mr. Rohith Murthy, CEO of MoneyHero Group. Over to you, Rohith.

Thank you, Chad. Good morning. Thank you for joining us today. I'm Rohith Murthy, CEO of MoneyHero Group. This is an exciting call as it marks my first earnings announcement in my new role. Having been with MoneyHero since day one, this is a tremendous moment for me, and I'm pleased to share our results with you. Before we delve into the details, I want to extend a warm welcome to everyone, especially those joining us for the first time. I also want to take a moment to outline how MoneyHero Group is being realigned under my direction and highlight the unique characteristics that set us apart. MoneyHero Group operates three core businesses across five key markets in Greater Southeast Asia. Our first core business, Comparison, is behind the market's largest P2C personal finance marketplaces, offering leading brands and products ranging from credit cards and personal loans to insurance solutions. In three of our five markets, Singapore, Hong Kong, and the Philippines, we also operate as licensed insurance brokers. Our second core business, Community, includes Singapore's largest personal finance community and brand, Seedly. Lastly, Creatory, our innovative B2B brand, connects hundreds of content creators and channel partners to financial products and institutions. When looking at our business model, it is important to note that our platform is built on five key pillars. First pillar, consumer pool. Our revenues are primarily from inbound consumers in an industry that usually relies on either trusted brand recognition or aggressive sales tactics. Consumers have shown they repeatedly trust us and come to our platforms to research and choose from a wide range of products, supported by high quality content and the best incentives. Additionally, given our strong balance sheet, we've also pursued an aggressive strategy to gain market share in our core markets. Second pillar, conversion expertise. We specialize in converting digital inquiries thanks to our superior UX and UI, which guides consumers seamlessly through the product selection process. Third, insurance brokerage. As a licensed broker in many of our markets, we drive direct insurance policy purchases on our platform, continually enhancing the purchasing process. This segment is a major growth driver for our future revenue. Fourth, strong partner relationships. We maintain a high quality book of customers for our financial partners, for many of whom we are the largest digital acquisition channel. And finally, fifth, operating leverage. Our business model allows us to scale efficiently with a significant portion of our revenue flowing directly to the bottom line. Over the past couple of years, we have been able to dial these various levers more precisely to drive top line growth or improved bottom line growth. This provides us greater flexibility as we constantly assess the broader competitive market and the strategies we determine to pursue. Now going on to the Q4 performance highlights. Now turning to our performance in the fourth quarter last year, which was our strongest quarterly revenue performance to date, with group revenues reaching $26.4 million, representing a 53% increase year-on-year. Our core business, online financial comparison, grew by 44% YOY. And Creatory, our B2B business, grew by an impressive 117% YOY, contributing 17% to the group's revenue compared to only 12% in the prior period. Our revenue growth has been impressive across all regions. Singapore grew 94% YOY to $12.1 million, Hong Kong grew 46% YOY to $8.4 million, Philippines grew 64% YOY to $3.9 million. And Taiwan showed a recovery with a 103% increase from the previous quarter despite a 22% YOY decline. Our strategic focus on insurance paid off with revenue from insurance products increasing by 106% YOY in Q4, aligning with our ambition to become the preferred destination for insurance discovery and purchase. Now as we look towards 2024, we are confident we will hit $100 million in revenues for the first time, a feat that is unmatched by any emerging fintech aggregator that is disrupting traditional financial product distribution in the APAC region. This ambitious target is supported by our ongoing aggressive marketing campaigns in our core markets of Singapore and Hong Kong, which we began last quarter. These efforts are aimed at significantly enhancing our market penetration and brand recognition in these key markets. This aggressive strategy has resulted in compressed margins last quarter, which will continue through the first half of 2024, but we anticipate margin expansion heading into the second half of 2024. We firmly believe that this strategy is a solid investment into our long-term growth. This margin expansion will be driven by improved conversion rates, deeper market penetration, and the product diversification into higher margin non-credit card verticals, which should start contributing more significantly to our bottom line. Shaun will elaborate upon these points shortly. We will continue to strategically diversify our business model throughout 2024 by expanding our high margin business Creatory and advertising revenue streams, further expanding margins. Our focus remains on enhancing user experience on our platforms, making it easier and more intuitive for our users to navigate and purchase financial products. This includes building off the impressive growth of our insurance offerings, developing comprehensive end-to-end purchase journeys that not only meet but exceed customer expectations. Additionally, our partnership strategies continue to grow and evolve with market dynamics. We are co-creating unique products and offerings with our financial partners. These new offerings will not only strengthen our relationships but also help improve our profitability. I'll also add that we continue to leverage new AI tools that help streamline operations and increase our enterprise-wide efficiencies. We're very excited about this technological advancement and how it can enable us to scale more effectively, enhancing our operating leverage. To support these initiatives that are targeted towards our long-term growth, we have strengthened our leadership team with recent promotions and strategic new hires, including a Chief Commercial Officer for the group and a Managing Director for the Philippines. We're also excited to soon be announcing our new CFO, as well as the new group Head of Operations and a new group Head of Marketing, all of whom will bring strong enterprise level experience, fresh perspectives, and diverse expertise towards our ambitious goals. Now looking at the big picture for MoneyHero, our business is well positioned to capitalize on significant long term tailwinds in the fintech arena. Number one, dynamic market growth. We operate in attractive growth markets where the penetration of digital channels for personal finance product distribution remains low but is growing quickly. We estimate the revenue opportunity for both online and offline product distribution at around $9 billion plus, and are at the forefront of expanding digital channels' share of the pie. Number two, technological adoption. The rapid adoption of mobile phones and the Internet has mainstreamed online businesses, opening up vast opportunities for our services. Number three, demographic shifts. The increasing prominence of middle and upper class families who are aspirational and seeking a wide range of financial products presents a growing market for our offerings. Number four, insurance penetration. With online insurance sales penetration still low in our markets but growing rapidly, we see a substantial opportunity for growth. We are well positioned to capture this emerging market and significantly increase our footprint. Number five, market dominance. As a leading and dominant player in our operational markets, we face minimal competition. This advantageous position enables us to effectively capture and expand our market share. And number six, consumer trust. We stand out among fintech players by providing consumers with trusted, optimal choices of financial products, ensuring a convenient and hassle-free experience. Now, before I hand the call over to Shaun for the financial highlights of our full year 2023, I want to personally thank him for his exceptional leadership and dedication throughout our journey from a startup to a US listed company on Nasdaq. His contributions have been invaluable and with this being his final earnings call with the company, I want to wish him on behalf of everyone at MoneyHero, all the best in his future endeavors. Thank you once again for your trust and support. I look forward to discussing our detailed financial results and answering any questions you may have. But with that, I'm now turning the call over to Shaun Kraft, our CFO and COO.

Thanks, Rohith. Good day, everyone. After successfully closing our deSPAC transaction in Q4 of last year, MoneyHero Group is in a strong financial position and is poised to further enhance its market leadership across Greater Southeast Asia. We experienced significant business growth acceleration in the second half of 2023 across several markets. As Rohith mentioned, we are making strategic investments to capitalize on the expanding opportunities in the digital distribution of financial products across our market. As of December 31st, 2023, MoneyHero had no debt and a balance of $69 million in cash and cash equivalents. We are using our cash to scale our business, grow our member base, and invest in our products and technological capabilities. Any excess cash that isn’t currently needed for monthly working capital is earning over 5% interest with our banking partners. Additionally, as of December 31st, 2023, we had 42 million shares issued and outstanding, along with around 2.9 million employee options, bringing our total fully diluted share count to about 45 million, excluding out-of-the-money warrants. For precise share counts, please refer to the press release. Now, turning to our financial results, since the deSPAC was completed in Q4, our financials for Q4 ‘23 and the full year ‘23 are consolidated. The listing transaction incurred significant one-time, non-recurring, and non-operational expenses that impacted our P&L in 2023, resulting in a substantial headline net loss of $173 million. It's important to consider these listing-related accounting items when evaluating the underlying profitability of the business; therefore, we focus on our adjusted EBITDA as the key profitability metric. A detailed reconciliation from the net loss to the adjusted EBITDA can be found in our earnings release. In the fourth quarter of 2023, MoneyHero achieved 53% year-over-year revenue growth, reaching $26.4 million. Notable growth was recorded in Singapore at 94% year-on-year and in Hong Kong at 46% year-on-year, supported by our increased customer acquisition strategy and efforts to bolster our already strong market positions. Our business in the Philippines also performed well, up 64% year-on-year, and our Taiwan business showed recovery after a tough first half of 2023, with revenue rising 103% from Q3 2023. Our B2B division, Creatory, also reported strong growth, contributing significantly to the group with fourth quarter revenue climbing 117% year-over-year to $4.6 million, accounting for 17% of group revenue. Insurance remains our fastest-growing product category, with fourth quarter revenue increasing 106% year-over-year to $1.9 million. For the full year 2023, we recorded revenue of $80.7 million, an 18% year-over-year increase. Growth rates accelerated in the second half, driven by stronger investments following improved profitability in the second half of 2022 and the first half of 2023, which had initially led to slower top-line growth but a dramatically enhanced profitability profile for the business during that time. From a profitability perspective, our adjusted EBITDA loss for 2023 improved from negative $15.6 million in 2022 to negative $6.8 million in 2023, resulting in an adjusted EBITDA margin improvement from negative 23% in 2022 to negative 8.5% in 2023. On a quarterly basis, the adjusted EBITDA loss for the fourth quarter rose to negative $4.6 million from negative $2.5 million the previous year, reflecting a negative margin of 17.6%. The main drivers of this increased loss in the fourth quarter were higher direct costs related to customer acquisition and competitive pricing strategies aimed at growing our market share, as Rohith indicated. Given our strong balance sheet, we are now in a better position to expand our market presence and plan to continue doing so through the first half of 2024 and beyond. This approach has resulted in a 41% growth in our member base in 2023, increasing from 3.8 million in 2022 to 5.3 million in 2023. Expanding our member base is crucial for achieving scale, creating growth opportunities, and diversifying our revenue towards higher margin products, which will enhance our profitability moving forward. Additionally, the increase in the fourth quarter loss was influenced by higher expenses associated with being a listed company, which we estimate to be around $2.5 million annually. Due to our strategic investments, we anticipate that the adjusted EBITDA loss will stay somewhat elevated in the first half of 2024, but we expect margins to expand again in the latter half of 2024. We foresee reaching adjusted EBITDA profitability on a quarterly basis starting in the second half of 2024, continuing into 2025. On a normalized basis, our expected adjusted EBITDA margins will likely be between 5% and 10% over the next 12 to 18 months. Importantly, our scalable business model has demonstrated the capability to generate considerable cash with much higher margins, which we are confident we can achieve over time. Looking ahead, we'll continue to use our strong cash position wisely to expand our presence. We see this unfolding in two main avenues: first, through organic initiatives such as our insurance business and Creatory, our B2B segment, along with cost-effective measures leveraging AI; and second, by seeking strategic acquisitions and investments that align with our long-term goals. We believe there are plenty of opportunities for consolidation within our emerging industry, and we strive to take a leading role. These strategies will support our efforts to scale both market share and revenue growth in the coming years. Finally, I want to express my gratitude to the Board of Directors, our leadership team, all our stakeholders, and my family. This has been a remarkable opportunity to help build MoneyHero into the leading entity it is today, and I am immensely thankful for your support. Thank you for your attention, and I will now hand the call over to the operator for any questions.

Thank you, gentlemen, for a fantastic set of results. I have two questions. First and foremost, what impact will the Creatory business have on the revenue model? The second is that, has the company raised enough capital to fulfill its operating expense requirements for the next three years?

Thank you. I'll take the first question. What impact will the Creatory business have? Now, Creatory is our very unique and innovative B2B business and it's pivotal in constructing the largest ecosystem of content creators and channel partners who essentially monetize their influence through our platform. As digital content consumption surges on social media platforms like Instagram and TikTok, we're observing a significant increase in engagement and an ever-growing number of these influential content creators specializing in niche topics. This trend has led to a dynamic expansion in the audience and the impact of these creators. Recognizing this opportunity early on, actually even before the pandemic, we began collaborating with many content creators to help them generate income through their creative outputs. Creatory provides a robust platform and it's a dedicated brand for these creators. It allows them to easily access and promote relevant finance products, personal finance products to the audiences, educate the audiences, and in return earn commissions whenever their followers engage with these offers. I think it's important to take away from today's earnings that Creatory has quickly become a critical component of our business, enhancing our scale and reach across diverse audience segments. This platform not only helps us gather valuable data and insights but also allows us to manage payouts with greater profitability compared to, say, traditional paid channels such as Google or Facebook. Our relationships with the creators who often have highly engaged and loyal audiences also help strengthen our own brand presence and marketing reach. Additionally, as part of our Creatory platform, we are also forming channel partnerships with major super apps and service providers eager to integrate personal finance products into their services and monetize their platforms. In just over two years, Creatory has started contributing significantly to our financials, now representing a growing double-digit percentage of our revenue. And as we continue to invest in and expand Creatory, we anticipate even greater growth as we tap further into the addressable market. Importantly, MoneyHero’s Creatory is filling a unique niche that does not exist elsewhere in our market. And providing a platform for the region dedicated to empowering content creators to monetize through personal finance products.

Yeah, yeah. So coming back to your second question around whether the company has raised sufficient capital to fill its operating needs. Absolutely it has. We currently have a very strong balance sheet with $69 million cash at the end of 2023 and no debt anymore. While we do still require a portion of that cash to fund operational needs today, we do not have any need to raise capital for the foreseeable future. I'd say additionally, we have a proven track record of effectively managing profitability levers in the past and are executing a strategy as outlined by Rohith earlier when he discussed his five key pillars underlying our platform that will enable us at MoneyHero to drive stronger profitability.

Hi, guys. Congratulations on a great set of results, and thanks very much for the presentation. So you've mentioned previously some updated offering launches in 2024 for Hong Kong and Singapore. So can you give an idea of what these might entail and how AI is being integrated within these? More broadly, how is AI being integrated within your business and are you seeing any issues arising from competitors using AI? My second question is on profitability. Very good that you've made progress this year, and it's good to hear that you expect to be profitable in 2024. I mean, could you discuss a bit further the margin range that you provided today? And then my third question is on insurance, which is obviously displaying very strong growth, but remains a relatively small share of total revenue. So what sort of levels do you expect to grow the insurance business to as a percentage of group revenue? Thanks very much.

Sure. Let me begin with the first question about AI. I want to refer back to the three pillars I mentioned: consumer pool, conversion expertise, and operating leverage. Our focus remains on being the top choice for consumers regarding personal finance and lifestyle savings. Now, let’s look at some specific updates on how we are integrating AI into our operations. In Singapore, we launched an innovative mobile app called ShopHero. This app allows consumers to interact with financial products and lifestyle offers. We are essentially aggregating deals by category and location. With the ShopHero app, consumers can maximize their savings with the right credit cards and engage with the app daily. This regular engagement is crucial for us as it enables us to collect valuable behavioral data and insights, which are essential for refining our offerings. AI is significant here since we utilize it to process and standardize brand content, ensuring that the offers displayed on the app are accurately categorized and presented timely. Additionally, ShopHero diversifies our business model by opening new advertising revenue streams for our financial partners, evolving us from just an acquisition channel to tapping into our partners' marketing budgets. The app is live in Singapore, and we plan to introduce it in Hong Kong later this year. Another interesting aspect of AI is our goal to convert many of our nearly 9 million users into active product holders. We are leveraging advancements in Gen AI and large language models to transform user interactions, making our platforms more intuitive and responsive. We expect to announce developments in this area within the next six to eight weeks. At a higher level, we are initiating a comprehensive transformation initiative within the MoneyHero Group to identify and integrate the right AI tools across various functions like engineering, marketing, customer service, and operations. This transformation aims to enhance productivity and operational efficiency by automating routine tasks and optimizing complex processes, allowing our teams to focus on strategic activities and improving outcomes, supporting our operating leverage pillar. Regarding your second question on profitability and margin range, we are on track to achieve adjusted EBITDA positivity on a quarterly basis in the second half of this year. We remain focused on core business growth, particularly in the credit card and lending product verticals, which significantly contribute to our revenue. We are improving our margins through increased direct traffic, better conversion rates, and strategic partnerships, including exclusive and co-created products. We are also scaling our general insurance offerings, including travel, home, domestic helper, pet, and motor insurance. Although these segments typically start with lower margins, they enhance our net present value through robust future renewal streams and will positively contribute to our revenue mix. Moreover, we are diversifying our revenue streams through high-margin businesses like Creatory and advertising revenues, which will bolster our bottom line. With these strategies, we are confident in achieving a normalized adjusted EBITDA margin range of 5% to 10% within the next 12 to 18 months. Your last question was about insurance and our expected growth levels. We are very excited about the growth of insurance and remain optimistic about future opportunities in this sector, which is why we are actively pursuing this area every day. After 2023, insurance has become one of our fastest-growing segments. We are a licensed insurance broker offering a variety of essential products like travel and motor insurance, as well as health and life insurance. These products are crucial for consumers to protect against potential losses. We recognize that purchasing insurance is a significant decision driven by the need to manage financial risks, and I understand that it's not an impulsive buy. Educating our consumers is our top priority, as we are committed to providing clear, useful information to demonstrate the value of investing in insurance for future benefits. We aim for MoneyHero to be the first choice for consumers considering insurance. We're experiencing strong growth in travel insurance and see great growth opportunities in other insurance markets. We are dedicated to making the buying process smooth and straightforward for our consumers. Importantly, our growth in insurance is just beginning, and we expect our insurance sales to significantly contribute to our total revenues, reaching double digits within the next 12 to 18 months.

Hi, Rohith. Thank you so much for the wonderful presentation. I have a two-part question. Which of your current revenue streams do you anticipate will be the biggest growth drivers in the coming three years? And the second part is, are there any new revenue models you're considering?

Thank you, sure. I think when we look at our diverse platform and revenue streams, they're already in place and each of them are experiencing growth and we've sort of structured this to maximize our expansion and strengthen our position. So what do I mean by that? Number one, our core aggregation business. When you look at our foundational revenue stream, it comes from cards and personal loan applications. This is something we are committed to continuing to expand our market share. We also have an opportunity to improve our conversion rates here. We do this by optimizing our user journeys and leveraging tech and data, ensuring we maintain that competitive edge. So that's our core aggregation business. Number two, insurance commissions. As I mentioned, we're a licensed insurance broker. Our role in the insurance sector forms now a substantial and expanding segment of our business. With insurance commissions, we are able to generate steady, uncapped revenue through these commissions every time a policy is sold, bolstered by diverse partnerships we have with insurers across our various product lines. Three, the Creatory business. Creatory is our distinctive B2B platform and by engaging these content creators and channel partners, we now access new audiences. Strong engagement from these creators, who have a lot of followers, drives significant impact. The very interesting aspect of this business is we actively set favorable take rates, which expands our reach across diverse demographics. Number four, advertising revenue. I spoke about the ShopHero app. We're harnessing our extensive user base and digital assets to offer advertising opportunities to external brands. These are high margin revenues that diversify our income streams and enhance the utility and reach of our platform. Lastly, as a licensed insurance broker, we will generate renewal commissions, thereby establishing a continuous recurring revenue stream. This will be crucial in products like motor insurance, where we know we have annual switches, representing a large segment of our consumer base. Overall, when I look at these diverse revenue strategies, they create a competitive moat for us, and I firmly believe these will be the key drivers of our growth. Importantly, these strategies ensure that we remain adaptable and ahead of the curve in our sector.

Well, I really want to thank you all for your time today. And yes, as Shaun mentioned, we will be publishing all the results. Thank you.

This concludes today's conference call. Thank you for your participation. You may now disconnect.