MoneyHero Ltd Q3 FY2024 Earnings Call

Thank you, Lithia. Hello, everyone. Very good morning or good evening, depending on where you are. My name is Chadwick Dorai, and I'm Strategic Finance Lead for MoneyHero Group overseeing our Investor Relations activities. We're excited to have you join us for MoneyHero Group's third quarter 2024 earnings conference call. Today we have with us Rohith Murthy, our CEO; and Hao Qian, our CFO. 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 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 views as of 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 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 state otherwise. Shortly, Rohith and Hao will be discussing our Q3 performance. With that, let me pass on the time to Rohith Murthy, CEO of MoneyHero Group. Over to you, Rohith.

Thank you, Chad. Hello, everyone. Today we share our performance update for the third quarter that ended 30th of September this year. This quarter, we made critical advancements in executing our efficiency strategy, which we introduced earlier this year. Our deliberate focus has been on optimizing our cost base, enhancing operational effectiveness, and strategically expanding high-margin product categories to drive scalable and sustainable growth. Q3 marked the launch of a comprehensive reorganization and restructuring exercise, streamlining our operations and optimizing team structures across marketing, product, and customer operations. These initiatives significantly improved our adjusted EBITDA by over 40% quarter-on-quarter from a loss of $9.3 million in Q2 to a loss of $5.5 million in Q3. These foundational changes position us to enter Q4 with a leaner cost base, greater financial discipline, and a clear trajectory towards operational leverage, which is expected to be fully realized in the current quarter. We also achieved a very critical milestone by centralizing all our customer data into a single platform, providing us now with a unified view of our customer figures. This advanced capability unlocks possible opportunities for cross-sell strategy, price segmentation, and more efficient marketing campaigns. As we implement these strategies, we are confident that we will deliver transformative outcomes in customer engagement, revenue generation, and operational efficiency. We continue to have strong momentum in high-margin product categories; personal loans and wealth and investment-related revenues grew significantly, 34% year-over-year and nearly 5 times year-over-year respectively, underscoring the success of our strategic focus. Our insurance vertical also maintained its growth trajectory, with revenue now increasing 36% year-over-year and contributing 9% to the group's overall revenue for the first nine months of the year. Notably, we launched a car insurance vertical in Hong Kong, building real-time pricing capabilities, a first among aggregators. This innovation not only improves customer experience by accelerating approval processes but also strengthens our leadership position in the aggregator space. Additionally, our seamless travel insurance purchase flow has delivered a marked improvement in conversion rates, showcasing our commitment to delivering tailored financial solutions that align with individual customer needs. User engagement remains a focus for us. This quarter we introduced new membership and loyalty capabilities, enabling users to create accounts, apply for products with one click, and track their rewards and incentives in real-time. These features deepen user engagement and position us to deliver highly personalized offerings at the right time, which we believe will drive long-term loyalty and value. While we continue to see strong performance across our core markets, fluctuations in provider campaigns in Singapore presented certain challenges this quarter. However, our diversified partnerships and expanding product portfolio have already started mitigating these impacts. These adjustments highlight our agility and resilience in navigating a dynamic market environment, positioning us to seize opportunities at their emergence. As we look ahead to Q4, we expect continued progress towards improving our adjusted EBITDA, recovering margins, and achieving our efficiency objectives. With a sharper focus on high-margin products, disciplined cost management, and data-driven operations, we are more confident than ever in our ability to deliver long-term sustainable growth. Credit cards remain a valuable gateway product for user acquisition, and we will continue to focus on higher-margin segments to align with our profitability goals. With a leaner operating structure, robust data capabilities, and a strong cash position, MoneyHero Group is well positioned to drive shareholder value and build a sustainable, profitable business for the future. I would also like to take a moment to thank our team, both present and past, whose dedication and hard work have been instrumental in navigating this transformative year. Their commitment to our mission and resilience in adapting to change have been key to achieving the milestones we've shared today. We are also excited to announce the rollout of our RSU plan, which will extend equity ownership to over 90% of our employees. This initiative underscores our belief that our team’s success is linked with the success of MoneyHero Group. Together, we're building a business that will deliver sustained growth and value for years to come. Thank you all once again for your trust and support. With that, I'm now turning the call over to Hao Qian, our CFO.

Thank you, Rohith. Good day, everyone. In Q3 2024, MoneyHero’s expansion resulted in solid growth in approved applications with a 6% year-over-year revenue growth to $20.9 million. We have made strong market share gains, particularly in our core markets, as we continue to expand across Southeast Asia. However, investment into strategically expanding our customer acquisition, brand building, technology, replatforming, and data infrastructure led to an adjusted EBITDA loss of negative $5.5 million for the quarter. Now let's turn to our third quarter 2024 performance. In the third quarter of 2024, MoneyHero delivered a 6% year-over-year revenue growth to $20.9 million. We realized significant growth year-over-year in the Philippines, up 49%, and in Hong Kong, up 18%, where we have made significant strides in diversifying our revenue mix by expanding partnerships with other key providers and broadening our product offerings. Our Singapore business decreased by 13% year-over-year due to the absence of campaigns from certain providers who scaled back their paid acquisition activities during this period. We are working closely with these clients to ramp up our commercial engagement, positioning us for recovery in the coming quarter. Our Taiwan business increased marginally by 5% year-over-year to $1.0 million, with the strongest growth coming from credit cards. We have successfully managed to turn around Taiwan and the Philippines in Q3, and we will continue to focus on building long-term facilities and developing new verticals to replace the loss of revenue from key clients’ decisions to exit the market. Our B2B business, Creatory, remains flat year over year with $3.5 million in revenue, representing 17% of group revenue. We will revamp the growth of Creatory and continue our commitment to leverage the Creatory platform as a competitive advantage to drive traffic and gradually decrease reliance on performance marketing. Insurance remains our fastest-growing product vertical, with third quarter revenue increasing 36% year-over-year to $2.1 million. We will continue to explore new opportunities to offer additional product lines to further fuel both top-line and bottom-line growth. In addition to our core business growth, we aim to use insurance as a differentiator to further enhance user engagement in order to increase both frequency and the share of wallet. For the third quarter of 2024, our adjusted EBITDA improved from a loss of negative $9.3 million in Q2 2024 to a loss of negative $5.5 million. The primary drivers for the improved adjusted EBITDA loss for the third quarters are; first, our efficiency strategy, prioritizing growth through increased investment in customer acquisition, technology, replatforming, and data infrastructure. Yet these investments were balanced by our restructuring exercise to streamline our operations and focus on product gross margin improvements, which led to a reduction in costs. Second, our partnership and new product strategy. While the exit of a major provider from two of our key markets, Taiwan and the Philippines, earlier this year impacted our revenue per application, we are making strides in diversifying our revenue mix by expanding partnerships with other key providers and broadening our product offerings. These adjustments position us well for sustained growth as providers scale their operations and create opportunities to further strengthen our revenue base and deepen our market presence. Looking ahead, we anticipate a continued improvement of our adjusted EBITDA in Q4 2024, building on the significant progress we made in Q3. With margins steadily improving, we are very well positioned for further recovery through the remainder of the year. Our comprehensive review of the organizational structure, completed alongside the successful reorganization in Q3, has strengthened our operational foundation and set the stage for growth. As mentioned in our Q2 earnings call, I would like to reiterate that we are actively pursuing a growth strategy by continuing to explore strategic acquisition and investment opportunities to consolidate the industry, as we believe the timing is right for industry consolidation in Southeast Asia. We believe there is ample opportunity for consolidation in our emerging industry, and we aim to lead the way. These two strategies will aid us in scaling both our market expansion and growth for years to come. With that, I thank you for your attention today, and I turn it over to the operator to take any questions.

Thank you. We have a question coming from the line of Ishan Majumdar with Baptista Research. Your line is now open.

Hi. Congratulations on the wonderful result. My question is focused on the car insurance platform. What challenges do you foresee in scaling this platform across your core markets? Also, how does the integration of bolttech's insurance exchange technology specifically differentiate your platform from competitors in Southeast Asia?

Thank you, Ishan. We actually see opportunities rather than challenges in scaling our car insurance platform thanks to our strategic partnership with bolttech, and let me explain this a bit more. Firstly, as a B2B marketplace, we have launched a very innovative B2C car insurance marketplace that's now powered by bolttech’s platform. And what this means is we're able to actually provide real-time pricing and also end-to-end purchasing journeys. These capabilities are first in the market and set a new benchmark when it comes to seamless customer experiences. For us, bolttech acts as a technology partner here, enabling us to deliver really superior and innovative offerings. The second opportunity is in terms of the B2B partnership for scale. Beyond being a marketplace, we're also exploring B2B opportunities, such as a white-labeled user journey and comparison tools for our partners. We believe by embedding these insurance capabilities into our partner ecosystem, we can achieve significant scale and provide value to a wider network of users. Lastly, our partnership with bolttech allows us to diversify our insurance product portfolio. For example, their market-leading device protection solutions enable us to offer products with comprehensive coverage, fast fulfillment, and superior service. We are really looking at this partnership from a multifaceted strategic perspective, leveraging both bolttech technology and expertise, positioning us as the most comprehensive and customer-centric insurance marketplace in the region.

That's wonderful. I just wanted to follow up on this with a specific point you mentioned about improving customer experience through this technology. Now this is something that you have been focusing on even in the past quarter, as you also mentioned rolling out a redesigned mobile app and enhancements to your overall UI across your applications. Can you provide insight into how these initiatives are resonating with users so far? Are there any metrics or any indicators that suggest that these updates are driving higher-margin revenue streams?

Sure. Let me elaborate a little bit on the mobile app. When we developed the mobile app, we had a very clear vision to address two very critical problem statements: one from our consumers and one from our banking partners. From our consumers, particularly in the markets we operate in with very high credit card penetration, users often face the challenge of managing multiple cards and being unaware of the deals and discounts available on them. What our app now provides is a single GPS-enabled repository of all real-time offers and nearby deals, helping our users save money, whether they dine, shop, or travel. On the banking partners' side, we are one of the key acquisition partners, but we've identified an opportunity to support them beyond just credit card signups. This app enables us to drive credit card usage post-acquisition and offer contextual cross-sell and up-sell opportunities for any additional products and services. By doing this, we're enhancing the lifetime value of our customers. Driving higher engagement and frequency on our platform is critical because we typically are a low-frequency, high-intent destination for financial products. Historically, users visit during key financial decision-making moments. With the app's redesign, we're shifting this dynamic by providing daily and weekly value through GPS-enabled real-time offers, nearby deals, and personalized financial insights. This approach encourages more frequent engagement and creates opportunities to surface relevant product services and advertising to our users, unlocking new revenue streams that deliver ongoing value to our consumers and partners. This app also opens a new channel for user engagement, allowing us to gather deep behavioral insights, aligning with our strategy to strengthen user loyalty and unlock higher-margin revenue opportunities. We're optimistic about the app's potential to enhance user engagement, boost conversion rates, and potentially drive incremental revenue, and we hope to share more tangible results early next year as we gather more performance data.

Okay, thank you so much.

Thank you. Our next question is from Nirgunan Tiruchelvam with Aletheia Capital. Your line is open.

Thank you very much. I would like to ask a question on the trajectory of your operating results. It appears that you have achieved EBITDA positivity in this quarter and also net profit positivity in this quarter by hitting a revenue number of say $21 million, assuming that your gross margins are about 50%, it appears that your break-even monthly revenue is in this say $21 million to $23 million ballpark, is that correct?

Thank you, Nirgunan. Just a couple of corrections: we haven't achieved EBITDA positivity, but we have really narrowed down our EBITDA losses and improved our margins. To your question on revenue, the way we think about our revenue is in terms of the revenue mix. This quarter, we’ve been very focused on driving revenue from high-margin products. We're not obsessed about a certain number we want to hit every quarter, but our focus is on ensuring that as we diversify our revenue, we're introducing new products to our consumers. This has been a quarter where we've seen growth in higher-margin products like personal loans and investment and wealth-related products, as well as insurance. We're pleased with the trajectory of our insurance vertical. Insurance is not an easy product to educate consumers on, but we're happy with our growth in this space.

Got it. I have another question. Can you explain the OCI situation, please?

OCI?

Other Comprehensive Income?

Just give us a couple of minutes on that.

Let me talk about the FX impact in this quarter. Our net income for the period increased to $5.7 million in the third quarter of 2024, from a loss of $7.2 million in the prior year period, primarily driven by the unrealized FX exchange gain. We saw fluctuations in USD versus SGD and USD versus PHP during Q3, significantly impacting the adjusted, unrealized FX hedge as I mentioned.

Right, has there been other comprehensive income losses of this magnitude in the past of $9 million since your listing?

I need to double-check the number. As far as I remember, I don't recall such figures.

We can check that and come back to you, but as we recollect, we don't remember that sort of figure.

Okay, and finally, can you point to a line item in your cost and expenses that reflects the contraction in labor costs that you enacted in the preceding quarter? Where can I see that in the quarter results? Or is it too early?

The restructuring and the reorganization, the entire initiative we executed actually this quarter. We will see the true benefits soon. However, I'm sure there are a few metrics we recognized this quarter. We've been looking at this in a phased approach, including our overall payroll. But I would recommend checking in future quarters to see the full impact of this exercise.

Thank you. Fiona Orford-Williams from Edison Group, your line is now open.

Thank you very much. I've got three questions, if I may please. I'll do them all at once just going backwards and forwards. The first is on the Singapore market. You talk in the report about the comprehensive site revamp. Do you just want to take us a little bit more into detail on the success of that or the impact of that so far? The second question is about where your marketing priorities are for FY’25. I'm assuming that it's going to be a continuation of what we're seeing at the moment with the drive towards the higher-margin products, but perhaps more color there. And also, the last one is on any new product developments you might have in the pipeline. Thank you very much.

Thank you for the questions. I'll start with the new product developments we have in the pipeline. We're very excited about our developments because we believe they will strengthen the value proposition for both consumers and partners. First is the mobile app, which we've launched in Singapore and plan to roll out in additional markets. As mentioned, it's a tool for frequency and engagement, helping our partners to drive usage and potentially look at cross-sell opportunities. We also successfully piloted a credit scoring feature in partnership with TransUnion in Hong Kong, which provides insights into credit profiles and we’re working on a product roadmap to scale this feature further. We launched the car insurance platform powered by bolttech in Hong Kong and will extend it to other markets. For travel insurance, we’ve powered a one-click purchasing journey, improving user experience. We're constantly optimizing UX and UI across all our content and product pages. We're also experimenting with GenAI apps across a few use cases, hoping to pilot early next year and share more details then. Regarding marketing priorities, our vision is to help individuals save, protect, and grow their money effortlessly. Guided by this, we want to drive efficient growth focusing on two pillars: consumer pull by building trust for organic growth and reducing reliance on paid traffic while improving marketing ROI. Tactics include doubling down on SEO, leveraging partnerships for high-value tactical campaigns, optimizing paid marketing efficiency, expanding our influencer network, and exploring ad monetization strategies to maximize existing traffic value. Regarding the site revamp in Singapore, we kicked off this quarter to improve user experience by enabling seamless content discovery for users. We aim for a holistic approach to content and site architecture, helping users learn and transact effectively. We've seen encouraging results in conversion rates for many of our pages, but Q4 will show the full ROI as we send more traffic through.

And is it achieving those purposes already?

We've just started rolling this out in our Singapore market. We've seen some encouraging results in terms of conversion rates on many of our pages. However, since Q3 was still the early stage of the rollout, we expect Q4 to show more significant results as we direct more traffic to the newly designed pages.

That does conclude our conference for today. Thank you for your participation and you may now disconnect.