PENSIONBEE GROUP PLC (PBEE) Q2 2026 Earnings Call Transcript

Good afternoon, ladies and gentlemen, and welcome to the Pentium B Q2 training update. Throughout today's recorded meeting, attendees will be in listen-only mode. Questions are encouraged at any time. You can simply either type your questions in the Q&A tab or simply type the question mark and I will unmute your camera and microphone at the appropriate time. Before we begin, I'd like to submit the following poll. I'm sure the company will be most grateful for your participation. I'd now like to hand over to the team from Pentium B, Romy, Christophe.

Good afternoon. I'm Romy Savova, the CEO of PensionBee. Welcome to our Q2 2026 results presentation. Today we are pleased to share our progress over the quarter as we continue executing on our vision to build a global leader in the consumer retirement market. For those of you new to the PensionBee story, we exist to help our customers prepare for and enjoy a happy retirement. We operate in the enormous defined contribution pension market representing over 30 trillion dollars in assets and more than 100 million consumers across the uk and us our customer-centric offering helps consumers to feel retirement competent we enable our customers to combine their old retirement accounts into a new online account 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 long-term ambition is to build lifelong relationships with our customers. This approach delivers value to them throughout their retirement journey while driving predictable, scalable revenue for our business and strong returns for our investors. At the end of the quarter, we reached £8.6 billion, approximately $11 billion of AUA, on behalf of 327,000 invested customers, reflecting 37% year-on-year growth in assets. Annual run rate revenue reached £56 billion, up 40% year-on-year, and quarterly net flows grew 30% year-on-year, keeping pace with increased marketing investment and demonstrating efficiency. In the UK, prompted brand awareness reached a record 62%, with partnerships and sports sponsorships reaching broad audiences. AI tools enhanced our productivity, with BeBot now resolving over 50% of its live chat volume, contributing to productivity improvements while maintaining the quality of our customer service. In the U.S., we advanced our dual-channel strategy, with business-to-business distribution growing through intermediaries and our direct-to-consumer business growing through optimized marketing activities. The U.K. was profitable for the quarter, with a 15% U.K. LTM-adjusted EBITDA margin, while the group was profitable on a last 12-month basis, reflecting strong operating leverage. Turning now to the UK, we continue to invest in marketing over the quarter, increasing spend by 34% year-on-year to £4.6 million in order to capitalize on our UK growth opportunity. The investment drove gross inflows up 34% to £463 million, supporting brand awareness that made PensionBee one of the most recognized pension providers in the country. Brand investment is a long-term endeavor, and we were pleased to see it converting into customer growth, with 327,000 invested customers at the period end, representing 14% year-on-year growth. Our industry-leading technology platform continues to scale effectively, driving operating leverage and the consistent delivery of excellent customer service. We delivered a 17% productivity improvement over the quarter, with over 1,700 invested customers per staff member in the UK, representing a compound annual growth rate of 20% since 2020. Two AI engines built on our over-decade-long knowledge base are enhancing our productivity. Bittrex, our internal AI co-pilot, continues to boost productivity across our support function. BeBot, our external AI bot, enhances customer self-service and is now able to independently resolve over 50% of its live chats, freeing our team to handle more complex queries. As we continue to become even more efficient, we maintain our standards of customer service, reflected in our excellent Trustpilot rating of 4.6 stars and an invested customer retention rate of above 95%. Looking ahead, we are focused on delivering our key UK growth and scalability initiatives for 2026. On customer growth, we continue to deploy increasing marketing investment through engaging multi-channel activities, growing our brand awareness. We continue to broaden our reach through partnerships and new channels, including our Channel 4 weather sponsorship, now live, and the launch of a new brand campaign expected in August. We continue to invest in product innovations, including through our new hybrid app, aimed at delivering a seamless user experience and stronger customer engagement across devices, live on Android, with the iOS version launching imminently. We are expanding our AI and automation capabilities, with plans for further AI expansion on emails and operational processing. Turning now to the US, our focus on building brand awareness remains a top priority. We are growing national brand channels at scale through a multi-channel approach that combines digital and out-of-home advertising. Our social media following has continued to grow exponentially since we launched our app, representing broad national reach. Over the quarter, we deployed a customer testimonial campaign featuring our U.S. customers alongside an out-of-home billboard campaign across New York and Chicago, building our presence in key U.S. cities. We're pleased to see prompted brand awareness in the U.S. registering at approximately 5% as we continue to build recognition in the market. Over the quarter, we continue to build our automatic rollover IRA, which we offer to employers, usually through advisor intermediaries and third-party administrators. It is competitively priced with a high-quality investment portfolio and personalized service for participants. Every year, an estimated $60 billion in 401k balances leave employer plans for automatic rollover IRAs, and our offering is built to capture this flow. Small balance rollovers, where employers force out former employees with balances below $7,000, are recurring and represent a potential of $4.6 billion of inflows annually. Voluntary rollovers, where employers ask us to serve former employees with balances above $7,000, form part of a $1 trillion annual market. And plan terminations, where an entire 401k plan winds up and its participants transfer to us, are large, at approximately $55 billion of potential inflows annually, with individual transactions reaching $250 million. We are building our distribution across this ecosystem, having reached record keepers representing approximately 75% of the market, building towards 100 intermediary relationships that each deliver approximately $10 million in recurring annual inflows, and with over 1,500 employers already enraged. Our progress is compounding as relationships established in 2025 generate further client referrals and recurring inflows. At scale, this supports our path to a billion dollars of AUA. Turning to our priorities for the U.S. in 2026, we are scaling our automatic rollover IRA, building distribution across the ecosystem as we work towards our medium-term goal of a billion dollars of U.S. AUA and continuing to onboard employer clients from our actively referring intermediaries. We are growing our direct-to-consumer presence. The U.S. today resembles the U.K. in its early years, at the start of a similar growth trajectory. We continue to grow brand awareness and build a predictable conversion funnel supported by our 1% match, which encourages consolidation and contributions, while enhancing our retirement planning tools to grow average account sizes over time. We are building efficient foundations, strengthening our transfer protocols, including straight-through processing from certain record keepers, and continuing to optimize our marketing and operational efficiency to build attractive customer unit economics over time. I would now like to hand over to Christoph Martin, our Chief Financial Officer, who will cover the financial update for the quarter.

Thank you very much, Romy. Hello and welcome to everyone to the financial section of our Q2 2026 results. Turning to the financial overview, I would like to start with a summary of our performance for the quarter before diving into the details of PensionBee's core value driver. For the second quarter of 2026, the UK delivered strong financial performance with 37% year-on-year growth in our AOA to 8.6 billion pounds and 40% year-on-year growth in ARR to approximately 56 million pounds. The UK revenue increased 42% to 14.3 million pounds and UK adjusted EBITDA expanded profitability to 0.8 million pounds for the quarter. On the last 12-month basis, we delivered a two-year CAGA on the revenue side of 34% while maintaining cost discipline with our cost base growing at a lower compounded annual growth rate of 20%. This resulted in a UK adjusted EBITDA of close to £8 million on a last 12-month basis, expanding the UK adjusted EBITDA margin to 15 percent up from 8 percent last year. At the group level, top line growth coupled with continuous cost discipline led to group profitability on the last 12 months basis with last 12 months adjusted debita of 2.7 million pounds at a 5 percent group margin in comparison to around negative 1% a year ago. These continuous achievements are derived from the core value driver of our business, which are first predictable and recurring revenue and second, business scalability. Furthermore, they are testaments to our ability to consistently and reliably execute against our public market guidance. I would next cover the two value drivers in turn. The first value driver is pension-based predictable and recurring revenue, which is generated from a durable base of assets under administration, the function of the assets of existing and new customers. In the second quarter, we achieved a 37% year-on-year EOA growth to approximately 8.6 billion pounds. The vast majority of our EUA base is derived from existing customers, customers who remain with Pension B 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 around 42 years of age and they build up their pension savings with Pension B, which means that cohorts on an underlying value basis before any impact on capital markets appreciation are resilient over time. This is reflected in our invested customer retention rate of above 95% and our value retention rate of approximately 100%. The AOA is also derived from new customers acquired through our proven cost-discipline approach to customer acquisition. Over the quarter, we onboarded 12,000 new invested customers onto our technology platform. New customers joining were slightly older than in the second quarter of 2025, aged approximately 40, with a higher average transfer in value. As a result, the compounding AOE base is subsequently converted into our revenue growth owing to our resilient gross revenue margin in the mid to high 60s. In the second quarter of 2026, we saw a revenue margin of 68 basis points, which enabled us to convert the 37% year-on-year AOA growth into revenue growth of 43% for the quarter and annual run rate revenue of around 40%. In conclusion, thanks to the compounding AOA base and resilient revenue margin, we have generated predictable and recurring revenue, which represents PensionBee's first radio driver. The second value driver is pension-based business scalability due to the controllable nature of our cost base. The cost base has continued to decline as a proportion of revenue. This scalability dynamics of predictable and recurring top-line growth coupled with cost discipline led to an improvement in operating margin. On the last 12 months basis, the UK adjusted EBITDA margin improved to 15% up from 8% a year ago. Furthermore, the operating margin pre-marketing, a measure of scalability, for the UK reached 42%, reflecting the inherent strong scalability and margin potential of the business. Reflecting on our long-term track record, PensionBee has delivered revenue growth since our IPO at a compounded annual growth rate of 44% and strong margin expansion in the UK with an adjusted EBITDA margin improvement to positive 15% on the last 12 months basis and operating margin pre-marketing improved to positive 42%. This underscores strong delivery against our growth and profitability margin objectives. Pension B operates a proven and scalable growth model designed to consistently expand our fee-generated asset base. Asset growth is driven by the following mechanisms. From a marketing investment perspective, which you can see on the left-hand side chart, we have accelerated our marketing expenditure while delivering profitable growth, a trajectory we intend to maintain. Conversion predictability, which you can see on the middle chart, demonstrates the reliable rate at which we converting marketing spend into gross inflows per pound of marketing budget deployed. thanks to the strong correlation between customers' age and gross inflows. This makes our growth engine predictable. Subsequently, through increased deployment of marketing and converting it predictably into gross inflows, we continue to drive gross inflows over time. In short, PensionBee operates a proven and predictable growth model where increased marketing investments yields growing gross inflows. With respect to our guidance, the framework for Pension We as a Group, we have outlined our medium and long-term targets. In the medium term, by year-end 2029, we expect the Group to generate revenue of above 100 million pounds and an adjusted EBITDA margin of circa 20%, with the UK considerably contributing to those targets. In the long term, by year-end 2034, we expect the Group to generate above a quarter of a billion pounds in revenue and an adjusted EBITDA margin of circa 50 percent. Our circa 31 million pounds cash balance or approximately 41 million dollars of cash balance puts PensionBee in a very strong position to scale the UK business as well as invest in a tremendous US market opportunity, continuing to execute on our long-term strategy and delivering on our public market guidance. I would now like to hand back to Romy for concluding remarks.

Thank you very much, Christoph. We are very pleased with the quarter. We are looking forward to a successful remaining 2026, and we are delighted to engage with the investor community on your questions over the last three months.

That's great. Thank you, Romy Christoph. Thank you for updating attendees, ladies and gentlemen. Please do continue to submit your questions just using the Q&A tab situated on the right-hand corner screen. You can type your questions or type Q and I will undo your camera and microphone. There will be a recording available and that should be about 15 to 20 minutes after the meeting has ended. Romy Christophe, you've had a number of questions from investors and attendees today. Thank you, everybody, for your engagement. Perhaps I could start off with the first one. At what point do you expect the group to become consistently profitable on a quarterly basis?

Yeah, happy to take this one. So as we have outlined in our profitability guidance on an annual basis, we have a 2029 guidance that says 20% adjusted EBITDA margin on at least 100 million pounds of revenue. So that means about 20 million pounds in that particular year. And then the second target thereafter we have in 2034. So with regards to specifically around the quarterly results, we as a management team focus very much on an annual basis, because when you look at our marketing deployment, you actually see that there is a higher marketing deployment usually at the first half of the year, because this is usually when we see a very strong return, but also it positions the business very well for the second half of the year, given that we build up the top end of the funnel and then converting customers through. That basically also means that some of the costs might occasionally be front loaded to the first half. So it's a little bit difficult to say at what point it will be precisely on a quarterly basis because of that nuance in terms of doing the best for the business. But on an annual basis, again, we target more than 100 million pounds in revenue by 20 by 2029, with around the 20% adjusted libido margin, which would be around the £20 million mark. That's great.

Thank you. I'm just going to jump a couple of questions to Guatam. Thank you. Guatam's got three questions. So let's start with the first one. You reached 75% record keeper coverage. USA AUA is at 4.8 million on around 400 customers. What's the actual lag time you're seeing between signing a record keeper intermediary relationship and it converting into meaningful rollover inflows and can you provide a rough timeline to get into that 1 billion US AUM?

Thank you for those excellent questions on the US. As you know in the US we have a dual channel model. We maintain our direct to consumer marketing approach and here we are really focused on optimizing the conversion funnel. The conversion funnel is different to the UK conversion funnel. There is a lower cost of marketing at the upper end of the funnel, which we've kind of stated numerous times. And conversely, because the prevalence of accounts in the US is lower than in the UK, there is also a lower funding rate. We are now at the point where we feel well optimized on the upper end of the conversion funnel in terms of the marketing spend. And we are progressively working our way through the conversion of the accounts from a funding request to a funding actually occurring. And I state that because you note the total AUA volume and the number of customer accounts. And most of those are coming through our D2C kind of channel. The question then turns towards the intermediary market where we are using our automatic rollover IRA and we are really distributing through intermediaries, which includes advisors, third-party administrators. We know record keepers because they are important gatekeepers for making that flow as smooth as possible. So the record keeper relationships here are really about how easy is it for an employer to use the pension B automatic rollover IRA. And the 75% figure there that is referenced points to the fact that we now have really broad relationships established across the record keeper market. So if you wanted to use the pension B automatic rollover IRA as a Fidelity client or as an Empower client or an Alight client, we either have a direct integration with you or we have worked with you or we are in the process of working with you. And so that broad coverage around the record keeper market as gatekeepers is really important. And we continue to add new record keepers. And we'll be sharing more news on that in the coming quarters and in the coming year to increase the ease of throughput through that B2B channel. The intermediaries themselves are typically advisors or third-party administrators who have strong working relationships with the employers. As we have stated in the release, we are targeting 100 intermediary relationships over the medium term. And that $1 billion US AUM goal is a medium term goal, as we have previously stated. What we've given you here is really the inputs into the $1 billion US AUM. The inputs are, of course, the B2B line. We've spelled out that we believe 100 intermediaries with 10 million dollars of annual recurring inflow from those intermediaries and i'm happy to go into more detail in terms of how that's generated uh we we see that getting us to 1 billion 1 billion dollars of aua but we also see it being substantially recurring uh and then similarly on the d2c side we've given you some of the ingredients around the funnel and we continue to establish the funnel it's it's it's getting really well optimized on the marketing side uh and we are continuing to push through on the conversion side through more automations and more kind of pushing of the transfers to get them through the system.

Thanks Remy. Just turning around to UK marketing spend, the question reads as follows that UK marketing spend rose 34% whilst gross inflows, sorry whilst gross inflows rose 34% and new customers were 12,000 versus 11,000 with growth increasing coming from higher transfer in values from older cohorts, average 40 versus 39. Should we read this as a shift in strategy towards wallet share over customer acquisition? And is that sustainable given the 250 CPIC target?

Great question. This time on UK marketing and the approach there, we remain very committed to our 1 million invested customer goal for the UK. We see ourselves well on track for that. We are onboarding more new invested customers every year. And as you noted, we are increasing our marketing spend to be able to increase the rate at which the new invested customers are being onboarded. As you also know, we make money on AUA. And so there is, of course, a priority to continue driving higher account sizes we've been very transparent around that and you can see that reflected in the average balances that are coming through on the on the pension fee platform so yes is the short answer very much committed to growing towards the 1 million invested UK customers with a focus on optimizing flows per pound of marketing spend. And the 250 CPIC is, of course, very important. It's a key driver of our LTV. So, you know, kind of long-term returns from customer acquisition activities.

However, we will always expect to see an increase in CPIC, especially because we are increasing marketing spend and there's always a lag between marketing spend and the customer's transfer actually completing so very much on track for our long-term goals there and hopefully everyone will be very pleased with the growth in those gross inflows indeed and maybe just one other point to comment on the growth engine because it is really important for us as a business is that our growth engine is really predictable and let me tease out a few additional points on this one but before maybe also quickly on the on the CPIC target so yes very committed to it you did see that we have indeed accelerated marketing investment this year and CPIC has come up a bit but also we have already we have seen this in the past as well so when you go back actually to 2022 you see actually a similar CPIC level at the time where we also increased that marketing spend and on the back of that they had a really accelerated customer acquisition. So we usually look at CPIC target by year end and the main reason is the acceleration in marketing. But I think the second point that I really want to tease out is, which is also new in our presentation on page 18, which is the strong metric around gross inflows per pound of marketing spend and that's quite important because as we just said you ultimately we are making regenerating revenue based on the assets on the fee-based assets so we see marketing as just a gross vector it was driver and therefore it's very important if we invest marketing that that translates into gross inflows and therefore drives revenue and so therefore we monitor gross inflows per marketing deployed and you can see on page 18 that there's a strong correlation with age in particular and i think we are really uh happy about delivering a gross info per marketing spend that is in line with last year yes customers were a little bit older but also we spent a little bit more towards uh the back end of this first half and so that means given that there's always a little bit of lag effect that when we deploy marketing until uh customers come into the door and customers are the the ports are transferred in there's always a little bit of a lag effect so that means the closer to you to deploy towards the end of the uh quarter if you will the more is actually pushed the value is pushed into the next quarter so i think despite that really strong gross influence by marketing spend and it basically highlights page 18 in particular that the growth engine is really really predictable and reliable because we have provided data back from 2022 to 2026 and it shows the strong coordination we spend marketing we have a certain marketing strategy that translates into gross infos

that's great thank you uh thank christoph uh just changing the subject the final point of the question here around margins uh uk LTM EBITDA margin hit 15% already closing in on the group's 2029 target of circa 20% for the whole business.

Does that imply that margins alone need to run well ahead of 20% to offset ongoing US losses?

Yes, very good question. And the short answer is yes. So I think the UK will, given that the UK is much further down, its growth trajectory will contribute much, much more strongly to the medium-term guidance by 2029. So that means that on a group level, we target around 20%. We probably expect the UK to be at or above 20% at around that time, and the US to be around break-even levels. So I think your suggestion is correct, and I think that's a reasonable understanding.

That's great. Thank you. Question from Jude at RBC. Jude, thank you very much. Again, a number of questions here. On the Channel 4 weather sponsorship, it's great to see PensionBee on the TV in the evenings. What's the rationale for this booking, this particular slot? And is it replacing something else that PensionBee used to sponsor?

Great question. Focused on the UK marketing strategy and particularly around building brand awareness. And Jude, I am so pleased to hear you commenting on the visibility of the brand. We are really focused on becoming a even better known household brand in the UK. And we think the Channel 4 weather sponsorship will contribute significantly to that. It's a very repetitive format, and so we expect consumers to see us multiple times a day, and it greatly enhances, we believe, the visibility of the brand and also the long-term trust that we are seeking to establish. We have some exciting pending product-related activities that will feed in nicely with this brand sponsorship, so please do keep watching. And in terms of what it is replacing, we have concluded our sponsorship of Brentford. It's been a wonderful relationship, and we really feel proud of everything that has been achieved over that five years working with Brentford. Over that period of time, we saw brand awareness growing significantly. We have previously stated that brand awareness grew significantly among male audiences, and therefore we believe that the football sponsorship was really effective in driving that given the audience representation around that sport. And so with a lot of that having delivered significant value, we are turning our attention to slightly different and perhaps broader audiences, including around the Channel 4 sponsorship. We have more sponsorships that will be announced very soon, some of which have been in the live environment already. And we believe that the combination of the repetitive Channel 4 sponsorship and a slightly deeper brand related sponsorship, again, on the sporting front, will enable us to continue to reach a broad section of the audience while maintaining the diversity of the sponsorship mix.

Thanks, Romy. Moving on, I think in the past, this is from Jude, you've said around 30% of existing customers contribute new assets. Can you remind where that stands now? And is there any colour you can add on how different cohorts behave in this respect? For example, do customers start contributing more the longer they have been with the group?

Nothing particularly new to report here. The numbers remain broadly in line with what we've previously discussed. we we believe that consumers contribute you know as as and when they can and of course pension tax relief remains one of the important ways that personal finances can be can be optimized in in the UK in terms of cohorts we we believe that contributions are more prevalent where affordability is greater and so the of course the the mix of customers that we have we have customers with, you know, £1 or £100 in their pensions with pension B, and we have customers with a million and beyond. And so we do tend to see contributions at the higher end of the affordability curve, and that's probably kind of quite expected as well.

That's great. Just only a question from Matt. Are you seeing any change in customer contribution behaviour beyond to pension transfers?

So I believe we just answered that one. However, what I would add, and what is really interesting for us to see, is that we are seeing a very similar contributing behavior emerging in our US customer base. Obviously, the US customer base is still significantly smaller than the UK customer base. But nevertheless, we see that around 20% of the U.S. customers are contributing. And so that very much validates our hypothesis that consumers around the world are looking for good, usable, easy retirement solutions that are also high quality. And it's great to see that contributing behavior making itself known across the pond too.

Thank you. We've got a number of questions from William. William, thank you very much for your questions. The first is you've added 22,000 UK customers in H1. Should H2 be higher as marketing momentum builds or is there still likely a seasonal dip H2 versus H1 as the tax year impact fades?

We think that the marketing buildup has been particularly strong. You can see that in the gross inflows and we can certainly see that in the transfer request too. so we think that the pipeline remains remains strong and we expect to continue optimizing that in in the second half thank you second part of his question you seem to enjoy much higher inflows per new customer this quarter if i'm right what was the driver and does it influence uh out uh view about the outlook it seems to be the 42 year old higher uh average age well we're certainly looking to grow inflows per pound of marketing span. And we have been for a while. We are also looking to grow the invested customer base. And we have our 1 million invested customer target for the long term for the UK. So yes, we are enjoying higher inflows per new customer. And we intend to continue on that route. We see the opportunity for engaging customers with slightly bigger accounts as being a marketing and a product initiative. So you can definitely expect to see more from us on that point, certainly in the second half, but also next year. And generally speaking, UK account sizes are increasing across the board, because automatic enrollment is becoming so embedded and you know the the typical 35 year old has more in their account in the UK than the typical 35 year old did 10 years ago so there is also a kind of broader market effect that you would expect to see in in our numbers thank you and the final question turning back to the Channel 4 weather sponsorship is this a relationship that you hinted in the Q1 call or is there something else also in the pipeline? This was definitely hinted at in the Q1 call. And we have more in the pipeline too. So please, please do stay tuned.

That's great. Thank you. And then there was one final question. I think you might have touched on it, but just in case there was any further colour, but marketing investment increased quite significantly. And really, where were you seeing the highest returns?

As you know, we're big believers in the diversified approach to marketing, that includes paid channels, that includes, of course, search, organic and paid across various devices, but also in brand and making sure that we are top of mind when customers think about their pensions. So very much continue to deploy that diversified marketing mix. It's been critical to our growth and will continue to be so.

Thank you very much indeed. And Romy Christophe, that takes care of all the questions from attendees today thank you to everybody for your engagement as usual remy i'll shortly redirect those on the call to give you their feedback but before doing so if i may just ask you for a couple of closing comments thank you very much for for joining us today and we look forward to continuing the conversation that's great remy christophe thanks once again that concludes today's presentation ladies and gentlemen we will now redirect you for your feedback thank you for your