MoneyHero Ltd (MNY) 2024 Q2 法說會逐字稿

Good day, ladies and gentlemen. Thank you for standing by. Welcome to MoneyHero Group second quarter 2024 earnings conference call. (Operator Instructions) Please note that today's conference is being recorded. I will now hand the conference over to your host, Chadwick Dorai, Strategic Finance Lead. Please go ahead.

Thank you, Ligero. Hello, everyone, very good morning, 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 second 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 of all, 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'll 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 risks 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 a reconciliation of non-IFRS financial measures, the most directly comparable IFRS metrics, please see our earnings press release. And one last thing, all monetary references will be United States dollars unless we state otherwise. Shortly, Rohith and Hao will be discussing our Q2 performance and business strategy.

With that, let me pass on the time to Rohith Murthy, CEO of MoneyHero Group. Over to you, Rohith.

Thank you, Chad. Hi, everyone. Today we share our performance update for the second quarter that ended June 30, 2024. As we also near the end of the third quarter, I'd like to provide some early guidance on our performance leading up to September 30, 2024. Our core business online financial comparison grew by 26% year-on-year and Creatory, our B2B business grew by 13% Y-o-Y.

In our core markets, Singapore posted an impressive 68% Y-o-Y growth to USD9 million, while Hong Kong grew 19% Y-o-Y to USD7.3 million. While we faced some temporary setbacks in Philippines and Taiwan due to provider constraints. We have swiftly addressed these issues, and we are confident we'll be back on track in the upcoming quarters.

Revenue from our insurance products increased by 89% Y-o-Y to USD2.2 million. Insurance now contributes 11% of our group revenue compared to 7% in the prior year. I think it's important to take a step back and look at the bigger picture. Focusing solely on quarterly results can sometimes mask the full scope of our performance and growth potential, which is much clearer when you view it from a long-term prospect.

Here's what I mean by that. First, consider our first half 2024 results. We processed 970,000 banking and insurance applications through our platform. That's an impressive 100% Y-o-Y growth and nearly three times the volume of 2021. And yet our insurance engine is just getting started. I don't believe any other aggregator in the region has experienced growth at this scale. And in anticipation of this, we built additional capacity and we make strategic investments that's enabling us to outpace industry growth rates.

Second, our industry is still in the very early stages of growth. We represent a small portion of the overall industry and there is substantial room for expansion and diversification ahead of us. Third, our strategy remains focused on growth, prioritizing long-term value over short-term profit optimization. While we could optimize for short-term profit in any given quarter, our priority remains focused on investing for future growth.

And finally, efficiency gains are driving operational leverage, something I spoke about in the last two earnings calls, and this will be even more impactful as we continue to scale. We're already seeing improvements across key areas of our business from marketing to operations.

Now talking about our strategic pillars, we've made significant progress across each of our strategic pillars. Consumer pulls, conversion expertise, insurance brokerage, partner relationships, and operating leverage. This quarter, we hosted Singapore's largest personal finance festival, drawing the record 5,000 attendees. We partnered with over 35 banking and insurance providers and the event featured more than 70 prominent speakers from the financial industry and government. This marks our seventh consecutive year posting this festival, and it was our largest and most successful event to date.

I'm also pleased to share that we were recently named the personal finance tech of the year at the Asia fintech awards, 2024. MoneyHero was selected from six finalists, which is a testament to our strong user connection, consumer pool and technological superiority. This recognition underscores our market leadership across greater Southeast Asia and highlights the strong consumer demand and loyalty that continue to drive our sustained growth and success.

An important thing to note is we are now pivoting from simply driving traffic growth to focusing on monetizable engagement metrics. So this would include monthly unique visits to our transaction pages, conversions to applications and registered members. This shift has resulted in a 50% increase in approved applications with our membership break now growing to 6.5 million as of June 30, 2024. We are now focused on driving strong repeat behavior supported by our cross-sell and upsell initiatives.

In the coming quarters, we are also rolling out new capabilities to enhance engagement of our member base. This would include a mobile app, a new car insurance verticals, one-click insurance purchasing and an improved site and car content architecture.

In the first half of 2024, we generated approximately [USD4 million] in revenue from insurance products, representing 65% Y-o-Y growth. This is nearly four times our revenue from the same period in 2021, making this now our fastest-growing vertical.

As a licensed insurance broker in three of our four markets, we will continue to invest in this business. While insurance verticals typically have lower margins in the first year, simply due to the cost of acquiring users, these margins grow significantly to renewals. This is a high-margin segment for us, and we will continue to make strategic investments focused on growth with profitability as a long term outcome.

Creatory, our B2B business, still is relatively young, but has already demonstrated impressive growth. We are increasingly confident about our ability to scale this business across all our markets. The creator market holds significant potential, and we are investing in building a strong brand with the aim of becoming a market leader.

We are also highly focused on building operating leverage for this business with several actions and initiatives in place to control our operating expenses and drive efficiency gains. We streamlined our headcount and operations and are investing in AI to further enhance efficiencies.

As you may recall, we previously announced the addition of a head of AI. And since then, we've identified efficiency opportunities across various business functions. Couple of examples, I could cite is we are now enhancing content production, creative production, we are exploring in a chat bot to automate our customer service capabilities and also looking at AI to help us drive conversion rates on our transaction pages.

Coupled with a disciplined approach to managing expenses, these efforts will keep our operating costs relatively fixed as we grow, allowing more of our top line growth to flow directly to the bottom line. As a result of this, we expect significantly lower EBITDA losses next quarter, reflecting the progress in building our operating leverage, and we are aiming for profitability in the last quarter.

As part of our broad growth strategy, we continue to explore strategic M&A opportunities with a focus on market consolidation. Rather than competing head on, we prioritize collaboration and investment. A recent example is our transaction in Malaysia where we transition from being an operator to an investor in our competitor, demonstrating our ability to adapt and consolidate the market.

Our acquisition of Seedly in Singapore also exemplifies this approach with the brand thriving post-acquisition. We remain open to opportunities that provide synergies across data, technology, revenue expansion and operational efficiency.

We are more confident in our strategy and trajectory than we were three months ago. And I look forward to answering questions, shortly after I hand over the call to our CFO, Hao. Thank you all once again for your trust and support. With that, I would like to now turn the call over to Hao Qian, our CFO.

Thank you, Rohith. Good day, everyone. In Q2 2024, MoneyHero's strategic expansion resulting solid growth in approved application was 24% year-over-year revenue growth to over USD20.7 million. We have made strong market share gains, particularly in our home markets as we continue to expand across great Southeast Asia. However, investment into strategic expanding our customer acquisition, contributing technology replatform and the data infrastructure led to an adjusted EBITDA loss of negative USD9.3 million for the quarter.

Now let's turn to our second quarter 2024 financial performance. In the second quarter of 2024, MoneyHero deliver 24% year-over-year revenue growth to USD20.7 million. We realized significant growth year-over-year in Singapore, up 60% and Hong Kong, up 19% where we have increased our customer acquisition, and that strengthen our already dominant market share. This top-line growth was driven by maintaining a strong provider relationship and by investment in both traffic and conversions.

Our Philippine business decreased 16% year-over-year, largely due to reduced volume with our key clients as is complete system and database migration post-acquisition. We are working closely with the client to ramp up our commercial engagement, position us for recovery in the coming quarters.

Our Taiwan business decreased marginally by 4% year-over-year to USD1.4 million in the second quarter due to pause of product offering from several key clients. For Taiwan and the Philippines, we will focus on building long-term sustainable profitability and focus on building new verticals to replace the loss of revenue from our key clients through decision to exit the market.

Our B2B business Q3 also continue to show growth with second quarter revenue increased 13% year-over-year to USD2.9 million, which represents 14% of Group revenue. We will continue to leverage a Creatory problem is a competitive advantage to drive traffic and that gradually decrease rely on performance marketing.

Insurance remains our fastest growing product vertical with second quarter revenue increased 89% year-over-year to USD2.2 million. We will continue to explore new opportunities to offer more new product lines to further fuel the top line and the bottom line growth. In addition to our core business growth, we aim to insurance to sorry, to use insurance as a differentiator to increase both frequency and the share of wallet.

For the second quarter 2024, our adjusted EBITDA loss increased to a loss of negative USD9.3 million from a loss of negative USD6.4 million in Q1 2024. The primary drivers for the increased loss for the second quarters are, one, strategic investment. We prioritize growth through increased investment in branding, customer acquisition, data, and technology, aimed at capturing new customers and building infrastructure for future profitabilities.

Second, provider constraints. During the Q2, multiple providers in Taiwan and the Philippines and the wind significant platform migrations, temporary porting new card acquisitions. These transition impact our short-term financial performance. We anticipate acquisition volume will return to normal level in Q3 as these migrations approach completion.

Furthermore, one key provides us is it from several key markets, also had a major impact on our revenue and profitability. To mitigate this revenue loss, we have invested in other providers' products and expanded into other verticals. We anticipate revenue and a profitability loss from this providers exit will be addressed in Q3 and Q4 and thus will only show a minor impact from Q4 and onwards.

Three, increased operating costs. Total operating costs rose year-over-year, largely due to additional expense associated with being a public company include auditor fee, [ENO] insurance and the IRPR retailer fees.

Looking ahead, we anticipate narrowing of our adjusted EBITDA loss in the second half of 2024. With margins start to recover in Q3 and the continue to improve throughout the year. We have initiated a comprehensive review our organization structure, which speaking with our recent reorg announcement, and we've said to be completed by the end of Q3. This will create a more streamlined and cost efficient operation. We expect to reach EBITDA -- adjusted EBITDA profitability on a monthly basis by year end. And as we have been focused on efficiency and optimizing the return on our growth investments.

Looking forward, we will continue to use our strong cash position to expand our footprint. We see this in two distinct parts. First, through organic efforts such as our insurance business, personal loans, Q3 and a streamline cost with efficiency gain using the IR.

Second, as Rohith mentioned early, and I would like to reiterate, we are actively pursue a growth strategy by continue to explore strategic acquisition and the investment opportunity to consolidate the industry as we believe the time is right for industry consolidation in Greater Southeast Asia. We believe that 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 share top line growth and the bottom line for years to come. With that, I thank you for your attention today, and I turn it over to operator to take any questions.

(Operator Instructions)

Milo Bussell, Edison.

Hi, guys. It's [Mario] from Edison. Congratulations on the results, and thanks for the presentation. Three questions from me. The figures reported today indicate the full year results should be H2 weighted. So just want to understand what are some of the levers you can pull to achieve the [USD100 million] revenue target and what is underpinning your confidence in achieving that target?

Second question is, what was the rationale for the Money from acquisition? And more broadly, how should we think about inorganic growth strategy going forward? And finally, just want to understand how you're leveraging AI, the short pero app and creates a platform to continue the improvement -- the approved application conversion rates? And is there any KPIs we should look to measure success against this. Thanks very much.

Thank you for the questions. I'll start with your first question around our revenue drivers and revenue line. Now, as we look quarter-on-quarter, there are a few key revenue drivers we focus on. The first is wherever we see an opportunity for what we would like to call organic growth, a classic example is typically in the last quarter of this year.

We have what we call a tax loan season in a couple of our markets. And here we see an organic growth in demand for personal loans. So that's a real good opportunity for us to attract that demand, convert that demand as and when people do come to our platform looking for this product.

The second thing is we typically see in the last couple of quarters, especially around the banking acquisitions. We do see a beautiful sort of scale-up of the budget from lot of providers. As you'll appreciate, this is also close to the annual target. So the majority of that budget allocation typically comes to us. We are in for many of the providers -- still one of the largest sort of digital partners. So we do get the first port of call to allocate or to use that budget. And that's why we have a lot of marketing campaigns, especially in the last couple of quarters.

Insurance, now we've been really thoughtfully building insurance vertical. If you take a look travel insurance, for example, today you can buy travel insurance on our platform in Singapore and Hong Kong. We've been really optimizing our UX and UI. And that really sets it up beautifully as we head towards the last quarter of the year where again, there's a seasonality spike of travel, especially in the markets we operate. And these sort of investments we've made in our capabilities allows us to attract that demand and convert the demand.

And Creatory again, it's a very new business for us. We don't really in a trial set targets for Creatory because it's such a really interesting space we are operating in. And really learning how to capture more of the space across all our markets. So there are some interesting plans, that's interesting things you're going to also invest in to try and expand that B2B brand and very unique and innovative, doesn't exist in our industry that we operate.

So the beauty of our business is we are multi market, we are multi-vertical and we have different sort of core businesses that we can scale. And a lot of this will also start to demonstrate returns on the investments we've made, especially in the first two quarters this year. Those were very deliberate investments we've made in acquisition.

Today, we have about 6.5 million members -- registered members as of June 30. This now allows us to also cross-sell and upsell to the space. We've made investments in data. We've made investments in our technology infrastructure, and now we're going to be launching a mobile app. So we do believe we have the drivers now to expand our revenue and we'll be very focused on execution again these.

Now on to your second question, which was around the recent announcement of an acquisition and what synergies we were expecting. Firstly, the point I would like to make is we are the largest aggregator platform in the region, and we have a very unmatched footprint across four key markets. No other accurate aggregator operate at our scale within these markets. That's an important point to note.

Second, since 2015, we've seen numerous aggregators enter and exit the region. We are the only one from that early batch to have successfully gone public. We strongly believe the market is ripe for consolidation as Hao mentioned, and we see ourselves as a key player in helping drive that process rather than just merely engaging in direct competition.

Having said that we are well kept back, capitalized, and ready to compete, but we prioritized partnerships and collaboration first over competition. And the recent transaction in Malaysia is a prime example of that where we ourselves transition from being an operator to an investor in a competitor to facilitate market consolidation.

The third thing to note, if we had a highly successful IPO backed by top investors and we've raised substantial capital as a result, while we are happy to see this capital generate returns. We received a number of inbound inquiries regarding our M&A strategy. Consequently, as a management team and a Board, we are now actively exploring acquisition opportunities.

And fourth, we have a proven history of M&A. I mentioned in 2020, we acquired Seedly, a leading personal finance platform. Many considered Seedly our biggest competitor in Singapore. Post acquisition Seedly has continued to thrive as a brand. And this is a testament of how we approach M&A with a focus on fostering growth, not just absorbing competition.

And finally, there are several similar smaller fintech platforms that could be of interest for us for a potential merger. As I mentioned before, our approach has centered around a buy or build strategy, which is evident in how we scaled key areas of our business, especially in insurance and Creatory. As for synergies, any acquisition target will ideally provide value across multiple dimensions.

Number one, data integration, technology enhancements, revenue expansion and operational efficiencies through consolidation. This is the strategic framework that we use and that allows us to fully leverage the benefits of any acquisition and generates significant growth.

And coming to your final question around how we are leveraging AI and the app and the Creatory platform, Look, AI is a very interesting and exciting space for us. We have already started leveraging AI and automation to drive efficiencies across every aspect of our business from content generation to customer service. And this approach is helping us achieve operational leverage by reducing costs while at the same time scaling our operations.

AI is a crucial tool for us, also allowing for more personalized customer journey, automating our workflows, and really optimizing our decision making processes. All of this contributes to a higher conversion rate for approved applications.

Regarding the app, the ShopHero app after with our initial soft launch, we are now transitioning into a fully functional mobile app with an integrated marketplace. We expect to roll this out in the next quarter. This will be our primary mobile app play, enhancing the end-to-end user journey with an improved UX and UI.

As we mentioned, we're very focused on traffic utilization, and this will allow us to drive that and also focus on monetizable metrics like conversion rate and completed applications, and through this, we aim to significantly improve our performance and engagement.

Coming to Creatory, as I mentioned, still very much in the early stages. We're very steadily adding content creators and strategic partners. The addressable market here is washed and we see several exciting opportunities for growth.

Creatory offers a very unique platform that combines a content play for us. A distribution play, a traffic play, and a conversion play. And we are really confident in this potential and excited about the potentials and possibilities as we continue to scale this B2B brand.

And finally, in terms of KPIs to watch, as I mentioned, we are now pivoting and focusing on application conversion rates, traffic engagement and utilization and user retention metrics across our platforms. These would be the key indicators on how well we drive operational efficiency and improve our monetization. Thank you again for the question.

Nirgunan Tiruchelvam, Alethia Capital.

Thank you for giving me this opportunity to do post a question at this forum. First of all, I'd like to congratulate the management on a phenomenal set of results and the eloquent manner in which the CEO has presented them is very encouraging. In terms of the questions, what would your guidance be for the FCF burn in FY24?

Okay. Let me address this question please. So we're not giving specific guidance for free cash burn in FY24. However, we expect EBITDA loss to be reduced to be between USD5 million to USD6 million this quarter, driven by key actions to optimize marketing investment, streamline operation and the focus on efficiency optimization. We expect to reach adjusted EBITDA profitability on a monthly basis by year end as we have been very focused on efficiency and optimize the return on our growth investments.

I see. My next question is about the markets that would drive the revenue growth in the next two years. Can you identify them, please?

Sure. Let me take that. We anticipate sustained growth from our core markets. Our core markets being Singapore and Hong Kong. They remain our largest revenue drivers. And in these markets, insurance will be our fastest growing vertical. As we rollout several key initiatives, I mentioned the revamped mobile app and announced sort of membership feature, a new car insurance vertical, a refreshed site architecture and an improved UX and UI. All these upgrades will elevate the customer experience and drive deeper engagement.

Beyond Singapore and Hong Kong, we are seeing strong growth in the Philippines where the market is again expanding beautifully. We have also strategic plans in place for Taiwan, positioning us for future growth in the region. I mentioned about Creatory, our B2B business, relatively young, but as already demonstrated impressive growth and unique brand with incredible growth potential that I would like to believe is ahead of its time.

Meanwhile, our insurance engine is just getting started. We are constantly enhancing our platform and user journey. And all of this, we believe will solidify our position in the market, but also fuel long-term growth across all our business segments.

Thank you.

Thank you. And I see no further questions in the Q&A queue at this time. I will now turn the call back over to Mr. Rohith Murthy for any closing remarks.

Thank you again all for your time, and I look forward to sharing our next set of results. For those back in Asia, again, wishing you all a very happy Mid-Autumn Festival.

Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation, and you may now disconnect.