Good morning, everybody, and welcome to MoneySuperMarket Group prelim results for 2021. I'm Peter Duffy, CEO, and I'm joined this morning by Scilla Grimble, our CFO. Thank you very much for those who are able to join in person. Also, can I welcome all of those people who are joining us on the webcast this morning. Now, I'm gonna begin with an overall summary before I hand over to Scilla to walk through the financials, and then I'm gonna come back and talk about execution and future plans. Let me kick off. We delivered revenue of GBP 370 million, and adjusted EBITDA ahead of expectations at just over GBP 100 million. Those are down 8% and 7% respectively on 2020. Clearly, we have some temporary challenges in our end markets.
We delivered strong gross margin improvements, up almost 4 percentage points on 2020, and excluding Quidco, gross margin would have been above 2018 levels. We're executing well on our strategy. I said last year that there was significant foundational work needed, and I'm pleased to report that much of that has been delivered with the remainder well progressed. We are nearing the full implementation of our new data environment, transitioning to Google Cloud Platform, which for the first time will allow everyone in the organization to see the same real-time data and for it to be used for operational as well as analytical purposes. We've made good progress with more efficient customer acquisition, transitioning our paid search or PPC bidding to the leading global platform, SA360. We've done the same with our customer relationship management. We're migrating to Braze, which will transform our remarketing capabilities.
We've also launched a new advertising campaign for MoneySuperMarket, based squarely around customer savings. We're evolving our tech to a single common platform underpinning our brands. That's gonna mean less resource for maintenance and development. We make changes just once. We've started with home services, where we're close to having now a single platform serving our in-house brands as well as our 40 B2B partners. That's the approach we're gonna be rolling out everywhere to support our multiple brands and to open up B2B opportunities. Now, these changes have made us a more efficient group, leaner and more agile. We've removed around 100 roles, that's almost 15% of the headcount, from the business that I joined back in 2020. In parallel, we've started expanding into logical and profitable adjacencies, diversifying the group and adding new capabilities.
That includes Quidco, which takes us into cashback, an attractive new market with high engagement and is so well aligned to our overall purpose. Turning now to our stakeholders. For shareholders, we maintain the dividend at last year's level, and that reflects our strong underlying cash generation as well as confidence in the business and our markets. For the U.K. consumer, we delivered once more on our purpose of helping households save money, and we continue to do this in an environmentally sustainable way. We're beyond carbon neutral, and we're committed to net zero by 2020. Finally, for our colleagues, we strive as ever to maintain a diverse, tolerant, and engaging working environment. We were pleased to rank first in the most recent Hampton-Alexander Women on Boards report, and we were also placed at number 21 on the Inclusive Companies Top 50 U.K. Employers list.
Now looking ahead. I'll provide some details later, but just want to make two broad points at the outset. The first is that with our data transformation in its final stages, we can now start to deliver real product innovation. Next quarter, we plan to launch on MoneySavingExpert a car insurance product, and there'll be more to follow on MSE and on MoneySuperMarket later in the year. The second point is that we need to return insurance to growth. 2021 was tough for insurance. We stopped buying unprofitable revenue, and we stopped using pricing investments at a time when we faced increasingly fierce competition in PPC auctions and heavy competitive spend above the line. We have several initiatives underway in insurance to build back our market share, some of which I'll come back to later. Overall, I'm very optimistic.
I'm actually more optimistic than I was a year ago. That's because I can now see a set of data and tech changes coming together that will finally allow us to do more for our customers and users, more for our providers, in turn more for our shareholders. Let me now hand over to Scilla to go through the financials, and I'll be back in a moment.
Thanks, Peter, and good morning everyone. Looking at our summary financials then, revenue was down 8%, excluding Quidco revenue fell 11%, similar to the first half. We had strong growth margin improvement of nearly 4 percentage points. Adjusted EBITDA was GBP 101 million, down 7%, and reported EPS fell 24%. More than EBITDA, largely due to cost for recent acquisitions that we treated as adjusting items. Our tech investment was up GBP 3 million as we added our three acquisitions, and this, along with the decline in revenue, led to a 2 percentage point increase in the reinvestment rate. Operating cash flow remained robust at GBP 66 million. Cash conversion was lower as a result of some one-off working capital outflows. Our underlying cash generation and confidence in our strategic progress and growth prospects mean we've held our full-year dividend at 2019 levels.
I'll now take you through the different dynamics in our three main verticals. Let's start with insurance and the left side of this slide. As you know, we've been in a falling premium market for some time for both car and home. In 2021, car and home visits across the market were down 11% compared to 2019 or pre-pandemic levels. Our revenue was down around 7% versus that period. 2021 saw strong conversion in car, but also faced intense competitive activity, particularly during the second half in PPC and in above-the-line marketing spend. In travel insurance, we saw recovery from Q3 as COVID-19 restrictions eased. Strong revenue per sale meant revenue peaked just above 2019 levels in October and November before Omicron dampened performance. More recently, travel is recovering again. That's revenue.
In margins, we improved gross margin rate in all our main insurance channels. Better data meant tighter management of our PPC strategy to bid up to break even on first transaction. In life insurance, margins benefited from the removal of the incentive, and in travel, we benefited from that much stronger revenue per sale. As we move forward, as Peter said, the focus is on returning the top line to growth at robust margins. If I look now at more recent performance, and you can see from the chart on the right-hand side that car and home premiums grew year-on-year in January. We'd expected that those increases, partly from the FCA changes and partly from underlying premium inflation. We have seen some indications of more inquiries in the market, the chart on the right, but the picture isn't yet clear.
We know providers are still refining their pricing strategies, reacting to one another, and so pricing volatility will continue. Remember, premium rises are generally good for inquiry volumes, their conversion does drop. Moving on to energy, which faced significant market disruption, particularly in the second half. Wholesale prices are currently around four times what they were a year ago. Our revenue slowed in Q2 as the savings available to customers fell. This worsened in Q3 when the price cap and the cheapest available tariff converged, taking customer savings to zero. By September, the price cap was the best deal available, and customers saw that message when they came to our site. From October, providers had removed all switchable tariffs from price comparison websites, meaning no revenue in Q4. You can see on the right where things stand today.
The cheapest fix is still above where the price cap will move to in April, and we have no switchable tariffs on our site. We do expect energy to return in the medium term. There remain enough providers to sustain a competitive market, and as we continue to see from search volumes, consumers are still keen to switch. With the work that we've done on our energy propositions, both MoneySavingExpert's Pick Me A Tariff and the MoneySuperMarket Super Switch, we're very well-placed when the market reopens. For now, though, we're assuming energy switching doesn't return in 2022, and to help you gauge the impact of that, energy was a bit less than GBP 30 million of revenue in 2021 and was GBP 56 million in 2020. Money was our standout performer, growing 20% with performance in the second half close to pre-pandemic levels.
That was driven by strong performance in borrowing, where credit card conversions surpassed pre-pandemic levels for most of the year. That largely reflected improvements in provider appetite. On the consumer side, traffic has yet to fully recover. Unsurprisingly, perhaps when we consider that the consumer has only recently returned to a consistent monthly net borrowing position, as you see in the chart on the right. More recently, we continue to trade well with conversion strong in January and similar year-on-year improvement to that we saw in Q4. Traditionally, though, January does bring a seasonal peak in card activity as consumers focus on debt management in the new year. We didn't see that spike in 2021, and it's really only partly returned in 2022.
We do think, though, that increasing interest rates could lead to more attractive savings products and may bring debt management more front of mind for the consumer. Turning back now to total group performance, and as I said, group revenue fell 8% or 11%, excluding Quidco. Insurance revenue fell 8%, driven by those factors I've already described, and Money recovered strongly, up 20%. Home services fell 34%, driven by those exceptional energy market dynamics. Broadband declined following a very strong year for switching in 2020, but this was largely offset by good growth in mobile. On to travel, which is now TravelSupermarket and icelolly, and here we saw some recovery from summer onwards. TravelSupermarket peaked at nearly half of its 2019 revenue before the emergence of Omicron.
Icelolly's recovery lagged due to its focus on holidays rather than travel insurance or car hire. Finally, our new cashback vertical, which is the Quidco business. We acquired Quidco on the first of November, and our first two months of ownership coincided with the peak Black Friday event. Revenue was as expected, and we've been pleased with what the team have delivered in activity-based marketing fees. Turning now to gross margin, as Peter said, we sustained the improvements from the first half with an almost 4 percentage point improvement overall. Around 1.5 percentage points were driven by more efficient acquisition, so from optimizing PPC bidding, the removal of the life insurance incentive, and conversion gains in car. As I said, all our main insurance channels saw gross margin gains in 2021.
Broadly 1.5 percentage points was from the improvement in money conversion as credit criteria loosened and the provider side of the market normalized. Most of the rest of the increase came from changes in mix. The margin benefited from the loss of the large B2B contract I flagged at interim and the mix away from MSE Energy with its associated customer cashback. These margin tailwinds were partially offset by Quidco, which has a gross margin closer to 30%. Excluding Quidco, group gross margin would have been around 1 percentage point higher in 2021. Finally, touching on devices, similarly to last year, these had a neutral impact. We've continued to see a shift to mobile with 61% of MoneySuperMarket visitors now using a mobile device. Tablet share, though, also continued to decline.
Looking at costs and operating costs excluding adjusted items were broadly flat year-on-year. Distribution costs were lower as we decreased marketing spend in the run-up to the MoneySuperSeven campaign launch, and we also made some efficiency savings. Admin costs were up 6%, driven by staff costs at GBP 60 million. That reflects the return of incentive costs and GBP 3 million of people costs from the recent acquisitions. We did make some underlying savings. As Peter said, we're transitioning to a leaner, more efficient core and removed around 100 roles during the year. In 2022, I expect the full year consolidation of Quidco and icelolly to add about GBP 10 million to OpEx, excluding depreciation and amortization. We also plan to increase our marketing investments behind the new MoneySuperMarket campaign by GBP 5 million, given all we know about the multi-year returns on above-the-line spend.
Turning to cash now, and we finished the year with net debt of just under GBP 60 million, including GBP 15 million of deferred consideration on the Quidco acquisition. Overall, our gearing is a comfortable 0.6x adjusted EBITDA, and I expect we'll reduce this further in 2022. Our cash conversion did fall. That was mainly due to a GBP 17 million working capital outflow driven by a couple of one-off factors, an GBP 8 million repayments of that postponed from 2020 under the government COVID-19 scheme and about GBP 5 million relating to one-off Quidco costs. In 2022, we expect working capital to return to more normalized levels. Our framework for how we deploy cash remains unchanged. Funding organic growth remains our first priority, then comes our commitment to the ordinary dividend.
After this, as we have in 2021, we look to M&A to support and to accelerate our strategy. As ever, we remain committed to returning any excess capital to shareholders. Turning finally to outlook, as I said, energy will continue to affect performance this year. We remain positive about the energy market in the medium term, but assume no energy switching in 2022. Early indications suggest that the FCA insurance changes have caused some premium inflation, but after a turbulent two years, we're seeing something approaching normalized trading in most insurance channels. Both travel insurance and our travel vertical appear to be on the road to recovery and money remains in good year-on-year growth.
In gross margin, we plan to hold on to our 2021 improvements made to the core switching business, but at the same time, we'll be looking to bring insurance back to growth. Mix effects, largely the full year consolidation of Quidco, will likely reduce group gross margin by around 5 percentage points. In costs, we'll hold on to the efficiencies made this year with increases driven by that full year impact of acquisitions and the planned GBP 5 million investment in brand marketing. Putting all of that together, we expect adjusted EBITDA to be back up to around 2020 levels. Thanks, and I'll hand you back to Peter.
Thank you, Scilla. It's now 18 months since I joined the group, and it's been a difficult 18 months in terms of our end markets. Let's remind ourselves why this group is such an attractive business in such an attractive industry. First, we play an important role for consumers. We make it easy for them to save on complex products, and that need is not going to go away. We believe it's only gonna get stronger. Second, we're an essential service for providers. Many don't have strong direct sales channels. 80% of car insurance acquisition goes through price comparison websites. We can do an even better job for our providers. Already, we're cost efficient and often indispensable, but we think we can do a better job. Thirdly, we're a well-diversified group in terms of distinct brands, but also our range of comparison services.
Despite the temporary situation in some of our markets, we are profitable, high-margin business that has maintained its dividend through two difficult years. I mean temporary. We are not seeing structural change in the markets that have recovered or are recovering. These are the markets that pre-COVID enjoyed good growth with further headroom opportunities. Now that said, as a group, we still need to execute, and we need to execute well. This has been my focus since joining, and you're starting to see that coming through. Starting with efficient acquisition. In 2021, we moved to Google's leading SA360 platform for PPC bidding, and we renewed our focus on SEO.
We've slowly turned on the smarts of SA360, and with SEO, while it can be volatile. MoneySuperMarket exited 2021 with current home insurance in their highest average positions since mid-2019. September saw us relaunch the MoneySuperMarket brand, introducing the MoneySuperSeven. It's a flexible advertising concept that squarely addresses our purpose of saving money and the breadth of our offer. We're pleased with its performance. On retain and grow, we have focused on building out capability for MoneySuperMarket. We've rebuilt our CRM platform, so we will be able to systematically recontact customers, whether by email or in their product journey, and this will form the basis of our retention improvements this year. We've started to simplify user journeys.
As an early example, our new energy Super Switch journey on MoneySuperMarket makes subsequent switches for customers easier by retaining and using more of their data. However, the whole returning user experience will improve this year as we use our newly available data to simplify product switching. We've made sign in and account creation easier, which is a vital step in using and deploying the data we hold. Expanding our offer, we made three acquisitions in 2021. The purchase of CYTI gave us full ownership of life travel and our pet insurance journeys. The combination of TravelSupermarket and icelolly will bring revenue and cost synergies, but importantly, greater scale, setting us up well for the travel recovery. Thirdly, Quidco, which takes us into cashback. It's aligned to our purpose perfectly, and it brings several opportunities. I'll return to that shortly.
A final comment on mortgages, where we remain excited about the long-term growth potential. In 2021, we built the returning user journey, and in terms of expansion, added a third remortgage decision in principal product with NatWest. We went further, adding our first decision in principal product for home buying, in other words, for a new property. We see strong commercial potential from these products. Although for now, it continues to be a slow burn in terms of overall revenue uplift. Now the last area at the bottom of this slide refers to data technology and scalability, which are all very close to my heart. This is where we've been most active, laying the foundations for a better, broader, and more efficient group. I said last year that data needed work. Our fragmented data estate held us back.
Data wasn't available consistently or in real time, and it constrained our efforts at cross-selling. It made CRM overly complex. It stopped us becoming a modern data-driven business. These are just a few examples. The majority of this is almost fixed. In the next few weeks, all our MoneySuperMarket customer data will be in one location on Google Cloud Platform, and we will be closing our legacy data warehouses. Data will be available in seconds rather than days, and it is all available. Previously, around 80% of what we now retain was all but lost. This is already bringing us better, faster internal reporting, visits, clicks, conversion in real time. But as an example, we can begin to feed directly into our PPC bidding. We will start to improve the data we share with our providers.
Most importantly, we'll start using this data operationally to improve the customer experience from one inquiry to the next. Simplification also means less resource. We no longer need to replumb for new data requests or when we make a tech change. We need fewer manual workarounds or painful data combinations. That has helped us deliver this data transformation as promised within our existing cost envelope. Now there's more to do, but not much more. I expect that by the end of the half, the heavy lifting in data will be done. Now I spoke earlier about the consolidation of home services across our brands onto a single common platform. That enables efficient redeployment of our underlying comparison services to all brands, whether that's in-house or external B2B partners. This is increasingly how we think about the group, as a tech-led savings platform.
We have a set of differentiated, compelling brands serving different savings needs in different ways. MoneySuperMarket, classic price comparison. MoneySavingExpert, journalistic-led, whole of market. Quidco, cashback or save as you spend. Additionally, we have B2B capability provided by Decision Tech to provide our services into brands beyond our group. They are increasingly underpinned by a common platform of redeployable capabilities. We build once, and then we reuse. As I say, platforming home services is close to completion. That has allowed us to reduce from eight tech squads to five, and it will be three by the end of this year, reallocating resource to growth opportunities. Platforming other areas will follow this year, starting with insurance. We are currently trialing B2B propositions in travel and pet insurance, and we'll expand our B2B insurance offer further.
As the current contracts expire, we will similarly expand the switching services we provide into Quidco. Travel insurance is going live on Quidco this quarter. I'm now going to touch briefly on each of the main brands at the top of this slide. First, MoneySuperMarket, where the opportunity is to drive more traffic, more direct traffic via retention and cross-sell. If I look at our active users, the 10 million MoneySuperMarket users that inquired in our seven core channels last year, only 19% inquired in more than one channel and less than 3% inquired in more than two channels. Now, those numbers are lower than the pre-pandemic peak of 23%. Travel insurance was a major contributor.
Even that 23% is frustratingly low when you consider that we pay to attract a proportion of these users, or when you consider the relevance and the breadth of our offer. Most users will have several of the products the spectrum covers, repurchasing many of them annually. The clear job is to drive this up. Every 5 percentage points we improve by is likely worth around GBP 10 million of gross profit, depending on the channel and the source mix of those individual inquiries. This would drop straight to the bottom line. Over the next 12 months, you will see the emergence of price comparison 2.0 coming on MoneySuperMarket. We're very close to having the necessary foundations now in terms of data, and we have a product and tech vision that is compelling and I believe achievable.
The results will be slicker, simpler, and more engaging for customers than traditional price comparison, with a focus on the customer as well as the channel they initially engaged in. We're making login easier. We've increased our login rates by a third in 2021, and we're about to launch social login as well. That means we can start to deploy the data we hold on customers and then better flow them from one channel to the next. In terms of the brand, in terms of brand strength, MoneySuperMarket continues to score extremely well on awareness and Net Promoter Score, well ahead of the peer average. In September, we launched our new campaign to reinforce front-of-mind positioning. The MoneySuperSeven is a flexible creative concept, has a memorable cast of characters which we can reuse, add to, zoom in on, build familiarity with.
It's more explicit about what Money Supermarket does. We help customers to save money, and we do this in many ways. It's a great vehicle to begin to help us to cross-sell. The reception has been good. We're landing the messages we want, and we've seen our share of branded search tick up nicely. We continue to see a good multi-year return on advertising spend. As Scilla said, we'll provide further backing for this campaign across the year. On to Money Saving Expert or MSE, which of course delivers a very different service to users, but it's just as important commercially. If I look at the first half of 2021, when energy was relatively normal, home services delivered just under half of MSE's revenue. Money was in recovery, but still accounted for over 40%.
Insurance was much smaller, even though it contributes around a half of group revenue. The current MSC insurance offer is a guide with a click out to different price comparison websites. We will shortly launch MSC car insurance in trial form, offering an on-site comparison journey. It's a whole of market journey. It's a multi-comparison service, but it's further differentiated by the guidance it offers users through that journey. The MoneySuperMarket part of the proposition will run off our existing aggregation technology, and is another example of the platformization approach that I've set out. We have further exciting plans for MSC, which I look forward to sharing with you at a later date. That's MSC. Now, our third-largest brand is now Quidco, with the acquisition having been completed in November. To briefly recap, Quidco is the U.K.'s second-largest cashback site.
It delivers close to GBP 60 million worth of revenue and GBP 8 million of EBITDA in their last financial year. Quidco provides a great way for users to save, but also a great way for merchants to drive volume effectively with a private discount to price-conscious segments. It massively expands the customer spend we cover as a group. As a reminder, this proposition is highly engaging. Transacting members purchase 11 times a year on average. Half of the Quidco clicks come via the app, another engagement proof point. Turning to our rationale. The first point is that Quidco takes us into a logical, adjacent and attractive part of the customer savings market, and it does that at scale. Second, Quidco will benefit from the group. We are already working on their data and tech.
There are also concrete, highly deliverable revenue synergies as we expand the switching services we provide to Quidco, bringing them onto the platform I spoke about earlier. I mentioned that travel insurance goes live this quarter as the first example. With a strong core proposition and some of the smarts that we can bring, we think there is real growth in Quidco. Third, and more long term, the group will also benefit from Quidco capabilities. Quidco has a broad and leading cashback offer, has a good flow of deals, has a membership program. Just as we've done with Decision Tech over time, we will platformize the elements of Quidco, making them available to other group brands. Now finally, an update on how the overall business is working. I said last year that parts of the group were too complex with unclear responsibilities.
Well, we've now addressed that. At the most senior level, we've added specialist knowledge to our executive team, complementing the broad experience we already have. Elsewhere, we've delayered and redesigned structures as we simplify processes, automate, and digitize the business. Overall, excluding the acquired businesses, we have reduced headcount by around 15%. Our office footprint is shrinking too, with staff from Decision Tech and Quidco London offices moving to Dean Street later this year. Finally, we are changing our culture. The general management structure that I spoke about last year has clarified responsibilities. Teams are more empowered, and we're moving towards the higher delivery cadence you would expect from a leading tech company. To sum up, this is an attractive business playing a valuable role for consumers and providers in fundamentally attractive markets. In terms of progress on margin, we have moved forward substantially.
Some of that is market-driven, but plenty is based on our actions, better data, and more efficient acquisition. Next on data itself, we are now close to completing a transformation that will let us use data operationally, driving cross-sell, deeper insight internally, and enhanced offers to providers, and as well as a lower cost organization. Third, we are advancing well towards a platformized business with common technology and capabilities. These can be redeployed efficiently across our in-house brands, but also across third-party brands. Fourth, we have expanded the business in sensible and profitable ways. We have diversified our revenue, and we've opened up further avenues for growth. Finally, and importantly, we're now starting to drive product innovation, initially on MSE with a car insurance proposition, but there is more to follow, and there will be more to follow on MoneySuperMarket as well.
We remain a highly profitable group, even after what I hope was our most difficult year. We are well-placed for travel and energy recoveries when they come, and to our overall return to a growth trajectory. Thank you. With that, we're going to open up for Q&A. Can we start with the people in the room first? We're gonna hand you a mic, if that's okay. Could I ask that you introduce yourself and your company so then people on the webcast can hear if they're not here. Of course, if you're on the webcast, please submit your questions directly, and then we'll have them read out in the room. Okay? Thanks so much, everyone.
Excellent. Hi there. It's Joseph Barnet-Lamb from Credit Suisse. I think three from me to start. Firstly, on the data around the proportion of your users inquiring in more than one channel, saying that that's currently 19, has been 23 pre-pandemic. Could you help give us some sense of where you think that can get to? I don't expect you to give us a target, but any benchmarks or case studies would be very helpful. Secondly, around device mix. Device mix was no longer a headwind in 2021. Do you think that is now gone as a headwind going forward? Or was that specifically because of a reduction in tablet use post-COVID? If you just talk a little bit about device mix, that would be great. Thirdly, within Money, we've seen promotions come back, supply is improving.
What do you think you need to see before the demand starts to come back? Is it just an expansion of that net borrowing, or is there something else you guys are looking for? Thank you.
Okay. Thanks, Joe. I'll do one. I'll have a go at two, and then hand over to you, Scilla, for a bit more of two and three.
Sure.
All right. Yeah, in terms of the ability to begin to cross-sell, I think the first target is to get back to 23%. I think that would be sensible first objective. I think secondly, in terms of benchmarks and case studies, while this has been done in other sectors, that haven't been done in price comparison. I think we're practically breaking new ground here. I don't think there are many comparators that you can practically begin to use. What I will say is that we are fundamentally looking to change the returning customer experience. The customer actually gets to see the multiple opportunities that they can avail themselves of rather than going through a stovepiped product application as it exists today. Price comparison broadly today is as it was 10 years ago.
This will be a change to the overall user interface. I'd say just, you know, look in the first instance to recovery, and then let's see where we can take it from there. In terms of device mix, headwinds changing, I think we are seeing that rolling off now. I think a lot of work has gone into optimizations of mobile, and we're getting to understand how to begin to do that in a similar way. Scilla, what would you kind of add to that?
Yeah. I mean, as you know, this is pretty much a MoneySuperMarket point rather than, you know, MSE. It's exactly as Peter described. We're now well through half, you know, 61% of visitors on mobile. That was up from 57% from memory last year. You know, still continuing to grow share. We've been doing some very good work to begin to reduce that gap in conversion, both on-site and the number of different channels we're now sort of pre-populating over to the provider side. Because remember, the mobile drag is as a result of our conversion and provider conversion on mobile. Some good work to narrow that gap. Then your other question, Joe, is on Money.
If you kind of, again, sort of separate the two sides to that. We tend to talk about promotional activity, particularly on the banking side. Think current accounts and easy access, you know, kind of savings accounts type of thing. As we've gone through 2021, current accounts in particular have kind of improved. We've again seen banks back in kind of acquisition mode, and that's improving nicely versus pre-pandemic levels. Savings are still lagging to some extent. You know, as we continue to see interest rates in all likelihood increase through this year, the headline rate becomes more attractive. Clearly with inflation where it is, you know, cost of money, holding it becomes more important and people become more focused.
That will, I think, be interesting as we go through this year. On the more major side of money, borrowing is about 80% or so of money. We've seen exactly as you're saying, the provider side normalize, it's about traffic. We think it is exactly as you're suggesting kind of where people are in their own balance sheet. That chart I showed about a net borrowing, we expect that will continue to increase during the year. Remember, savings levels on average 5% pre-pandemic, they were about 15% during pandemic. That sort of got to normalize a little bit on an individual household perspective. Assuming people continue to spend, the consumer confidence remains robust. We would expect to see those borrowing levels return during this year.
Thanks. Yes, it's Ciarán Donnelly from Liberum. Three for myself as well, if you may. Just on the cross sell, if you could give us some insight into why you think the cross sell has fallen from 23% pre-pandemic to 19%. What are the drivers in your mind? Just on insurance, in the scenario where it continues to be highly competitive, you said you've kind of gone away from bidding from unprofitable revenue. In terms of, let's say it is competitive and that scenario still persists, how committed are you to returning it to growth in that scenario? And three, just a clarification for my benefit. On the gross margin, is it a net 5% headwind? If you could just clarify the outlook on that. Thanks.
Great. I'll do one and two, Sil, three.
Yeah.
Okay. It's really about travel insurance. Travel insurance is a significant volume driver, and so that really is the main reason why 23 has kind of gone to 19. Just fundamentally it's structural in terms of where we are. Obviously, energy would be playing out as part of that at the moment as well. In terms of insurance, I think I'd sort of say three things really where we're gonna begin to act. The first is on more efficient acquisitions. There's still more smarts we can turn on SA360, and we're confident that the MoneySuperSeven will begin to help us drive volume for more above the line activity.
Secondly, through the data investment and the Braze implementation, you know, the more structured ability to recontact customers and to use data more in a more agile way there will provide opportunity. Secondly, I think when I say we can begin to help our providers, we can provide information to them to make sure that they're getting the best deal for customers in front of them as well. I think there's more we can begin to do there. Then I think the platform kicks in really. MoneySavingExpert having a car insurance proposition to begin with, that obviously is its own traffic driver that runs entirely separate from any third-party media spend. I think that's very exciting. I think you've got Quidco coming in, which is another opportunity.
Obviously as we begin to platformize, we open up B2B opportunities which enable us to access another part of the market as well. I think we have a range of initiatives that go beyond simple PPC that give us confidence we should be able to make progress.
Just on the gross margin rate. Yeah, we've guided to a net 5 percentage point reduction from mix in 2022. That's across the year. What we're guiding to in that is the impact of Quidco, but also the offsetting impact of the loss of that B2B contract. Remember that B2B contract is H1, so you get a little bit of shape during the year. As we've said, the rest will sort of depend on competitive dynamics and when other things return. We're looking to hold on to the gains we've made this year.
We have a few questions from the webcast. If we start with Adam Berlin from UBS. Two questions. Firstly, how sustainable is the underlying 150 basis points of gross margin improvement driven by better customer acquisition? And then secondly, are you guiding for insurance revenue to grow in 2022?
I'll do the first. Sil, do you want to do the second? Yeah, we think it is sustainable. We think we've made good progress on gross margins, and we're looking to continue that into 2022. I think it's probably very short and simple answer there.
Just on insurance revenue. Look, as we've said, we're looking to return to growth during 2022. That's the sort of headline message that you should take away. That varies a little bit by channel, so there'll be shape as ever during the year. Travel insurance we've guided to. We're seeing, you know, some good growth, and we expect that to continue during 2022. Travel insurance was 10% broadly of insurance revenue in 2019. I've given you some color in relation to what we're seeing on car and home, which are the main parts of that vertical. Peter's described all of the measures that we're taking to return that to growth during 2022.
Given, you know, when those things will land, I would again expect some of that to have shape. I expect to see more in H2 than H1.
Yeah, I should have said that in my answer, actually. You know, these things are fundamental and difficult in terms of sort of launching new products. They're not absolute quick fixes. To Sil's profile point, you should expect it more towards the later end of the year.
Two questions from Bridie Barrett, Stifel. First, could you discuss your expectations around the cyclicality of the Quidco business, give a sense as to whether or not that benefits from the rotation to e-commerce during the pandemic? And then secondly, perhaps you could update us to how effective the apps have been in terms of customer retention.
Great. I'll do the first. Scilla, do you wanna do the second? We're not thinking that is particularly cyclical. Of course, there has been a switch to more e-commerce purchasing across the period of the pandemic. Of course, kind of, you know, more mainstream high street retail is kind of coming back. I don't think that's necessarily at the cost of e-commerce-based retail. It feels like Quidco is exactly in the right part of the market. I'm not expecting that there is gonna be fundamental cyclical shifts in that business. I think, you know, we've invested in something which is essentially a growing sector and an opportunistic sector for us.
Remember, I guess, that the build on that for travel is that travel will rebound, and that was, you know, a relatively, you know, large element of the revenue in Quidco as well, pre-pandemic. From an app perspective, and Bridie, feel free to follow up with me afterwards. I'm presuming that's a build on from the Quidco question, but if not, I'll cover both in case. Quidco, the app is actually, you know, a very successful app. Within that business, a large element of revenue kind of come through the app, and, you know, that's continued through the pandemic, you know, in the same way as it was prior to that. Interesting to see when you have a, you know, highly engaged user engages in 11 times a year.
Surprise, surprise, they're happy to have an app on their phone. We're continuing to see good growth in terms of the app customers on MoneySuperMarket. You know, continuing to see that retention and growth there that we'd hoped for.
Question from Ross Broadfoot at Investec. Do you believe that Ofgem's price-walking ban will be extended beyond six months? Following on from that, what's in scope for commission based on lifetime value? Any evidence to support this from car or home insurance following the FCA review?
This guidance came out yesterday lunchtime, so to be open, we're still entirely processing it. I think there are two main components to it. You know, the first is that consumers, existing consumers have to be offered the same deals that new customers get. Big tick. Anything that helps customers, you know, we think that's a very, very big positive. Secondly, we're seeing this adjusting factor being announced if wholesale prices fall more than 30% below the price cap, essentially. What we see there is Ofgem essentially putting a smoothing mechanism in as wholesale prices begin to come down.
The good practice of hedging to make sure the providers are stable tomorrow could potentially be undermined if wholesale prices fall abruptly and essentially they lose large volumes of consumers to a cheaper offer. There is a smoothing mechanism being proposed here. You know, this is really early modeling, but from what we can see, the consumer would still be getting between 85% and 95% of the savings, even with the existence of this market adjusting fee which is paid from one provider to the next. It's interesting and, you know, I think it probably will help the market during a return to normality, but it feels like something which is a transitionary arrangement rather than something which is necessary for the market to function adequately going forward.
That would be, you know, our starting position. In terms of the second part of the question, which is changes in commissions, I think that's just sort of very early doors now in terms of where this stands. We'll just stay alive to what the right thing for customers, what the right thing for providers is.
Just staying on energy, a question from Cristina Campo from Alantra. Do you expect the energy market to maintain high prices for the whole of 2022? Do you expect further lifting of the price cap? And if so, could that enable competition between energy providers?
Yeah. We've essentially announced this morning that we don't see a return of the energy market in 2022. Fundamentally, that's about the relationship between wholesale prices and the price cap. The price cap has gone up to GBP 1,971, a 54% increase. If wholesale prices continue to stay where they are, one would imagine that that could kind of go even further in six months time because it's a formulaic outcome in terms of where that price cap gets to. If this market comes back when wholesale prices drop to a level below the price cap, that enables savings to be offered to consumers. Until that happens, we don't see that there is gonna be a return to normal trading. You can just read the second part of the question out again on that, Ian.
Yeah. It was just to sort of say if there is a further lifting of the price cap, would that enable competition between energy providers?
Well, well, it's only about the relationship between the price cap and wholesale prices. Maybe, but the wholesale price has to drop to a level that makes savings available.
Maybe a final question from the webcast. Sorry, this comes from Stephen Hayte at Close Brothers, I think. The guidance that Quidco is earnings accretive is an easy target given it was bought with cheap debt. Can you give more information around your return on invested capital or IR, IRR framework that you use to analyze acquisitions? What are your hurdle rates on M&A?
Obviously, we look at things in a on a number of different bases. We would look at whether or not things are earnings accretive. We said at the time that we compared that to, you know, a share buyback, and we were confident that it was better to buy the business than to buy shares, you know, at that time. We would look at the returns available in line with our capital allocation policy. Remember that we look at the returns available effectively through M&A against the returns available through organic growth investments. You know, that measured up against our own view, effectively, of our WACC and the IRR attached to that, but I'm not going to disclose numbers.
Okay. Any further questions? Well, thank you, everybody, for joining us this morning. Really appreciate your time. Look forward to catching up soon. Thank you. Bye-bye.