Okay. Are we all ready? Yes, we're good. All right. Let's get going.
Good morning. Thank you, everyone. Welcome to our interim results. I'm Mark Lewis. And I wanted to start today with actually the exact same slide that we finished with in the last update in February when we announced the launch of our Reinvent strategy to grow the business going forward.
And here we are six months into the year, and I'm pleased with our progress. Our trading is in line with expectations. Once again, we've helped households save over £1,000,000,000 in the first six months, so we feel very pleased with that. We have continued to deliver strong cash generation, and we're confident with our expectations for the full year. I'm also pleased with the progress on our strategy across those two main pillars of optimizing the customer experience.
We're scaling that, as you know, in 2018 to reaccelerate core growth, but have also made some committed steps forward to unlock future new ways of growth for the business as well. I'm going to give an update across those strategic pillars in a few minutes once Matt has run through the results for the first half. But let me just take a moment as I pass over to Matt to recognize that although he will be with us in the business until the October, this is his final formal results presentation. Matt has been a tremendous servant to the business for the last four years and a tremendous help for me in my first year getting to grips with the business and laying down our plan. So thank you, Matt.
And of course, we all wish you all the best for the future. But take it away with the first half results.
Great. Thank you. Good morning. Thank you, Mark. Yes, thank you very much for the kind comments.
And thank you all for making the time to come and see us today, what will be my last result of Money Supermarket. I thoroughly enjoyed working here and thoroughly enjoyed working with everyone on the team. It's an absolutely fascinating business, and I'm really proud of what we've achieved together. And Mark has done a brilliant job in setting the business up for a successful future. And I particularly want to thank Nicola, James and John and our other brokers and advisers for all their help and patience, particularly a focus on the patience there.
And I'd also like to thank all of our covering analysts, most of you who are here today, for keeping my toes and making sure that things have been interesting, is probably the right word there. If not, the last you'll see me. I'm around to the October, so I'm sure we'll speak. So on to the finances, and I'm going run through them before passing on to Mark for the interesting strategy pieces. And what I'll do is I'll kick off with the themes for the half year.
And I'm pleased to say that our diversified business continued to deliver exactly as planned and in line with expectations, with revenue growth, EBITDA and EPS all growing as we planned them to do. And again, we've done a good job for our customers, saving them £1,100,000,000 in the first half of the year, That's broadly flat on last year as a result of the motor insurance premium cycle. And whilst volumes have grown, savings per customer a little lower. And we're on track with our £5,000,000 investment in product engineering. We've successfully started building out our technology hub in Manchester, and we now have a very meaningful resource focus on improving the customer experience, especially on mobile.
And as part of that, our tech costs are now shifting from CapEx to operating costs, as we set out last time. And that means that the quality of our earnings is improving going forward as we no longer see a growing level of future amortization costs ahead of us. Energy performance was exceptionally strong, reflecting investments in a core Money Supermarket site customer experience that we announced this time last year. And we continue to deliver great cash flows with £43,000,000 of operating cash in the first half of the year and £24,000,000 on the balance sheet. And as I said before, we intend to debt finance the acquisition of Decision Technology.
And also, obviously, as you said in the statement, the Board remains confident in our outlook for the year. So looking at the numbers. As you can see, we made good progress in line with our guidance on all the core financial measures, with revenue growth of 5% to 174,000,000 and adjusted EBITDA of £62,000,000 and EPS growth of 4%. Cash generation was strong at £43,000,000 And reflecting our commitment to progressive dividend, the interim dividend has increased 4% to 2.84p. Moving on through the income statement.
Revenue grew 5% in the half, whilst EBITDA was in line with expectations of $62,000,000 Gross margin is 72%, a one percentage point dip on 2017. And we continue to operate our marketing mix to the same strategies we have for several years now. And then we continue to take a disciplined approach to costs as we go through the income statement. As we flagged for the full year, our admin costs have increased by £1,300,000 in the half over and above normal inflation due to the additional costs of our new office space near here at 1 Dean Street in London. And depreciation was in line with our plans and reflects the change in technology spend and also the sums we wrote off last year as part of the strategic review.
There are £4,000,000 of adjusting items outside of adjusted EBITDA. Pounds 3,000,000 relates to the strategy and organization and a further £1,000,000 to the acquisition of Decision Technologies, which Mark will talk to you later on. And then we grew the net profit position by 5%. And then if we look at the vertical performance, the benefits of being the most diverse price comparison business remain clear. Insurance continued to be strong, growing at 4% for the half despite the change in the premium cycle and the good comps last year.
And for energy, the big providers are still not offering blockbuster collective deals at the moment. So the benefits from focusing on our core customer experience are clear, with home services up 23%. And this actually masks the standout performance in the core money supermarket side, which Mark will discuss later as well. Remember, as we move into Q3, that in September, we ran a collective switch alongside a very popular exclusive deal that we don't expect to repeat. Therefore, without a large promotional deal coming in this quarter, could easily actually be looking at a 25% drop in Q3 Home Services revenues despite the very strong underlying performance in the core energy business.
Our Money performance is a continuation of trends and reflects the weaker promotional product availability. I've included in the appendix the historical planned revenue disclosure, and this will be the last time we put this segmentation out. And as fully explained to the full year, we'll be updating our view on product markets annually, and so these estimates will be available to you in February. So looking at marketing. As I mentioned earlier, our gross margin and, hence, marketing margins were one point lower than this time last year, and our disciplined approach to marketing continues.
And you'll be very familiar with this page. Threefour of our revenue come direct to site through our CRM, our brands, our journalism and other content and tools, and this proportion is stable. Our TV spend to support and build our brands is also stable. Our paid search is now 24% of total revenue, and we continue to operate paid search in our regular strategy of bidding to breakeven on per first purchase. And this feeds our future direct to site revenues through CRM and also by people experiencing our brands.
Paid search isn't always an exact science, and we're pleased to have brought the trend of spend growth on search back in towards the revenue growth rate this year. And of course, you can't mention marketing these days without touching on GDPR and its impact. So our customers exchanging personal data with us and with our providers to find the best deal is actually the very heart of our business model. And therefore, being GDPR ready has long been very significant for us and important to us, and it's something that we took very seriously. From a marketing perspective, we started work on GDPR last year.
And so our twenty eighteen numbers that you're seeing now already include the impact of many of the changes. We reduced our marketing e mails to focus on recently engaged customers, and we moved to hard opt ins for marketing, which means that we ask for explicit permission from customers to market to them. And so we are taking a robust and well controlled approach to GDPR. And importantly, our financial guidance has always included the impact. I'm delighted to confirm, as we set out last time, that the refactoring of our motor insurance question set is now complete and is live with customers.
And we've been successfully pivoting into our product development phase. And so technology development costs swing from being capital costs to operating costs, which are mainly staff costs and licenses. And the total level of investment on technology is reduced to £18,000,000 in the half. The move away from CapEx means the quality of our earnings is increasing and there's no longer a future drag from the growth in amortization. And our total CapEx for the year will include around £3,000,000 for our new offices, and we expect some more fit out costs next year when we deliver our permanent new Manchester home.
Our cash generation remains strong. And so far, we've returned a further £40,000,000 to shareholders during 2018 through our regular dividend payment. The growth in our working capital at the half year is a normal feature of these results. So in summary, 2018 has been solid and on plan. We remain a strong and diversified business relevant to our customers who want to save money.
And as we set out earlier this year, this has allowed us to invest in our exciting new strategy and in our Manchester Technology hub. Driving the customer experience means that we can grow financially, do more for our customers and keep delivering great returns to our shareholders. We continue to expect very strong cash generation in the remainder of 2018 and going forward. Our framework for how we use this cash remains unchanged. From the organic growth to get after headroom and the opportunities in our markets remains a top priority.
Then we remain very committed to a progressive ordinary dividend, and we look to M and A to support and accelerate the strategy. Decision Technologies is a good example of this. And finally, we don't need to retain large cash balances to fund working capital for growth, and so we remain committed to returning excess cash to shareholders. I'd like to thank you all once again, and I'll hand back to Mark to give you the strategic update.
Great. Thank you, Matt. Okay. So as I said, I'm pleased with how the year has started. Now let me give you a bit of an overview progress against that Reinvent strategy.
Let me start off by just reminding us all about the strength of our strong differentiated core business. As you know, we operate in growing markets. We forecast those markets to grow around 67% over the next two to three years. And we have what we believe is quite a unique and differentiated position driven not just on the back of the technologies that we now have but in terms of the diversification of trade that we have the fact that we help users save across so many different categories. Nevertheless, we do believe there's also an opportunity to unlock future growth in our markets.
We're very proud of the level of engaged users. We retained about 13,000,000 active users on Money Supermarket. But given the work that we have been doing to optimize the customer experience, I'm pleased to see both the Net Promoter Score and the revenue per active user step forward in the period to 72 and £15.4 respectively. As Matt has just reminded us all, we have a very efficient marketplace model, which very efficiently generates strong levels of cash. So the first pillar of our strategy is all about customer experience optimization to reaccelerate the core growth.
This is about kick starting the flywheel of our marketplace business, building on the strength of our leading trusted brands, building on the strength of our leading provider offer but really trying to optimize the customer experience to help people find those savings more easily. Remember, this is the area which we said have perhaps underperformed through the replatforming stage of the business. It is also the strategic pillar that underpins our return to market levels of growth. We committed about £5,000,000 worth of investments in 2018 to scale this part of our strategy through the year, and we're on track with that investment. We're building out our product engineering hub in Manchester.
We're finding that we can recruit the right capabilities and talent in that area, and that is on track. We have now restructured our teams to accelerate their ability to deliver. And what that means is that for each large comparison area, whether that's insurance, whether that's energy or whether that's money, we now have dedicated squads building out to improve the experience in those categories. So what are the teams doing? Well, actually, they've been very busy.
In the first half of the year, we have quadrupled the rate with which we are testing innovations for the customer experience. And what we're finding is that those tests are giving us increased confidence that we can find ways to make it easier for people to use our sites and get to the savings. And as Matt has just mentioned, we said at the start of the year that we had to rebuild, refactor our motor insurance co pay to enable optimization, and that new code is now live with users. So I thought I would try and bring this to life for you with showcasing some of the progress that we've made in one of our categories, and that's particularly the money supermarket energy category. You'll remember twelve months ago, we reported that our home services business was in decline, about minus 33%.
That was really a story about the left hand side. It was a story about collectives in money saving experts and that we had seen a reduction in the scale in the size of collectives that providers wanted to offer. And remember, Money Saving Expert, on the back of its user base, on the back of its editorial prowess, has a unique position in collectives. But at the same time, we said that our core energy business on Money Supermarket was also feeling a little bit neglected. In fact, it was in negative growth in a growing market at that time.
The code for our Money Supermarket energy business replatforming. It came out of the associated code freeze in February. And since then, we have been deploying optimization against that user experience. What that means is that we have been testing, testing, testing and releasing ways to help customers find it easier to enter the information in our questions and find it easier to view the results pages and actually find a deal which they want to take up. By doing so, we have helped more people save more money, and we have increased the conversion rate, the number of people who start those journeys and actually get to choose a deal and switch their energy at the end by 50% in the first half of the year.
In terms of the business performance, that means for the money supermarket energy category, that's gone from being a negative growth a year ago to having grown greater than 50% in the first half of this year. So I think it talks to the strength of what we're trying to do in customer experience optimization, and we're excited to be rolling this out and scaling it through the course of 2018. Okay. Having spoken about reaccelerating core growth, let me now spend a couple of minutes talking about the second big strategic pillar, which is about unlocking future new areas of market growth for us. The first area that we've talked about here is around personalizing the Money Supermarket journey.
You're seeing our first work in that in the Money Supermarket app. I'm pleased with the development in that area. Those of you who have looked will see that we have rebranded the app back into Money Supermarket. It now carries a 4.7 approval rating in the App Store. And I'm encouraged by the way that, that team are finding new ways to engage our users with a slightly different proposition from Money Supermarket.
Notably, the team has recently launched a full monitored energy proposition into the Money Supermarket app. That means that once you have switched your energy, that policy is easily accessible to the user in the app. We are monitoring it in the background, checking that it's still a great deal for you. And if we find a personalized deal, which we think you might want to take advantage of, we'll be very proactive with our users in alerting to that and helping them switch forwards. But we've also taken a couple of significant steps forward in the other areas around taking price comparison to the user and mortgages price comparison.
So let me take a minute to talk about each of those. So taking price comparison to the user, we think there is a significant opportunity to develop B2B partnerships with new platforms for the group. Why do we think this? Because we think that price comparison has turned something which used to take hours and a long time for people to do and was really quite difficult into something which is easy to do, takes a few minutes and you can do on your mobile phone. Nevertheless, we know that a lot of people still don't engage with price comparison, and we still require people to come to our sites to take advantage of the deals that we offer.
And we believe that on the back of our trusted brands and leveraging the new technologies that we have, we can actually take those personalized deals and present them to users in the places where they already are and are visiting around the web and in the apps that they're already using. In order to do this, we obviously have to build out a B2B sales, account management and servicing capability. We could build that ourselves, but we think there's an opportunity to accelerate our entry into this market through our acquisition of DecisionTech. DecisionTech is an established price comparison business. Today, it operates in the home communications categories, so particularly broadband and mobile deals.
It operates B2C businesses, for example, brands like Broadband Choices, but has an established B2B business providing those services into other platforms as well. In fact, they provide B2B services into the Money Supermarket Group. They power our DecisionTech powers the broadband comparison services that we offer our Money Saving Expert today. So we think that in combination, we can take the ready made and established B2B sales and servicing capabilities that come with DecisionTech in combination with what we have already in the group, which is that ability to match a user with a personalized deal across many categories and actually take forward new propositions into the market. And that through the acquisition, we'll be able to do that at a more accelerated pace.
In terms of the dynamics of the deal, remember, this is a profitable business. It will be an earnings accretive acquisition, and we did signaled our intent to fund it from our existing debt facility. And as you know, it's currently awaiting regulatory approval. So if I finish up by talking about mortgages. We have seen you'll have seen today that we have now created a new fintech called Podium to target the opportunity in mortgages.
Remember, we have an incredibly strong position in mortgages already with tens of millions of visitors to our mortgage categories researching how to find the right mortgage deal for them. But we think there's a significant opportunity to transform the mortgage experience, both for those users but also for the lenders and brokers with whom we partner. What does that mean that we'll do? It means that we will try and build out a true price comparison service in mortgages, not just showing our users a selection of rates and deals that are in the market, but actually showing them the true cost and acceptance of the offers for them. So showing them the deals which we have confidence that they would be accepted for.
So they get a true cost, and they can help find exactly the right mortgage for them. That also means, over time, doing digital integration with the lenders' approval processes so that our users will be able to step through the stages of application for their mortgage online. By doing so, we think that can transform the customer experience, but we also think it will add a much more value add experience to our lenders as well because by helping people through further through the steps of their choice and applications for mortgages, we would be passing over much more qualified and more motivated leads into our lenders and brokers that we work with. So in order to do that, we have to build some of the tools and services that we have previously built different forms of into the cards and loads categories. And we're excited to announce the creation of Podium, a joint vendor a joint venture, rather, with the exact same people that we built those services into cards and loans some years ago.
So that is with Mac Denham and Mark Hawkins. Those of you closest to the industry will recognize those two gentlemen as the original founders of HD Decisions, the business that was once co owned by the group and built the industry standard for eligibility in the cards and loans categories. So we have a very strong history of working together. We're excited to partner with them again, and they obviously come with very strong relationships with the lenders. So I think I said in February that we don't expect mortgages to digitize overnight, but we do start with a very strong position in this category, and we do think that it will digitize over time.
And we want to make sure that we're on the front step as it does. And so we are now building out tools in this category. So let me finish where I started and just try and summary. We're very pleased with the progress of the year to date. Our trading is in line with expectations.
We're pleased to once again help households save over £1,000,000,000 I'm pleased to see our revenue growth tick up to 5%. I'm pleased with our continued cash generation, and we're confident with our expectations for the year, equally pleased with our progress at the half year on our Reinvent strategy. So let me pause there, and we should open up the floor to questions. Thank you. Joe, why don't you kick us off?
Joe Barnett Lamb from Credit Suisse. Three from me to start, please. So with regards to the benefits that we've seen in Energy post altering the question set there, can you talk a bit about how you've redesigned the insurance question path? How long you would expect it to take for benefits to flow through in insurance? Anything you can on the scale of benefits we could potentially see.
Secondly, on GDPR. You said it's in guidance. But can you talk a little bit about what you think the impact of GDPR was in H1? And then thirdly, on Decision Technologies, can you take
us through sort of some
of the B2B partnerships that they have and where you see the greatest opportunities going forward for that partnership?
Okay. Why don't I take the first and third? And to mix it up, why don't you take the second? That's okay. Right.
So first question was around some of the optimization that we've done in energy and what might we see if we translate over to the other categories. So a reminder, what we've done here is relatively straightforward changes to the customer experience, simplifying the two key stages of the journey, right? The first is how people enter the questions and the information, and the second is how they review the results set. So if you were to look at the site, that's where you would see that we have made a number of changes. Of course, we are particularly focused on how that presents to our users when they visit us on a mobile phone, which is how the majority of our interactions now happen.
So we're very pleased with the impact that we have been able to deliver in that category. As that then translates to how we roll out the methodologies across the other big verticals, Energy is a category that, obviously, we've gone fastest and furthest on in the first half of the year. You asked about motor. Motor is in a slightly different place in that the code base following the replatforming, we didn't feel was able to enable those optimizations to occur. So we said that we wanted to rebase that code, it's called refactoring, if we want to get technical.
So we now have a new code base, which is live with our users. I think I'd encourage you to think of that as the foundation upon which optimization can happen. So it is really something which we will be scaling through the year rather than something which will have direct impact tomorrow, if you will, on motor. So hopefully, that gives you a sense of the scale there. Do you want to talk GDPR?
Yes,
GDPR. So we felt we're in a we've been working on GDPR for a while, and we felt we're in a good place. And actually, the real heart of it, forget the database is controlling PII, controlling the personal identifiable information. It's been a lot easier because we've had that investment in the enterprise data warehouse, which puts us in a good position to do this. In terms of the impact and scale of it, I think you can sort of see in the overall numbers that our direct to site revenue is flat year on year.
So there hasn't been any material movement in that. So it's been well controlled there because, again, we did the planning early. And really, probably the big piece there that could have impacted marketing and could have impacted our revenue but clearly hasn't was actually having to scrub and reduce the database. But actually focusing early on the recently engaged customers and building that database through with those are the people who are most likely to convert, most likely to respond to the marketing that recently had a good experience. We focused on them.
And that's really relevant and heavily engaged database set that actually builds quite quickly through the year, and we're already well into that. So I think we're very comfortable with it. I think those are the main pieces. It really is at the heart of our business. We've been thinking about controlling this properly in terms of data for a while, so we think we're in
a good place. Okay. Right, Decision Tech. I think the question was what do we see as a potential in terms of different categories and so on going forward. So and also just remind us what DecisionTech do today.
So think of DecisionTech today in part B2C business, but I think really the interesting part of your question is around the B2B business. So today, that is primarily in home communications, so broadband and mobile. And today, they offer B2B services to a number of partners, including a number of significant price comparison business, including ourselves. As I say, they sort of power the broadband comparison tools that we have on Money Saving Expert. So if we look about what the potential is in combination, I think it offers two areas of change in that.
One is moving out of purely offering B2B in home communications. And what the group brings to the party is the ability to aggregate and match a user to a personalized deal across a broad range of categories. So not just home concert, obviously, we operate in energy, we operate in money categories and a range of insurance categories. But also, we think that there are potentially a range of different platforms upon which these services might be interesting. So I think the example I'll refer back to the example I gave in the February update, which is we could imagine, for example, presenting someone with a personalized energy deal in a mobile app.
So we think that there are different range of categories and then different range of locations where we might see opportunity.
Gareth Davies from Numis. Two quick ones from me. The first one, you sort of cautioned the minus 25,000,000 in Q3 on collectives. Is that an expectation that you just don't think there's a collective coming through? Or is there a conscious decision by you now not to do collectives going forward and sort
of take that volatility out
of the business? And if you are going to do them, can you just talk a
little bit about the sort of
what the energy companies are saying at the moment? And then the second one, in the money vertical, can you
talk about that plus 2% versus the market and maybe expand a little bit
on the competitive environment? And I suppose, particularly, ZPG and have you Okay.
I'll do Collectors, Matt will pick up the money point. So actually, there's no change in our position of how we see energy collectors. So we continue to see them. We ran collectors in the first half of the year, and we would anticipate running collectors in the second half of the year. At the same time, we do not envisage seeing those real blockbuster collectors that we have previously seen in 2016.
So we think that they will still be there, and we think that every indication that we'll have access to them in the second half of the year. The point that Matt makes around potential comparison in 'twenty in the third quarter is actually a statement about what happened in the third quarter of last year, where we ran a particularly interesting collective. But at the same time, a number of providers came in with particularly attractive deals into the market at the same time. So you had a very nice sort of multiplicative effect in the particularly in the third quarter. So we have a very significant spike in the comparison.
So it's more a statement about comps than any change in outlook going
forward. Yes. So on to money versus the market. I there's two sides to our money business. There's one that we call banking, which is actually around savings accounts, current accounts.
That has well, ever since the drop in interest rates a long time ago, that's always been quite promotionally led. So it's about the quality of the products. Actually, we aren't seeing a significant change in that. So that's not what's putting it through. And those products are obviously when banks, etcetera, want to really acquire a lot of customers.
We're not seeing a change in that view. Looking at the credit side. Again, I don't think we're seeing any particular change in competitor participation strategies or competitive intensity, I. E, how much they've had money they're prepared to grow to acquire new customers. So I think, yes, there's been a lot of change in terms of the ownership of these businesses, but we haven't seen that change coming through in the quarter.
And again, actually on credit, we haven't even seen the quality of the products really change. They're quite similar to what they were in Q1 and Q4. My belief on it is that actually in Q2, it's more about the consumer. So I think we've done some work on optimization. We're pleased internally with some of the conversion gains.
That's not what's really pulling it through at scale yet. I think the consumer is just looking for a little bit more credit. And I think that's borne out of an Feet article the other day about the back of England saying something similar. We're probably cautious into H2 because clearly, Q3, Q4 is there's a lot of uncertainty from Brexit. So we remain comfortable with our overall numbers for the full year, but it was nice to see.
We'll come back to you. I'll make it a very quick one. Can you just remind us the policy of no profit on First Interaction, how many years that policy has been in place? And how long do you anticipate it remaining a core policy? And yes.
As it relates to particularly performance marketing spend, I'm not sure how long that's been in place, but
It was certainly I can talk for the last four point five years, and it was certainly in place for the year or two before then. So it's been quite long running.
Yes. And I think I said upon joining that I have I'm very comfortable with it as a policy. I think it works for us for a couple of reasons. I don't think that you would appreciate us leaving trade on the table if we left profitable trade available to our competitors. And at the same time, we do see a value from bringing that trade into the business, getting people into our database so that when they revisit, we can offer them an enhanced service because we've already claimed back some of their information and also the value that comes from putting them into our databases and CRM mechanisms.
So we're not signaling any change in that strategy. We go here.
Bergeron from UBS. A couple of questions from me. The first one is on Page 17. We can see quite a material improvement in the conversion rates. Can you just let us know if the base if the access is actually at zero or if it's if the similar kind of improvement that we could expect somewhere else?
So used the I'm sorry, didn't catch the tail end of the question, but it was around the scale of the conversion rate.
Yes. So that's my first question. My second question is more on the impact on gross margin. Can you help us understand what you will do on the back of better conversion rates? Would it be bidding more on paid search?
And will you prioritize volume and growth of our kind of gross margins? And my last one is when I go on the money supermarket lending page, I see I don't know if we can qualify that as promotional activity, but GBP 100 guarantee on the switch on an energy switch, sorry. And so has that had an impact on the performance we saw in energy, which was very good?
Okay. Well, let me confirm the chart on '17. The axis does cross at zero, and it is a linear scale. So if you do get your old slide rules out, I think that will show a 50% increase in conversion. We absolutely don't tell you what the numbers are on that scale because we see that as very confidential information, which in part links to your second question because the reason why the conversion rate is such a critical metric for us is because it does dictate that flywheel of the marketplace, and it influences how we go about the customer acquisition and quite how we approach the bid auctioning in our performance marketing.
So in terms of where do we see us going forward with that to be able to increase that conversion rate and increase the flywheel of the marketplace. We'll take the judgments as we go forward on how much of that do we put back into the marketing activity and how much do we hold into the margin. I think our approach on paid search, though, remains very consistent, which is to the extent that it is not an ex like science, but our approach is to try and land it on down to breakeven on first transaction. And then the final question was around sort of promotional activity in energy, I think, or more broadly. We do a range of promotional activity, and we partner with a number of providers through the course of the year on specific tariffs.
And the biggest of those are obviously the collective deals that we take to market. I think they probably talk more to this like bumpiness that you see in the charts. You might see a particular spike if there's a rate change from a provider or a particular promotion, but it is the optimization of the experience that drives the overall increase in the trend for sure. Okay, Andrew? Is working well.
Favorite system on this side of the room, I think. Yes, just a couple of questions. One is on Baldy Alley at Macquarie. A couple of questions. One is on the mortgage product and the other one is more generally on marketing spend.
On the mortgage product, just wanted to get some more detail on exactly what's so new and also what's so different about some of the other products out there. We've the acquisition of Mortgage Gym. We've seen Trussle make some noise and raise some money. Just want to see how you're going to sort of what sort of competitive advantages you have against those products, Also against some of the other property marketplaces as well and how you see what they're doing influencing the design of your product. And then the second question is more long term about your broader strategy.
Obviously, if successful, we should see reduced churn, greater customer loyalty. Does that mean that you would also expect to see a reduction in marketing spend as a result of that to acquire customers? Or is it the view that you're only looking at boosting top line and seeing marketing spend stay stable?
Yes. Okay. All right. So I take that? Mortgage.
So you're absolutely right. There's lots of activity around innovation in mortgages. And so there should be we think this is a category where there are significant savings to be made by users by finding the right mortgage. And it is not the case that everyone is particularly active in this market. At the moment, lots of people we think could save significant amounts of money.
And it's also one where we think that the customer experience can be enhanced through digitization in order to do that. So we're seeing lots of exciting things in the market. What we think that we will be able to do that we're very excited about that we feel is slightly different from what we're seeing other innovations and investments happening is not dissimilar to what we were able to do to other credit driven categories in the past, if you take cards and loans. It used to be that the comparison journey in those categories is ones where you presented the rates that were available in the market. But as a user, you didn't know if you would be able to get those rates.
And so what we were able to do with Matt and Mark previously was actually build the tools that allowed our users not just to see all the rates in the market, but to see the rates which had eligibility built into them. So if you came and looked at our credit card category today, you would see a feature called SmartSearch on Money Supermarket, which in the background is running all the soft searches to enable you to have confidence that you would get that credit card at that interest rate. And in some ways, it's not dissimilar into the mortgage categories. Today, the large number of users who are visiting our sites are coming and doing very early stage research of the mortgage market. And we will present them with a range of rates that we're aware of in the market for the type of value that they're looking to borrow and whether it's interest only or prepayment.
But they're not personalized. They have no acceptance built into those rates. So that's the thing that we are very excited to be working on to bring a true price comparison experience to the market. And we haven't seen that. We're very excited about our ability to do that versus other players in the market.
In terms of the long term strategy, I think we've laid out and I sort of updated the metrics on them at the start of my section. We have laid out a number of KPIs, which we think are significant for the strategy going forward. And they do talk to customer retention and they do talk to marketing. Number of active users, revenue per active user and marketing margin. So as we look at our long term strategy, we look at those initiatives.
The things that we are working on are all aligned in one form or another in increasing the volume of active users, increasing the revenue per active user and targeting the marketing margin. And we think that's absolutely the strategic goals of our strategy. I think we're going to Andrew in the middle here, and then we'll come across.
There's three things I just wanted to touch on. First one is to come back to the optimization. So the uptick in conversion on energy looks really good. I'm still struggling a bit as to how to think about the benefit that's going to give you in 2019 on the other product areas. Am I right in thinking that's the delta between growing, let's say, four this year and the market of seven next year?
Or is it more or less? That numbers would be helpful. Second one is on B2B and just to get an update on the feedback you've had from any conversations you've had with banks so far. And I guess, particularly, I'm interested in what they're saying on your technology. Is there a sense that you're better than your competitors in that space?
And have you got any hints for banks or kind of challenger fintechs might want to do this themselves? And I'm thinking of like a Revolut or a Monzo who have raised a lot of money. And my last question is back on mortgages. How much have you put into the new JV? And what's the funding outlook for that over the next couple of years?
All right.
How should we mix this up? So I'll take the first two and then you can take the mortgage investment. How about that? Yes. Okay.
So optimization. So we're very pleased with what we've been able to achieve in the case example that we've shown you there on energy. I think Matt has alluded to some signs of encouraging progress in money in the results that you see as well. But I would want to caution you, we said we were going to roll this out through 2018, okay? So we are putting that £5,000,000 investment.
We are still recruiting those teams. We are still building out that product engineering hub. So it's not that we are fully at speed on that, but we're very encouraged by what we've seen in the first half, and that gives us increased confidence, if you will, to keep going as we build that out through the second half. So I don't to give too much change in any guidance on that other than we have encouragement in that we can build out that capability. And what we're seeing is that we've quadrupled our rate of testing, and those tests are actually showing that we can find the ways to make it easier for the users that visit our sites to go through the questions, to go through results and get to the deal with which they can save money.
So positive encouragement, if I'm not going wrap any specific numbers around that for you. On B2B, the feedback we're getting is that there is actually a lot of excitement in trying to understand how partnerships, the type that we're talking about, could be brought to life. Now we're confident in our technology in being able to do the key thing there. And remember, we are one of a very small number of people that do price comparison aggregation, and we do it across many categories. And it is not as simple as it looks, right?
To actually match someone's user information with a legally binding personalized quote is not a straightforward thing. That's the secret sauce. And we're very confident in our technology to do that. What we have now have on the back of the replatforming, and they still get a little bit technical, but I know you've even built graphics around this in your reports, we now have that API service layer that allows us to serve up those deals into different places. So we're confident in the technology.
The piece which is a group we don't have today is because we don't have a B2B sales servicing account management capability. And so that's why we're excited about the acquisition in order a way for us to accelerate our way into that category. So we're encouraged in what we're seeing. And I think that in terms of who else is looking at this space, I think there's a bit of a difference between the providers that we might work with and then the core capabilities of aggregation and price comparison. And we're seeing a relatively distinct split between those two.
Do you want to change your voice? Do want to talk about levels of investment in Yes.
So I think
just to make sure we're clear
on exactly what Podium is. So the Podium joint venture is a fintech which is going to build the engine and the link between to the banks and to the providers to allow us to deliver proper price comparison that's tailored to the user. It's not going to be running the marketing and customer acquisition. So in many ways, it's different to the Tussles and Avitos and so on. We clearly have a lot of customers, and that's a core activity that we're very good at as Money Supermarket.
So that means its funding needs going to be different. And it needs funding, therefore, to build and to run that, which, therefore, is going to be quite sensible numbers, to be honest. The first phase, we put in
£1,000,000 The other partners have put
in £1,000,000 as well to get it up and running, and then we'll put investment in as
and what it needs just to do complete the build and dev. That million? Gosh, I haven't really talked about that yet.
I don't know. Tim, is it OpEx or CapEx? CapEx. There you are. Thanks, Tim.
There's tons of depth in tea. Right. I think we're probably getting close to drying up, but maybe there's one more question over here.
It's Charlie Mortimer from Citigroup. Just a very quick one, following up on the B2B question. So the technology is ready. It's more about developing the sales team, which I assume comes a bit from the acquisition. So you think that's the main obstacle towards which you could then start to develop this proposal?
And is there any sort of rough targets, time frames that you that's probably a more difficult question that you have in mind for the B2B stuff? And the second one is the main on the mortgages side, is the main obstacle well, what are the main obstacles between you and the personalization of the service between what service you're offering today and the one that you're trying to develop, but there are some difficulties that you come across in developing that product? Okay.
Well, look, I think I would in terms of you're absolutely right in your description of the B2B site B2B proposition in terms of the technology and then the build out of the sales and account management piece, which, of course, we can build ourselves, but we're hoping to go faster through the acquisition. So that's absolutely right. In terms of time line, I would encourage you to just draw the distinction between the reaccelerating core growth, which we're saying is that is an activity we're absolutely scaling out in 2018. It is the piece where we think that we underperformed previously and underpins our return to market levels of growth. And then the unlocking new market growth, which I think we're saying are best for the future.
So we're not providing any particular guidance on those. And in terms of mortgages, the really tricky bit in this for us is less the acquisition of customers because we have an awful lot of people who are already visiting our sites with the determination to investigate mortgages. We have the most trusted brands in the category with Money Saving Expert, one of the most trusted brands in The U. K. The really tricky bit in mortgages is helping people work out what is the right mortgage for them.
And that's quite a complex combination of acceptance criteria around their own financials, the affordability of the lenders' models and the property itself. So that's the difficult thing to crack in mortgages, and that's why we're excited about this venture because we think that gives us a great chance to unlock that. Okay. I think we might be done. So let me thank you for your time.
Thank you, Matt, and I'm sure we'll see you all again soon. Hi.