Good day and thank you for standing by. Welcome to the MoneySuperMarket Group full year results 2020 day. At this time, all participants are in listen only mode. After the speaker's short presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one and one on your telephone.
You will then hear an automated message advising your hand is raised. To withdraw your question, you can please press star one and one again. Alternatively, you may also submit your question via the webcast. Please note that today's conference is being recorded. I would now like to turn the conference over to your speaker, Mr. Peter Duffy, Chief Executive Officer. Please go ahead.
Thank you and welcome, everybody, and thank you for making the time to join us this morning. I'm also joined by Scilla Grimble, our Chief Financial Officer. You'll have seen this morning that we've reported a strong trading performance, but also importantly, momentum in our strategic delivery. Revenue in 2022 was GBP 388 million. That was up 22% or 8% if we exclude cashback.
Profit returns growth with EBIT are up 15% to nearly GBP 116 million. In that, within that trading, money has clearly been the standout performer. It was up 37%, really driven by strong banking product availability. Also our travel channels also had a good year, and that was helped certainly by the recovery in the travel market.
Gross margin was down 2.7 points to 67.7%, mainly due to Quidco consolidation, we flagged that with you last year. Confirmed 2023 EBIT guidance in line with market expectations, we've also maintained the full-year dividend at GBP 0.1171. Just on our strategy, we've made good progress across the course of the year in becoming the scalable tech-led savings platform that we've been speaking about over recent months.
We've centralized our data onto Google Cloud Platform, which alongside our market leading PPC, CRM, and SCA platforms, will lay the foundations for future growth. We've continued to platformize our tech. By that we mean building features once then deploying them across our multiple brands, we're making good progress there. Our three acquisitions of 2021 Quidco, CYTI and ITG are on track.
All of this sets us up for the next phase of our strategy, where we can use data to drive greater cross-sell product innovation and enhanced offers to users as well as customers, as well as providers. With that summary, I'm gonna open it up for questions. Can we take the first question, please?
Sure. As a reminder, to ask a question, you will need to press star one and one on your telephone and wait for your name to be announced. If you wish to ask a question via the webcast, please type it in the question box and click submit. We are now going to proceed with our first question. The question comes from the line of Andrew Ross from Barclays. Please ask your question. Your line is opened.
Great. Thank you, good morning, everyone. I've got two to get us started. The first one is for in the pre-recorded message on the presentation. There's a lot of good things that come across in terms of what's going on internally around kind of data, tech, consumer experience. I guess the question is how much of this is baked into your expectations for 2023? Put another way, as you start to release some of this, what kind of tangible benefits could we start to see in terms of earnings? Then the second question is about your market share in home and motor insurance. I think you talked about getting your business back to growth in Q4 in motor in a market that was down a bit, so you're starting to gain share.
Hoping that you could talk a bit about what's driving that sustainability of it, and then also, could that start to follow in home insurance? Thank you.
Yeah. Great. Thanks, Andrew. Firstly, the progress we're making on data, tech, and consumer experience. If I kind of step back to what we're trying to do, we ended up with a stronger market share. We can't talk about market shares, as you know, we did end up with a stronger market share in motor at the end of the year to where we began. Lots of things happening there, the leaders really for motor are quite similar to where they are for home. We've been able to turn a lot of the smarts on from our PPC bidding system, SA360, to optimize PPC. The Money SuperS even campaign, which is resonating well, talked about car insurance. We've got better CRM coming on the way.
We're able to support providers in new and different ways in terms of sorting their pricing out. We've got B2B up and running now, and I'm including Cushon in that. One of the benefits of platformization is that we can then deploy something like, you know, car aggregation to multiple different areas of the group. You saw Compare Plus going live on MoneySavingExpert in the middle of the year. We actually put it live on Cushon last week, and we've got two B2B partners signed up on Motor as well. You know, there's a similar strategy we'll be rolling out on Home, but I'm confident that we've got a lot happening to begin to move things in the way that we described.
Very helpful. Just to clarify one of the answers to your first question, you talked about stable margins across 2023. Do you mean stable gross margins? Then clearly the EPS or margin will be a function of how much the top line grows.
Yeah.
given you've given kind of SG&A guidance. Okay, cool.
Yeah.
Thank you.
No. Just asked for clarification on it. Think we're ready for the next question.
Okay, we're now going to proceed with our next question. The question's come from the line of Joe Bunton-Lamb from Credit Suisse. Please ask your question.
Excellent. Thank you very much. Three from me. Firstly, with regards to improving performance in insurance, and specifically car and home, you stated, Peter, that one-third of car insurance providers have launched new products through the year. Can you comment on home? Are those products coming and it's just lagging? Some comment around that would be great.
Secondly, when we think about travel insurance dynamics, you stated travel insurance was 20% ahead of pre-pandemic levels, and you mentioned one driver of this was the pandemic trend towards higher priced travel insurance products. How much of a boost was that? I guess one way of answering the question maybe would be, what did travel insurance volumes do? Where are they versus pre-pandemic?
The third question, with regards to weakening conversion in loans, is that sort of a consumer-led problem with consumers sort of misjudging the macro and what they can get, or is it in some way a product or provider-led problem? Just any color you could give around that to help us how we think about that into 2023. Thank you very much.
Okay. Thanks, Joe. I'll take the first. Stella, do you wanna pick up the second and maybe we'll both have a go at the third as well. Yeah, I think obviously, you know, car is a more profitable product for insurers and so it would be natural for them to perhaps focus their attention there first before kind of moving on to home.
You know, what we have seen, particularly with providers who have big back books, is they've had to think about new go-to-market strategies in the light of a regulation which started some 12 months plus ago now. Yeah, I think we have seen quite a dynamic marketplace for motor. We've seen new products, new brands beginning to launch, and we gave a flavor of that in the overall presentation. We have seen less of that in home, but I'm fully expecting that that will start to come down the line as well. Scilla, do you wanna pick up the question about travel?
Sure. travel revenue last year was 20% above 2019 or pre-pandemic levels. Joe, you'll remember this is one of the few channels where what we're paid is linked to the value of the insurance policy, so it's sort of commission-based rather than fixed fee. We saw last year volumes were running at about 85% or so of 2019 levels. I think really what we're expecting as we go through this year is, you know, that volume recovery to continue to come through, but maybe some slight shift in terms of the type of policy people are taking out as their confidence in travel, you know, rebounds with fewer restrictions and so on.
Thirdly on money, you know, I think, Joe, you have seen, and everyone on the call would have seen the Bank of England data that shows that consumer credit is backing growth overall after COVID. I think one of the things we would observe is that banks are better capitalized now, so we wouldn't be expecting, perhaps the issues that we saw in the last recession. I don't think the under, what, 2008, 2009 recession, I don't think there's gonna be a read over there. At the moment, we are not seeing any significant issues coming through on eligibility.
The softening really was related to the mini budgets that we saw, where essentially products were pulled and then were repriced, and particularly on consumer loans over credit cards where that repricing was more significant. It does feel more about the numbers and the prices that the consumer's seeing now versus what they were seeing previously. You know, whilst it does apply to both credit cards and loans, I think it does apply to loans more than it does to credit cards.
Yeah. The flag I'll have on that, Joe, is we see in our data, and I think we shared this during the pandemic, we can see how many visitors get pre-approval for loans or credit cards, those who get no results and those, you know, in the middle that get results but no pre-approval.
We're not seeing any significant change really in terms of, you know, the ratios in that. It's exactly as Peter's saying, when someone comes to the results table, they're seeing higher prices than they'd expected and therefore not converting. The final point I think, 'cause, you know, some people might say, "Well, why was loans running ahead of cards?" Partly pricing in loans moves faster.
Also I think if you think about our type of user, often they're using the personal loan for something which is slightly more discretionary in nature, so it can be for, you know, improving their home or a new car or something. Obviously, price factors into that a little bit more.
Really helpful. Thank you.
I think we're ready for the next question.
Sure. We are now going to proceed with our next question. The question's come from the line of Charles Zhou from Jefferies. Please ask your question. Your line is open.
Thank you. First question's on the competitive landscape, please. We've seen some major movement from competitors over the past 6 months or so. I'm thinking of GoCompare and their rebrand, and then RVU has sold its European assets and is focusing solely on the U.K. It'd be interesting to see or more able to hear what you're seeing in terms of competitive landscape. In particular, RVU feels like or more of a Uswitch Confused.com build by the more serious threat here, but any color would be helpful. Second question is on taking control of Podium. Just be interesting to know the logic and whether we can expect to see that accelerate your push into the mortgage segment.
Then finally, back on the question of money and the interplay between rising cost of credit and cost of living crisis. You've spoken in this call and in the materials about the drop in conversion. I'm wondering if this is just gonna be a temporary thing, essentially as consumers come out of promotional periods, especially in credit cards, and are forced into a cheaper priced product that's gonna be available to them. I guess the question is how long do you think you'll see a compression in conversion around credit?
Okay. Thanks, Charles. I'll perhaps do one and two. Scilla, do you wanna pick up three?
Sure.
In terms of the competitive landscape, I think the summary will be still as competitive as ever, and we're not seeing yet any significant changes. Yes, GoCompare did a rebrand, and I think there was some advantage given to them in terms of SEO, certainly for a period of time. I think the go-to-market strategy with, you know, PPC and TV advertising feels pretty consistent with what we have seen in the recent past as well.
I would observe that that is the case for Compare the Market and Confused. Obviously we had Amazon coming into the market. That isn't importantly to say that isn't price comparison. They're offering one product to consumers. They've got three people, three providers on the panel versus our 60-plus providers.
When I say it's a standardized product to you kind of get a certain amount of contents cover and buildings, rebuild cover. We have something for, you know, obviously needs, demands and needs for the various consumers which come onto our website, in an appropriate way. I would observe that that hasn't had much of an impact, certainly in the first three months that it has been operating, and we haven't seen much change in any of our key competitors in terms of their go-to-market strategy. In terms of Podium, just to flag that for others on the call, in terms of what's happened there. In December 2022, we increased our interest in Podium from 50% to 52%, essentially giving us control. Fair value of that consideration was GBP 1.6 million.
We've got a call option to acquire the remaining 48% of Podium in three years' time. I guess I begin, Charles, by stepping back and saying, look, mortgages are still a very big opportunity. It's a high value market. You know, commission, broker commission is about GBP 500 million that we estimate. I think what's important here is that as we begin to bring our data together, we have a more sort of user-centric view of our customers. Control of Podium is going to enable us to control those journeys in the way that it has done with our CYTI acquisition for pet, life, and travel insurance. We can begin to use that data in a much more integrated way. We're making good progress with Podium. We've got physical connections with three of the big lenders for remortgages.
That's Nationwide, NatWest and Santander. We've got home purchase sufficient in principle now live on NatWest. We have product transfer integrations with Nationwide, NatWest, Skipton and Leeds Building Society. We have built logged in customer user experiences so they can retrieve old searches. We've got live chat going now. We've got a market leading affordability tool on MSE. I think we're doing all the right things, and we can see the strong commercials coming through from these deeper lender integrations, but it's just a slower burn in terms of what that means in terms of overall revenue. That, and I think that hasn't probably changed from the last time we had the conversation. I hope that answers the question. Stella, do you wanna pick up on the third one?
Sure. Thanks, Charles. Really just in terms of that conversion, I think your question was sort of how long do we think that compression will last? I mean, firstly, just to sort of put it a little bit in context, obviously I'm not giving any guidance that that's going to significantly impact growth margin going forward. You know, just to put utmost clarity, I'm not flagging anything like what we saw during the pandemic and, you know, you can take a view therefore on how much compression and conversion there is given borrowing is 75% of the revenue of the Money vertical. Specifically to again, carve it into, you know, cards and loans, and obviously cards is a much larger proportion of that borrowing channel than loans.
I think you're right in your, I think your hypothesis. The cards, particularly for our type of user, it's often the balance transfer period that will, you know, cause an improvement in conversion and, you know, vice versa, a depression in conversion, obviously given what's been happening to rates and to some extent, expectations in terms of delinquency, those BT periods have been brought in.
That could change as rates move or, you know, expectations of further rate changes move on the go forward in 2023. On the loan side, I think I sort of gave some of the, you know, what we've seen in my response to Joe. I think in terms of, you know, that conversion compression, part of it will also be linked to their own sort of personal Confidence.
you know, to the extent to which, you know, their own, back pocket is being squeezed, I think those rates being slightly higher obviously leads into their own affordability in terms of the user. I think part of it will depend on what we're seeing on wage inflation this year versus, you know, versus CPI.
That's brilliant. Thank you very much.
Thanks, Charles. Can we take the next question, please?
We are now going to proceed our next question. Questions come from the line of Ciarán Donnelly from Liberum. Please ask your question. Your line is opened.
Thank you. kind of one following on from Andrew's questions earlier, just in terms of the new to SA360 and Braze, et cetera, you guys have pointed to kind of the benefits around increased marketing efficiency. I guess, just in terms of taking a step back, how should we think about marketing margins going forward and the potential kind of over the medium, longer term? Also just kind of tangential to that in terms of cross-channel inquiry, what should we think the kind of a sensible level that you think you can achieve with respect to that? Secondly, I guess it wouldn't be a conversation without talking about AI at the moment.
In terms of kind of the, I guess, notions around search dying and what AI is going to do to that in terms of, consumer interaction with that going forward, it'd be interested to hear your thoughts around that and how any change to kind of consumer search will affect your business.
All right. Thanks, Cieran. Maybe I can sort of blend those two answers, those two questions in a way. Start with benefits of SA360 and Braze, and I think you should see this in terms of the applications that sit on top of our now centralized data. The more we know about a customer, the more we can then deploy that data real-time, and actually using AI in the case of SA360 to identify opportunities to bid more effectively in a more targeted way, in a more real-time way, in a more accurate way in terms of the revenue we're getting off the back of it. You know, very smart to rolling out now. Essentially, the platform went in in the, you know, first half of last year, really.
The second half of last year, we were able to turn on more and more of the smarts. There's still some way to go on that in 2023 as well. I think that all gets wrapped up in, you know, the comments that we've made about margins now. In terms of cross-channel inquiry, I think the point I was trying to make earlier, when I was answering Andrew Ross' question, was that we've got to get the proposition working in a different way in price comparison, and we've gone through a series of foundational changes to how our technology works to enable that to happen. Essentially, what we're wanting to be able to do is to dynamically offer customers additional savings opportunities when they're with us on site, and we're then wanting to begin to attract them directly.
You know, that doesn't really happen in this sector in the way that it happens in other sectors. You know, clearly we want that to be a greater number than it is today, but we're not gonna put any specific guidance in terms of what we're targeting there because we have to begin to prove that out. In terms of AI and search dying, I just don't think that's probably a short-term issue for this business. I think the application of AI within the existing way that we do things provides an opportunity rather than something that we should be more immediately concerned about.
Okay. Thanks.
We keep on top of all those things, as you'd expect. Can we take the next question, please?
Sure. As a reminder to ask a question, you need to press star one and one on your telephone and wait for your name to be announced. If you wish to ask a question via the webcast, please type it in the question box and click submit. We're now going to proceed with our next phone question. It's from the line of Rahul Chopra from HSBC. Please ask your question.
Yes. Good morning. I have three questions, if I may. The first is around the Moneyprice guarantee. Could you just give us any implications on volumes and gross margin? If you could please quantify any tailwinds to volumes and et cetera on price guarantee scheme and margins as well. That's the first one. The second, in terms of insurance switching volumes obviously has helped by a strong pricing tailwinds.
Basically, just wanted to understand your thoughts on where do you expect the switching volumes to stabilize as the price converts between existing and new insurance policies. The third point in terms of FTE reduction of 170 headcount, could you give us more sense of color in terms of which areas those are? Is it probably in the marketing or it's in tech? Just probably what's driving that. Thank you.
Okay. Thank you. I struggled to catch the third question there. We couldn't just. Oh, someone putting it in front of me now. Headcount reduction. Okay. Let me start on the price guarantee, which is on our general insurance products, just to say it has a negligible impact on margins. You know, we know we're pretty price competitive across most categories where we operate in these insurance areas.
We know the customer coming in the main, gets the best deal with us. This is a really nice way to begin to communicate that to them, that if they do find a better deal somewhere else, that they can begin to get some compensation from us for that. Reality is that it has a negligible impact on margins overall.
The second question was.
Switching volumes in insurance.
Switching volumes in insurance. Look, forgive me if I'm repeating myself, but if we look at what happened across H2 and H2 in 2022, I think that's really interesting. Car and home are down 10% and 5% as we've said across the course of the year. I think what was really interesting was the shape of that. Double digits in H2, single digits in H 2, a Q4 exit of -4%, we've seen that trend continuing, that improving trend continuing into 2023. Premium inflation picked up across the course of the year. Car premiums rose 24%, home insurance by just under 8.5%. You know, that essentially is as insurers began to, you know, catch up with the rising cost of claims.
We see there's more premium inflation coming through in 2023 as well. I think that then means that, you know, consumers are gonna clearly look around to get a better deal. That should be good news for us finding, you know, opportunities for them to get better value with, with somebody else, essentially. We're seeing providers adapting their acquisition strategies, as we've already said, particularly in H2. There's plenty of new product and new brands out there, which are gonna be able to offer the consumer that value if they're not finding that with their existing provider. You know, combine that with the fact that millions of people every year, you know, change their risk profile. They're buying a new house, a new car, they have an accident, you know, add another driver, all those sorts of things.
You know, the competition will always exist, but in the consumer's head price comparison is the place to actually come to. You know, I think we're optimistic that this is gonna be a stronger year than 2023, and we gonna get into our sort of new normal I think, across the next few months in terms of what the industry looks like post the regulation. I think the final question was in terms of headcount reduction. We're operating on 170 heads in the core business, less than we did at the start of 2020. Even with the three acquisitions, I think that's, you know, 50+ heads less if we kind of look at that in total.
Essentially, we're always looking to begin to automate, to begin to optimize, begin to take out duplication. You know, I think we've made some very big savings in terms of how the organization works as a result of efficiency. If there are smart things to do going forward, new opportunities, we'll always look to do those in the right sort of way.
Okay. Thank you. Cheers.
We have no further questions at this time.
Right.
I'll now hand back the conference to Mr. Peter Duffy for closing remarks.
Well, thank you very much for taking the time to join us everybody, this morning. I think, many of the people on the call, we will be meeting face-to-face over the coming days and weeks. We look forward to continuing the conversation with you then. Of course, we're here if you have any further questions in the interim. Thanks again for joining this morning. Look forward to seeing you soon. Bye-bye.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect your lines. Thank you.