Hello, I'm Romi Savova, the CEO of PensionBee. Welcome to our first quarter trading update for 2022. For those of you who are new to the PensionBee story, we are a leading online pension provider in the U.K. We exist to make pensions simple so that everyone can look forward to a happy retirement. We enable our customers to combine their pensions into one new online plan with money managed by the world's largest asset managers. We aspire to build a lifetime relationship with our customers, generating predictable and scalable revenue streams for our company and for our investors. We recently published our annual report and financial statements for 2021, and in our first full year results following our IPO, we were very pleased to have delivered resoundingly high growth, achieving our operational and financial goals across our core key performance indicators.
The first quarter of 2022 is a continuation of that momentum. We are proud to have delivered growth in line with our guidance and full year objectives, despite the ongoing market volatility that has undoubtedly affected consumer sentiment. As always, underlying the results we are sharing today is our value proposition, which resonates in the enormous market of pension consumers who have GBP 1 trillion in defined contribution pensions across the U.K. Today, we also look forward to celebrating PensionBee's admission to the Premium Segment of the London Stock Exchange. This important next step for the business reflects PensionBee's continued commitment to strong corporate governance and our dedication to realizing our growth ambitions. The move is expected to further enhance the company's profile and brand awareness, while broadening the opportunity to own the company shares to a wider group of shareholders through index inclusion.
Turning to our financial and operational highlights for the first quarter, I am pleased to report that our assets under administration increased to GBP 2.75 billion, putting us well on track to the GBP 3 billion milestone. This continues to reflect a compound annual growth rate of over 90% since 2018. We are particularly pleased to have maintained our growth momentum despite a volatile market background with the S&P 500 delivering negative growth of about 8% year to date as at the time of recording. We are also pleased to have attracted over 200,000 active customers and to have approximately 140,000 invested customers. Our registered customer pipeline is now nearing the 1 million mark.
Thanks to our predictable revenue model and high retention rate of over 95%, the growth in assets has translated into similar growth in revenue. Our annual run rate revenue increased to GBP 17 million, also reflecting an annual growth rate in excess of 90% since 2018. Taking a closer look at the past three months, I am pleased to report that we have added over 20,000 invested customers in the first quarter alone, reflecting a year-on-year growth rate of 70% and year-to-date growth of 17% higher than the guidance we delivered in our last presentation to the market. We are pleased to see the asset and revenue base each increasing by approximately 65% over the past year. This outturn continues to support our overall guidance for 2022.
As always, our results are testament to our strategy and proposition, which continue to resonate in the market. We have previously communicated that guided by our data model, we plan to deploy a substantial part of our marketing budget in the first three months of the year. I am pleased to report a deployment of GBP 8 million in advertising for the first quarter, well in line with our budget and growth ambitions. We deployed our budget across our prevailing top channels, search, TV, and out of home. Thanks to our data, we were able to respond rapidly to a changing market environment which affected consumer sentiment among the over 50s in particular.
Our more mature target audience was less likely to take financial action this quarter, and therefore we focused on a slightly younger customer base, delivering an average new customer age of 37 compared to 39 in the first quarter of last year. This was achieved through deliberate changes in our paid search strategy. We deployed a greater proportion of our budget in the app stores, where we tend to attract a younger audience. We also delivered and continued to deliver an enormous brand campaign across the country to support our acquisition activities for the rest of the year. As a result, our cost per invested customer has increased to GBP 268 for the quarter, in line with our expectations and guidance.
As we consider marketing initiatives for the rest of the year, we expect to now actively focus on delivering a strong reduction in our cost of customer acquisition. Our product activity will support this endeavor. We will be expanding some of our lowest cost channels, including referrals and email marketing by integrating these channels closer within our product and technology. With a registered customer base nearing the 1 million mark, now is the right time to harness our enormous marketing investment. In addition, we will continue to deliver the excellent experience customers have come to expect from PensionBee through ongoing enhancements to our contribution capabilities, including the rollout of easy bank transfer in the web estate and the launch of regular income payments for withdrawing customers. To support our ambitions, we have continued to invest in the ongoing performance of our industry-leading technology platform.
We delivered further transfer efficiency improvements, internal automations and information security enhancements to support growth, productivity and safety. This is evident in our increasing productivity with invested customers and revenue per full-time employee demonstrating strong annual improvements in line with operational leverage. Many of these improvements were designed to support our customer service team, enabling us to continue delivering a high quality of service despite substantial growth and exceptionally volatile markets that impacted our customers' pension balances. We are pleased to have maintained our excellent ratings across Trustpilot and the app stores. With regards to our investment offering, it is in times like these that we are proud to work with the largest money managers in the world who help PensionBee to give our customers peace of mind. As previously mentioned, we have identified substantial demand in our customer base for an impact-led investment plan.
I am pleased that our search for this plan is progressing well and we expect it to conclude very soon. Now I'd like to hand over to our CFO, Christoph Martin, who will take you through the financial outcome for the quarter.
Thank you very much, Romi. Hello, and a warm welcome from me to everyone. I would like to cover the financial section of the first quarter trading update. We continued to execute on our growth story as AUA reached GBP 2.75 billion at the end of the quarter, representing a 67% year-on-year growth rate. Against an enormously challenging market backdrop, we generated GBP 237 million of net flows over the period. I would now like to highlight the asset growth drivers in more detail. First of all, we have driven growth through new customer acquisition. Growth from over 20,000 new invested customers represented the majority of asset growth over the quarter at circa GBP 153 million. The average consolidated pension pot was slightly smaller than usual, owing to market volatility that impacted sentiment among more mature customers.
We observed that over fifties were less likely to transfer their pensions, preferring to wait for conditions to stabilize. This led us to refocus our online acquisition activities on slightly younger customers with an average age of 37 this quarter versus 39 in Q1 last year. It is worth noting that while a 37-year-old average customer might have a smaller initial pension pot, they are expected to have a longer lifetime with us to generate attractive lifetime value for PensionBee, thanks to the high retention rate. Second, we have driven asset growth through existing customers who have continued to accumulate pension savings with PensionBee. Growth from existing customers over the quarter was GBP 85 million of AUA. Therefore, existing customers, together with new customers' net flows, contributed circa GBP 237 million of asset growth over the quarter.
Since the inception of the company, we have seen a high customer retention rate of over 95%, meaning customers remain on the technology platform and build their pension savings with us. We recorded a continuation of the greater than 95% customer retention rate. In addition to staying on the PensionBee platform, customers have continued to consolidate further pensions, have contributed into their pensions, and overall, we have seen low levels of withdrawals. We therefore recorded a continuation of the circa 5% annualized underlying cohort growth figure in Q1, which captures consolidation, contributions, transfers out, withdrawals, and the PensionBee fee. Importantly, the 5% underlying cohort growth figure excludes market growth. These dynamics of high customer retention coupled with underlying cohort growth have generated attractive long-term value for the company.
In summary, while we were negatively impacted by unavoidable market volatility, we generated asset growth over the quarter, thanks to strong net flows from new and existing customers. We have turned our asset growth into a recurring and predictable revenue stream, thanks to our resilient contractual gross revenue margin. By way of reminder, the contractual gross revenue margin is the annual fee charged to customers before applying any discount, which again remained resilient in Q1 at 69 basis points. This meant that we converted the 67% year-on-year asset growth into 63% annual run rate revenue growth, translating into annual run rate revenue of GBP 17 million for March 2022. As already communicated, we executed on our plan to accelerate marketing expenditure in the first quarter, priming us for a low-cost marketing growth for the rest of the year.
On a trailing 12 months basis, we have seen an improvement in adjusted EBITDA margin to - 151%, compared to -164% last year. On an adjusted EBITDA margin profitability before marketing investment, we saw an improvement from - 36% to - 29% LTM to March this year compared to last year. This improvement in operating leverage is due to the scalability of the technology platform, as evidenced in rising invested customers and revenue per staff member, as pointed out earlier in the presentation. As both margin developments are consistent with our expectation, we reconfirm the guidance around adjusted EBITDA profitability by the end of this year and adjusted EBITDA profitability by the end of next year.
To conclude, we have converted asset growth into revenue growth thanks to the resilient contractual gross revenue margin, and we have continued scaling the business operations. The majority of proceeds we raised during the IPO have been earmarked on marketing spends, and therefore a close monitoring of that spend is critical. We routinely evaluate the attractiveness of marketing expenditure within the unit economics framework, which includes a cost and return component. On the cost side, we measure cost per invested customer, which represents the unit cost of our marketing investment. I will cover the cost side on this slide, while the return or lifetime value component will be covered on the next. As guided, we accelerated marketing deployments in Q1, which saw a temporary increase in CPIC to GBP 268.
We now expect the CPIC to decline strongly over the course of 2022, thanks to, first, a reduction in the velocity of marketing expenditure. We expect the marketing deployment over the next quarters to be significantly below the Q1 costs at around GBP 3 million-GBP 4 million per quarter, compared to GBP 8 million this quarter. Second, the impact of the upfront marketing investments is that conversion into invested customers has a longer time period to roll in for the remainder of 2022, thereby reducing CPIC as we approach the end. In summary, as guided and accelerated marketing deployments saw CPIC grow in the first quarter. The subsequent quarters will now be focused on conversion on the back of more moderate marketing spending levels and an increase in lower cost marketing activities to capitalize on our growing brand awareness.
It is very important to view the cost of acquisition together with the expected return on that investment in order to evaluate the return potential of the marketing investment. As shown in the illustrative unit economics example, the unit economics framework includes a cost and a return component, and the multiple of return over cost guides to the attractiveness of that marketing investment. With regards to the cost component, we pay a one-time cost to acquire a given customer to come to our platform, which I covered on the previous slide. With regards to the return component, once on the platform, a customer builds their pension savings with the company over a long time, evidenced in the high retention rate. This translates into a recurring and predictable revenue stream over many years.
We pay a fee to our money manager partners and bear the cost to serve customers on our scalable technology platform. The remaining profit accrues to PensionBee and generates lifetime value. The illustrative unit economics of return over cost calculation with simplified assumption indicates that PensionBee deploys marketing capital with attractive returns of mid- to high-single-digit multiples. I will now hand back to Romi to cover guidance, investment highlights and further updates.
Thank you very much, Christoph. Given the performance to date, we are pleased to reconfirm our medium-term financial objectives. We expect to deliver high double-digit revenue growth in 2022 and for revenue to exceed GBP 20 million. We expect to deliver this with consistent margins in line with historical averages. 2021 demonstrated strong improvements in operating leverage. By the end of 2022, we expect to have achieved profitability on an Adjusted EBITDA basis. As confirmed earlier, we have now deployed GBP 8 million of our GBP 17 million-GBP 20 million pound marketing budget.
The resulting growth in net flows from new customers, combined with net flows from existing customers, will see us achieve full profitability on an Adjusted EBITDA basis by the end of 2023, as always expected and consistently communicated. As you can see, PensionBee continues to take advantage of the vast and growing U.K. defined contribution market. Our differentiated customer proposition and scalable technology platform have been designed to serve an enormous customer base. Our successful brand building and customer acquisition activities have enabled us to grow with a clear path to profitability. I and the rest of the executive team are committed to continuing on this path to serve our customers. We look forward to engaging with investors at our annual general meeting in May and at the first half results in July. Thank you for your time today.
If you would like to ask a question, please signal by pressing star one on your telephone keypad. We will pause for a moment to assemble the queue. We will take our first question from Paul Bryant of Equity Development. Please go ahead.
Hi. Good morning. Thanks, Romi and Christoph. Christoph, you touched on the point a little bit is to do with deploying marketing spend. There's obviously been a, you know, big jump now in registered customers. Does there come a time where the spend almost gets redeployed to a degree with less of a focus on adding registered customers and more of a focus on converting to active and invested customers? Also what does that look like in terms of practical terms, you know, how exactly how that's deployed?
Good morning, Paul. Thank you very much for your question. We have invested a substantial amount in the first quarter of this year to grow that registered customer base. As you know, as you point out, that milestone is now reaching the 1 million registered customer mark. Which means we do have a very substantial base of customers who have indicated interest in combining their pensions with PensionBee. For the remainder of the year, we're planning on spending about GBP 3 million-GBP 4 million per quarter. The deployment in the first quarter was quite the big one for the year as per our plan and as we you know as we guided to the last time that we spoke.
Yes, we will now be focusing on conversions from registered customer to invested customer, which is really the conversion funnel that we track. We will be doing that through various activities. Some of those will be sort of the, you know, paid activities, so we can certainly retarget some of our registered customers through paid channels. Also through the ramp up of more internal activities, like eCRM marketing, but also like referrals and refer a friend. We do expect to emphasize these channels more into the run up to year-end. I hope that answers your question.
Cool. Yes. Thank you very much.
The next question is coming from Philip Middleton of Bank of America. Please go ahead.
Yeah, thank you and good morning. Two things. Firstly, you talk about receiving continual inflows from your existing customers. Could you talk a little bit more, please, about how much of your inflows come from existing customers continuing to contribute rather than consolidating more pots? That would be helpful. Secondly, could you talk a little bit about how you think retail sentiment has evolved over the year? Because obviously, it took a bit of a nosedive late February and into March. How are you seeing things now, and how does that affect what you're doing? Thanks.
Yeah. Good morning, Philip. With regards to the first question around net flows generation of existing customers. We typically see customers roughly 30% of the existing base to contribute into the pension and also adding additional pots as they're building their pots over time. It's roughly 30% that do actively contribute into their pensions. I think if you take a step back and look more broadly around cohort growth, the 5% annualized underlying cohort growth number is the data point that captures contribution consolidation, but also transfers out and withdrawals. That's kind of the all-inclusive number that looks at the health of cohorts.
We reported a continuation of that 5% underlying cohort growth number in this quarter. I hope that answers your first part of the first question.
I'm very happy to jump in on kind of sentiment. I think this quarter externally has been exceptionally challenging, probably for every business in the country. You know, we started off with the expectation of high inflation and therefore rising interest rates, which quickly translated into a cost of living crisis. You know, kind of forced to face some very severe and disturbing geopolitical conflict, which continues today. Yes, I would certainly say that consumer sentiment has been impacted in the first quarter. As a result of that, you know, the way that we responded internally is to understand the parts of consumer sentiment that have been most impacted.
Really what we observed through our customer funnels and through our data is that sentiment amongst the over fifties in particular was impacted, with many of them being reluctant to take, you know, decisions related to personal finances until the atmosphere kind of stabilizes. That led us to deploy a substantial part of our marketing budget into channels that tend to attract a younger audience because that was simply the best place for us to be deploying that capital. That was very much our response through the quarter. Now as we look through into April, it's still early days, but so far it seems that sentiment is recovering.
We can certainly see that translated into ongoing high customer numbers on our end, which we are quite pleased with and which we also think reflect the quality of the decision making around the marketing expenditure in the first quarter. I hope that answers your second question.
Thank you. Yeah, no, thanks very much.
I would like to remind everyone, if you wish to ask a question, please signal by pressing star one on your telephone keypad. We have the next question coming from Greg Peterson of KBW. Please go ahead.
Morning, everybody. Quick questions. One is, Invested Customer year-to-date growth was 17% over the quarter. Do we expect that growth rate, that quarterly growth rate to accelerate or decelerate during the remaining three quarters of the year? The second question is, when do you expect your marketing budget to shift back to focusing on older customers with larger pots? The two-part, and if what you say, the economics are similar, given for younger or older, given the lifetime value parameter, does it really matter if you're focusing on younger or older customers? Then the final question, that's just a point of clarification.
Christoph, when he was talking about his return slide, which he's talking about at every presentation, he mentioned that you expect mid to high single digit multiples of initial marketing spend. Am I mistaken? Didn't it used to be high single digits? Is that a downgrade in product profitability? That's a question. Thank you.
Yeah. Good morning, Greg. Yeah, with regards to the first question around IC growth, I think a good way to think about that is typically we kicked off the year with a quite substantial marketing budget, you know, deploying GBP 8 million. Now I think for the remainder of the year, it's converting registered customers through the funnel into invested customer as well as new customer acquisition. I think we would expect that growth momentum to continue. Maybe I jump to the third part because it's related to a IC acquisition. We have not made any changes to that unit economics example.
We consistently refer to mid- to high-single-digit return multiples from an LTV over CAC investment.
I'm happy to jump in on the second question with regards to average age targeting. I think, yes, absolutely, that's the way we see it. You know, younger customers and older customers have similar lifetime values in the long run, and that is one of the most important facets of our business model, that every customer is a good customer and therefore we can afford to target very broadly. I think, you know, therefore, does it really matter? I think in the long term it doesn't matter. Therefore we are exceptionally happy with, you know, with achieving customer growth generally.
I think in the short term, we do recognize that older customers, more mature customers do tend to come to us with higher pension pots, and therefore that does contribute to the more rapid achievement of profitability in the short term, which is a reason why we have strategically focused on those in the short term. When will we return to, you know, kind of deploying the marketing budget in a way that over-indexes on a slightly more mature audience? Well, when the data tells us to. You know, we remain very focused on consumer sentiment, on the way that customers are responding to our advertising, and on deploying the marketing budget in the most accurate way, so that we can achieve our best results in terms of invested customer growth and net flow growth.
I hope that answers your questions.
Yeah. In the short term, probably given that you said April sentiment improved, I was wondering in the shorter term for the rest of the year, should we just assume the cohorts remain younger or should we be shifting it back to sort of a longer term trend? I'm just trying to think about 22-
Well, that really depends on the external environment, right? You know, what impacts consumer sentiment is the geopolitical situation, the domestic kind of inflation and cost of living situation. I think that, you know, whatever your views are on the external environment, we would expect those views to impact consumer sentiments. Now there is also the argument that there will be a normalization of the external environment within people's expectations and therefore, you know, the external environment will have less of an impact. I think what you can expect from us is to deploy the marketing budget in the way that achieves the best outcome in terms of customer growth and net flows.
All right. Just to confirm, Christoph, what you were saying is you said a continuation of the 17%, so it's neither an acceleration or deceleration of quarterly growth for the rest of the year.
That's fair to say. I think when you look at the last few quarters in 2021 and you compare it with how the marketing was paced, I think that would also be a good way to just triangulate. Yeah. I think that's fair, that's a fair comment.
Thank you.
Next question is coming from James Allen of Liberum. Please go ahead.
Hi. Morning, guys. Can you hear me okay?
Yes, we can.
Perfect. Three questions if I may, and forgive me if these are quite simple questions. I'm still relatively new to the story. First question is, could you provide a split of the marketing spend by channel between, say, TV, paid search, and other channels? Second question is, presumably not all of the assets held on the platform are fully invested at any one time and some of that is held in cash. If some of that is held in cash, does that attract interest, and is that interest paid onto customers in full? The third question is, presumably, you know, given younger customers, they are slightly more exposed to the rising cost of living, and that could therefore reduce the amount they continue to contribute to the PensionBee platform as existing customers.
Do you see that as a risk as we move through the year? Obviously you've had a very good performance in terms of net flows from existing customers in Q1. I was just wondering what your view is going forward.
Thanks for those. Perhaps I'll take them in turn. With regards to the distribution between various marketing channels, what we do disclose is the top three channels which have remained consistent over the past couple of years, and those are paid search, TV, and out of home. Those remain the top three channels with regards to expenditure of the marketing budget. I think, you know, with regards to the second question, which is about interest, and sort of, you know, cash being held, we actually don't hold cash balances. We redirect all funds that come onto the PensionBee platform into customers' pensions, and we believe that is the most appropriate way to achieve long-term returns for our customers. It's a no on that one.
Then third, with regards to contribution. As you might expect, the tax year-end is a pretty important time for contributions. We, you know, we did see robust activity in the run up to this tax year-end, and we don't really foresee a tailing off of that cohort growth that we've experienced over the past couple of years.
Thank you very much.
I would like to remind everyone, if you wish to ask a question, please press star one on your telephone keypad. When you're in the queue, please remember to mute yourself. Thank you.
There are no further questions on the conference line. We will now address the questions submitted via the webcast page. This question is coming from Jonathan Richards of Berenberg. Given that the average age of newly acquired customers is falling from 39 years to 37 years, what would be the impact on the lifetime customer value? Could you quantify the change?
Yeah. Good morning. Good morning, Jonathan . Yeah, typically how we're thinking about return metrics, it is obviously a lifetime value over CAC and payback period perspective. What we typically see is that if you know reduce the average age slightly, that means that the customer, thanks to the high retention rate of greater than 95%, stays longer with us, and therefore builds the pension with us. I think just marginally, I would think an impact on life from a lifetime value perspective. The impact from a payback period is maybe more obvious, which is maybe a little bit longer. From a lifetime value perspective, reasonably similar in that kind of age group.
There are no more written questions at the moment. Thank you, everyone. I will now hand back over to Romi Savova for closing remarks.
Thank you very much. Thank you all for taking the time to join us today. We didn't quite mention that we are actually still at the LSE, celebrating our move to the Premium Segment this morning. Very, very pleased to be with you on this call, and to take the questions as we continue to progress on the growth journey of PensionBee. Thank you very much.