Good afternoon, ladies and gentlemen, and welcome to the PensionBee Group Q1 results presentation. Throughout this recorded presentation, investors will be in listen-only mode. Questions are encouraged, and they can be submitted at any time using the Q&A tab situated on the right-hand corner of your screen. Simply type in your question at any time and press send. Alternatively, type a question mark in the Q&A tab, and we will open up your microphones for you to ask your questions to management. Throughout today's presentation, you will be, as I say, in listen-only mode. Before we begin, we would like to submit the following poll. I am sure the company will be most grateful for your participation. I would now like to hand over to CEO Romi Savova. Good afternoon.
Good afternoon, and welcome to PensionBee's Q1 2025 results announcement covering trading for the period ending 31 March 2025. I'm Romi Savova, the CEO of PensionBee Group. For those of you who are new to the PensionBee story, we are creating a global leader in the consumer retirement market. We exist to help our customers prepare for and enjoy a happy retirement. We enable our customers to combine their old retirement accounts into a new online plan. We enable them to make contributions, to invest in line with their objectives with money managed by the world's largest asset managers, and ultimately to withdraw and spend their retirement savings. Our aspiration is to build a lifetime relationship with our customers, generating predictable and scalable revenue for our company and for our investors.
Over the first quarter of 2025, we continued to record strong year-on-year growth in assets under administration, revenue, and invested customers as we executed on our long-term strategy. Turning now to our individual country segments. In the U.K., we closed the quarter with assets under administration of GBP 5.8 billion, representing 20% year-on-year growth, annual run rate revenue of GBP 36 million, representing 17% year-on-year growth, and 275,000 invested customers, representing 14% year-on-year growth. This growth was achieved despite the well-publicized global economic turbulence and even while global markets have fallen 5%-10% over the past few months. Over the first quarter, we onboarded approximately 10,000 new invested customers through effective data-led advertising. Our "When Your Pension Is in a Good Place, You're in a Good Place" brand campaign premiered across television and radio while we continue to optimize our core online channels.
Heading into the second quarter, we continue to execute on our strategy to reach 1 million invested customers in the U.K. To that end, we have begun accelerating marketing spend and intend to continue doing so as appetite for our offering remains strong. We will, of course, keep a watchful eye on economic volatility. We continue to invest in productivity, introducing new automations across our technology platform. We generated a productivity improvement of 16% year-on-year, with each staff member supporting close to 1,400 invested customers. We also made strides with our AI initiatives, further refining our internal bot, Beatrix, who is currently supporting our operations team with the view to enabling Beatrix to eventually serve customers. Turning to the U.S., over the first quarter of 2025, we have been broadening and deepening the foundations for long-term growth.
We continue to build brand awareness with a particular focus on channels that facilitate national consumer reach, including social media, public relations, and search. Fueled by our engaging content, we grew our social media followership to reach 17,000 across YouTube, Meta, TikTok, and LinkedIn. We have also advanced our Safe Harbor IRA, our employer-to-consumer offering, launching through several large record keepers. We are currently actively promoting our Safe Harbor IRA to consultants and a number of large and medium-sized employers with a strong reception to our consumer-friendly approach. Throughout the quarter, PensionBee launched several notable functionality enhancements for customers, including a Roth IRA, the ability to make seamless new contributions, and certain transfer automations. With our rapid pace of local innovation expected to continue through the second quarter, we remain on track to increase our marketing expenditure in the second half of 2025.
I would now like to hand over to Christoph Martin, PensionBee Group's CFO, who will cover the financial update.
Thank you very much, Romi. Hello and a warm welcome to everyone. I am pleased to cover the financial section of our quarterly trading update. In the first quarter of 2025, PensionBee had a strong financial performance despite the macroeconomic environment with the resilience of our business model enabling us to achieve 20% year-on-year growth in our AUA, plus 34% year-on-year growth in our last 12 months to March group revenue. Coupled with continuous cost discipline leading to improvements in our adjusted EBITDA margin, with the group achieving break-even at circa 1% margin on a last 12 months to March 2025 basis. Those continuous achievements are further testaments of our consistent and reliable execution against our public market guidance and is ultimately derived from the business core value drivers, which are, first, predictable and recurring revenue, and second, business scalability.
The first value driver is PensionBee's predictable and recurring revenue, which is generated from a durable base of assets under administration and is derived from the assets of existing and new customers. In the first quarter, we have seen a 20% year-on-year AUA growth to GBP 5.8 billion. The vast majority of our AUA base is derived from existing customers. Those are customers who remain with PensionBee for a long period of time and continue to build up their pension savings with us, resulting in value generation for decades to come. This is because our average customer is around 41, and they build up their pension savings with PensionBee, which means that cohorts on an underlying value basis, i.e., before any impact of capital markets, are growing over time. Next, AUA is also derived from new customer acquisition through our proven approach to cost discipline new customer acquisition approach.
Over the first quarter of 2025, we added circa 10,000 new invested customers onto our technology platform. Joining customers were approximately the same age as our 2024 cohort, as our Q1 2025 cohort reflects marketing expenditure made in 2024. As a result, the quarter new invested customer were approximately 40, and they had a similar account size to the same period last year. For the remainder of the year, we expect the total number of invested customers to continue growing strongly and with a slightly younger age profile, which is in line with our marketing strategy for 2025. As it is customary in the industry, pension assets are invested in capital markets, which have experienced movements year to date owing to global trade negotiations impacting PensionBee's portfolio.
Similar to what we have observed in past periods of heightened volatility, we observed strong underlying KPIs on retention rates and net flows, underscoring PensionBee's strength and resilience. As a result, the compounding AUA base is subsequently converted into our revenue base owing to our resilient gross revenue margin. In Q1 2025, we have seen a revenue margin of 64 basis points. This is unchanged year-on-year, which enabled us to convert the 20% of year-on-year asset growth into annual run rate revenue growth of around 17% and last twelve months group revenue growth of about 34%. In conclusion, owing to our compounding AUA base, resilient revenue margin, we are driving predictable and recurring revenue. The second value driver is PensionBee's business scalability owing to the controllability of the cost base, which is thereby continuing to decline as a proportion of revenue.
Those scalability dynamics of predictable and recurring top-line growth coupled with cost discipline led to improvements in adjusted EBITDA margin to 1% on an LTM to March 2025 basis compared to minus 20% for the comparable metric in the comparable period in 2024. With respect to our 2025 guidance framework for PensionBee as a group outlining our short, medium, and long-term targets, short to medium term, in the short to medium term spanning around three to five years, we target the group to generate revenue of above GBP 100 million and a group adjusted EBITDA margin of circa 20% by year five, whereby the U.K. is considerably contributing to group profitability. In the long term, spanning five to ten years, we expect the group to generate above a quarter of a billion pounds in revenue and target a group adjusted EBITDA margin of circa 50%.
Our roughly GBP 34 million in cash balance puts PensionBee into a strong position to further scale the U.K. business as well as invest in the tremendous U.S. market opportunity to continue executing on our long-term strategy and delivering on our public market guidance. I would now like to hand back to Romi for concluding remarks.
Thank you very much, Christoph. We are very pleased with the outcome for the first quarter and are very much looking forward to continuing the second quarter in a similar fashion. I think we would now like to turn to questions.
That's great. Romi, Christoph, thank you very much indeed for updating investors later, gentlemen. Do continue to submit your questions just using the Q&A tab situated on the right-hand corner screen or just type question mark if you would like us to open your microphones. The first question that we have is coming online from William Hawkins at KBW. William, we're going to open up your microphone if I could ask you, please, to just click on the bottom, select the microphone, and we'll confirm that we can hear you, sir. Just requested to turn on your microphone there, William. If you would just press allow, we'll get that turned on for you. Thank you.
Hi, guys.
Hi, William. We can hear you. Go ahead, sir.
Hi, Romi. Hi, Christoph. Yeah, three questions to start, please. Just trying to do a bit of Sudoku on your numbers. Of the 214 million net flows, how much was from new customers and how much was from enforced customers, please? Secondly, you did touch on this in your prepared remarks, but can you again help me understand why the market impact seems to have been so negative? You updated us at GBP 6 billion at the end of January. I know the markets have been volatile, but the big volatility is an April event, not a first quarter event. For me, the FTSE was up and U.K. gilts were about flat in the first quarter. I am still a bit confused about what drove the negative market impact in the last two months of the first quarter.
Could you just help me understand a little bit about the seasonality and the full year outlook for your U.K. marketing spend? The first quarter figure was a couple of million higher than I anticipated, and you did refer to accelerating marketing spend. I'd assumed first quarter was going to be a bit lighter and then we'd be picking up through the year. That implying something's changed there. Could you maybe help me with a bit more clarity on what we're looking for for full year marketing spend and how your view on seasonality has changed from when we last had the update? Thank you.
I'm happy to start with the first one on your detailed question around the net flows to GBP 214 million. We're happy to provide the split. That splits into GBP 131 million coming from new customers and about GBP 83 million coming from existing customers for the first quarter of 2025. I hope that answers your question. I might briefly hand to Romi on the second one, the volatility point.
Yeah, very happy to update on that. I think it is a fair assumption that pension companies in the U.K. would have more exposure to U.K. assets on a disproportionate basis. If you look at the underlying asset allocations, you'll find that most pension companies have about 4% exposure to the U.K. That is because the majority of pension companies, us included, tend to allocate according to the global market cap of different countries. You would expect to see a stronger correlation to the performance of global markets, including the S&P 500 and including movements in U.S. assets. That being said, we remain very well diversified, including with exposure to the U.S. and to the U.K. and to the rest of the world, and also on an asset class basis.
That includes exposure, of course, to equities and to bonds and to cash and to other assets. Overall, I would, in the model, perhaps track more the benchmark asset allocations for U.K. pension funds rather than these specific U.K. indices such as the FTSE or gilts. I am very happy to take the third question as well, which is around marketing spend and seasonality. Generally speaking, Q1 has always been a fairly high spend quarter for PensionBee. That is because it is just before tax year-end, meaning that it is a very opportune time to be reminding customers about the benefits of making pension contributions. You can see that historically, Q1 has always accounted for a strong proportion of our spend, and that intention was no different this year.
I think what's important to bear in mind is a little bit about the timing of the flows as well. What we can see in Q1 2025 is a bit of influence from 2024 and the way that the marketing budget was deployed there. We did comment on the rough age profile of the net new invested customers. What Q1 2025 also sets us up for and the expenditures that we have made for this quarter is a fairly strong amount of net new invested customers to be expected in the second quarter. As I mentioned earlier, we are focused on continuing strong levels of marketing expenditure within the U.K. for Q2 and ideally also into the second half. We will, of course, keep a watch on market volatility and how that impacts us.
The current intention is to stick to the plan and continue deploying that marketing spend. Overall, in 2025, we expect to have deployed more in GBP terms than we did in 2024, thereby re-accelerating the growth of invested customers coming through the U.K. business. I hope that helps.
If I may just push on that final comment, Romi, do you think I can multiply the first quarter marketing expenditure by four, or are we looking to be higher or lower than that?
We will need to be guided somewhat by market volatility on the exact numbers, but our intention is to keep pushing. That is not unreasonable in my view, but we do want to maintain the flexibility to watch how markets are doing.
Brilliant. Thank you for that help.
William, thank you very much indeed for your question. Feel free now to disconnect your microphone. Romi, maybe we just turn to a question online, if I may. With the U.K. business now profitable on an LTM basis, what are the key milestones you're targeting to replicate this success in the US?
That's a great question. I think it's important to remember the duration of time that it took us to build such a successful U.K. business. That's very much something that we are focused on in the U.S. with the particular emphasis on the long term. In the U.S., in the early stages of development, we are executing against the goals that we laid out over the past couple of quarters. Those have been very much focused, first of all, on product development and localized features. What we tend to look at a lot internally is the speed with which we are deploying those localized features. Q1 has certainly been prolific from that perspective. We launched the Roth IRA. We launched new contributions. We will soon be launching our retirement planner, which is one of the most used features of our app, to dat e.
We launched a Safe Harbor IRA for our consumer acquisition through employers. We have launched a number of other smaller features as well. For us, the big priority from a product standpoint is really on the automation of transfers coming through from the larger record keepers. That is 401(k) transfers in particular, which is where we see a lot of dormant left-behind accounts. There we now have a number of automations in live testing that were developed over the first quarter and that we are very happy to see in a live environment. For Q2, what we are very focused on is the ongoing speed of that product deployment because it is really in the second half of 2025 that we then intend to increase marketing expenditure to align with the product build and the product investments that we have made over the first half.
I would say a lot of our internal milestones in the short term are focused on the speed with which we are developing products. The second aspect that we are looking at, which we know is absolutely key to long-term growth, is brand awareness and brand identity. We have identified a number of channels in the US that have broad national reach and can contribute to awareness of PensionBee and who we are and what we offer. Those channels in particular are social media, PR, and search. Over the first and second quarter, we have been tracking milestones around followership, particularly on social media, which is something that can also be tracked externally, but also prompted brand awareness, which we are starting to measure internally.
The goal is to continue growing that brand awareness so that we can have a backbone to our presence and to the trust that customers place in us as we increase spend on some of the paid channels. Those are really kind of the milestones that we are tracking over the short term. I think that over the kind of medium to longer term, we are tracking milestones that align with the financial guidance. As you know, we are pretty religious about guidance, and you can expect us to be incredibly focused on that.
That's great. Romi, Christoph, thank you very much indeed. I think that concludes the Q&A. If any further questions do come through, we'll obviously make those available to you post today's meeting. Romi, Christoph, I know investor feedback is always important to you. I'll shortly redirect those on the call to give you their thoughts and expectations. Before doing so, Romi, back to you just for a couple of closing comments, and then I'll send investors for feedback.
Thank you very much for taking the time to join us today. We're very happy to keep engaging in various different forums around the results for the first quarter. I think the summary from us is that we continue to execute on our long-term plan. So far, so good. Thanks for joining us today.
That's great. Romi, Christoph, thanks once again for updating investors. Could I please ask investors not to close the session as we'll now redirect you for the opportunity to provide your feedback in order that the company can better understand your views and expectations? This will only take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of the management team of PensionBee Group, we'd like to thank you for attending today's presentation and good afternoon to you.