MoneyHero Q2 2024 Earnings Call Transcript

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Provided by Quartr
September 19, 2024

Key Takeaways

  • In Q2 2024 Money Hero Group reported 24% revenue growth to $20.7 million, driven by 68% growth in Singapore and 19% in Hong Kong but offset by declines in the Philippines (-16%) and Taiwan (-4%) due to provider constraints.
  • Revenue from the insurance vertical rose 89% year-on-year to $2.2 million, now representing 11% of group revenue and marking insurance as the company’s fastest growing product line.
  • Adjusted EBITDA loss widened to $9.3 million in Q2 (from $6.4 million in Q1) as the company invested in branding, customer acquisition, technology, and faced provider platform migrations, though management expects losses to narrow in H2 and monthly profitability by year-end.
  • Management highlighted significant progress on operational leverage through AI-driven efficiency initiatives—such as automated content production, chatbots, and conversion optimization—which should scale fixed costs and boost margins.
  • The company continues its M&A and market consolidation strategy—transitioning from operator to investor in a Malaysian competitor and integrating Seedly—to drive data integration, technology enhancements, and revenue synergies.
AI Generated. May Contain Errors.
Earnings Conference Call
MoneyHero Q2 2024
00:00 / 00:00

There are 6 speakers on the call.

Operator

Good day,

Speaker 1

ladies and gentlemen. Thank you for standing by. Welcome to Money Hero Group's 2nd Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session.

Speaker 1

Please note that today's conference is being recorded. I will now hand the conference over to your host, Chadwick Doray, Strategic Finance Lead. Please go ahead.

Speaker 2

Thank you, Olivia. Hello, everyone. It's a very good morning or good evening depending on where you are. My name is Chadwick Durai, and I am Strategic Finance Lead for Money Hero Group, overseeing our Investor Relations activities. We're excited to have you join us for Money Hero Group's Q2 2024 Earnings Conference Call.

Speaker 2

Today, we have with us Rohit Murti, our CEO and Hao Tian, our CFO. Let's start with a few friendly reminders. First off, you can find detailed results in our earnings release located in the Investor Relations section of our website. Also, we are recording today's webcast. So don't worry if you miss anything, a replay and a transcript will be posted on our website under the Investor Relations section.

Speaker 2

A heads up during this call, we'll discuss some future projections and expectations for our business. Keep in mind, these forward looking statements are based on what we currently expect and are subject to risks and uncertainties that could cause our actual results to differ. We also encourage you to look at our earnings release and SEC filings for a detailed discussion of these risk factors. Remember, these forward looking statements reflect our views as of today, and we are not obligated to update them unless required by law. Also, we'll talk about some non IFRS financial measures today.

Speaker 2

For a reconciliation of non IFRS financial measures to the most directly comparable IFRS metric, please see our earnings press release. And one last thing, all monetary references will be United States dollars unless we state otherwise. Shortly, Rohit and Hal will be discussing our Q2 performance and business strategy. With that, let me pass on the time to Rohit Moorthy, CEO of Money Hero Group. Over to you, Rohit.

Operator

Thank you, Chad. Hi, everyone. Today, we share our performance update for the Q2 that ended June 30, 2024. As we also near the end of the Q3, I'd like to provide some early guidance on our performance leading up to September 30, 2024. Our core business online financial comparison grew by 26% year on year, and Creatry, our B2B business, grew by 13% y o y.

Operator

In our core markets, Singapore posted an impressive 68% yoy growth to US9 $1,000,000 while Hong Kong grew 19 percent yoy to US7.3 million dollars While we faced some temporary setbacks in Philippines and Taiwan due to provider constraints, we have swiftly addressed these issues, and we are confident we'll be back on track in the upcoming quarters. Revenue from our insurance products increased by 89 percent Y o Y to $2,200,000 Insurance now contributes 11% of our group revenue compared to 7% in the prior year. I think it's important to take a step back and look at the bigger picture. Focusing solely on quarterly results can sometimes mask the full scope of our performance and growth potential, which is much clearer when you view it from a long term perspective. Here's what I mean by that.

Operator

First, consider our first half 2024 results. We processed 970,000 banking and insurance applications through our platform. That's an impressive 100% Y o Y growth and nearly 3 times the volume of 2021. And yet, our insurance engine is just getting started. I don't believe any other aggregator in the region has experienced growth at this scale.

Operator

And in anticipation of this, we built additional capacity and we made strategic investments that's enabling us to outpace industry growth rates. 2nd, our industry is still in the very early stages of growth. We represent a small portion of the overall industry, and there is substantial room for expansion and diversification ahead of us. 3rd, our strategy remains focused on growth, prioritizing long term value over short term profit optimization. While we could optimize for short term profits in any given quarter, our priority remains focused on investing for future growth.

Operator

And finally, efficiency gains are driving operational leverage, something I spoke about in the last two earnings calls. And this will be even more impactful as we continue to scale. We're already seeing improvements across key areas of our business from marketing to operations. Now talking about our strategic pillars, we've made significant progress across each of our strategic pillars: consumer pool, conversion expertise, insurance brokerage, partner relationships and operating leverage. This quarter, we hosted Singapore's largest personal finance festival, drawing a record 5,000 attendees.

Operator

We partnered with over 35 banking and insurance providers, and the event featured more than 70 prominent speakers from the financial industry and government. This marks our 7th consecutive year hosting this festival, and it was our largest and most successful event to date. I'm also pleased to share that we were recently named Personal Finance Tech of the Year at the Asia Fintech Awards 2024. Money Hero was selected from 6 finalists, which is a testament to our strong user connection, consumer pull and technological superiority. This recognition underscores our market leadership across Greater Southeast Asia and highlights the strong consumer demand and loyalty that continue to drive our sustained growth and success.

Operator

An important thing to note is we are now pivoting from simply driving traffic growth to focusing on monetizable engagement metrics. So this would include monthly unique visits to our transaction pages, conversions to applications and registered members. This shift has resulted in a 50% increase in approved applications with our membership rate now growing to 6,500,000 as of June 30, 2024. We are now focused on driving strong repeat behavior supported by our cross sell and up sell initiatives. In the coming quarters, we are also rolling out new capabilities to enhance engagement of our member base.

Operator

These would include a mobile app, a new car insurance vertical, one click insurance purchasing and an improved site and content architecture. In the first half of twenty twenty four, we generated approximately $4,000,000 in revenue from insurance products, representing 65 percent Y o Y growth. This is nearly 4 times our revenue from the same period in 2021, making this now our fastest growing vertical. As a licensed insurance broker in 3 of our 4 markets, we will continue to invest in this business. While insurance verticals typically have lower margins in the 1st year, simply due to the cost of acquiring users, these margins grow significantly through renewals.

Operator

This is a high margin segment for us, and we will continue to make strategic investments focused on growth with profitability as a long term outcome. Creatory, our B2B business, still relatively young, but has already demonstrated impressive growth. We are increasingly confident about our ability to scale this business across all our markets. The creator market holds significant potential, and we are investing in building a strong brand with the aim of becoming a market leader. We are also highly focused on building operating leverage for this business, with several actions and initiatives in place to control our operating expenses and drive efficiency gains.

Operator

We streamlined our headcount and operations, and we're investing in AI to further enhance efficiencies. As you may recall, we previously announced the addition of a Head of AI. And since then, we've identified efficiency opportunities across various business functions. Couple of examples, I could cite is we are now enhancing content production, creative production. We are exploring in a chatbot to automate our customer service capabilities and also looking at AI to help us drive conversion rates on our transaction pages.

Operator

Coupled with a disciplined approach to managing expenses, these efforts will keep our operating costs relatively fixed as we grow, allowing more of our top line growth to flow directly to the bottom line. As a result of this, we expect significantly lower EBITDA losses next quarter, reflecting the progress in building our operating leverage, and we are aiming for profitability in the last quarter. As part of our broad growth strategy, we continue to explore strategic M and A opportunities with a focus on market consolidation. Rather than competing head on, we prioritize collaboration and investment. A recent example is our transaction in Malaysia, where we transitioned from being an operator to an investor in our competitor, demonstrating our ability to adapt and consolidate the market.

Operator

Our acquisition of Seedly in Singapore also exemplifies this approach with the brand thriving post acquisition. We remain open to opportunities that provide synergies across data, technology, revenue expansion and operational efficiency. We are more confident in our strategy and trajectory than we were 3 months ago, and I look forward to answering questions shortly after I hand over the call to our CFO, Hao. Thank you all once again for your trust and support. With that, I would like to now turn the call over to Hao Cheon, our CFO.

Speaker 3

Thank you, Rohit. Good day, everyone. In Q2 2024, Money Hero's strategic expansion resulted in solid growth in approved applications with 24% year over year revenue growth to over USD 20,700,000. We have made strong market share gains, particularly in our core markets, as we continue to expand across grain sources to Asia. However, investment into expanding our customer acquisition, brand building, technology platform and the data infrastructure led to an adjusted EBITDA loss of USD negative $9,300,000 for the quarter.

Speaker 3

Now let's turn to our Q2 2024 financial performance. In the Q2 of 2024, Money Hero delivered 24% year over year revenue growth to USD 20,700,000. We realized significant growth year over year in Singapore, up 68% and the Hong Kong, up 19%, where we have increased our customer acquisition and strengthened our already dominant market share. This top line growth was driven by maintaining a strong provider relationship and by investment in both traffic and the commercials. Our Philippine business decreased 16% year over year, largely due to reduced volume with our key client as its complete system and the database migration post acquisition.

Speaker 3

We are working closely with the client to ramp up our commercial engagement, positioning us for recovery in the coming quarters. Our Taiwan business decreased marginally by 4% year over year to USD1.4 million in the 2nd quarter due to paused product offering from several key clients. For Taiwan and the Philippines, we will focus on building long term sustainable profitability and focus on building new vertical to replace the loss of revenue from our key clients' decision to exit the market. Our B2B business, Quittery, also continued to show growth with 2nd quarter revenue increased 13% year over year to USD2.9 million, which represents 14% of group revenue. We will continue to leverage our credit platform as a competitor advantage to drive traffic and the gradually decrease rely on performance marketing.

Speaker 3

Insurance remain our fastest growing product vertical with 2nd quarter revenue increased 89% year over year to USD2.2 million. We will continue to explore new opportunities to offer more new product lines to further fuel the top line and the bottom line growth. In addition to our core business growth, we aim to insurance sorry, to use insurance as a differentiator to increase both frequency and the share of wallet. For the Q2 2024, our adjusted EBITDA loss increased to a loss of USD negative 9,300,000 from a loss of USD negative USD 6,400,000 in Q1 2024. The primary drivers for the increased loss for the 2nd quarters are: 1, strategic investment.

Speaker 3

We prioritize growth through increased investment in branding, customer acquisition, data and the technology aimed at capturing new customers and building infrastructure for future profitability. 2nd, provider constraints. During the Q2, multiple providers in Taiwan and the Philippines underwent significant platform migrations, temporarily holding new card acquisitions. These transition impact our short term financial performance. We anticipate acquisition volume will return to normal level in Q3 as these migrations approach completion.

Speaker 3

Furthermore, one key provider exit from several key markets also had a major impact on our revenue and the profitability. To mitigate this revenue loss, we have invested in other providers' products and expanded into other verticals. We anticipate revenue and the profitability loss from this provider's exit will be addressed in Q3 and Q4 and thus will only have minor impact from Q4 and onwards. 3, increased operating costs. Total operating costs rose year over year, largely due to additional expense associated with being a public company, include audited fee, D and O insurance and IRPR rated fees.

Speaker 3

Looking ahead, we anticipate narrowing of our adjusted EBITDA loss in the second half of twenty twenty four with margins start to recover in Q3 and continue to improve throughout the year. We have initiated a comprehensive review of our organization structure, which begin with our recent reorg announcement, and that we expect to be completed by the end of Q3. This will create a more streamlined and cost efficient operation. We expect to reach EBITDA adjusted EBITDA profitability on a monthly basis by year end as we have been focused on efficiency and optimizing the return on our growth investments. Looking forward, we will continue to use our strong cash position to expand our footprint.

Speaker 3

We see this in 2 distinct parts. 1st, through organic efforts such as our insurance business, personal loans, quarterly and the streamline costs with efficiency gain using the IR. 2nd, as Rohit mentioned earlier, and I would like to reiterate, we are actively pursuing our growth strategy by continuing to explore strategic acquisition and investment opportunity to consolidate industry as we believe the timing is right for our industry consolidation in Great Southeast Asia. We believe that there is ample opportunity for consolidation in our emerging industry and that we aim to lead the way. These two strategies will aid us in scaling both our market share, top line growth and the bottom line for years to come.

Speaker 3

With that, I thank you for your attention today and I'll turn it over to operator to take any questions.

Speaker 1

Thank you. And we are first question coming from the line of Milo Bosel with Edison. Your line is open.

Speaker 4

Hi, guys. This is Milo Bosel from Edison. Congratulations on the results and thanks for the presentation. Three questions from me. The figures reported today indicate that the full year results should be H2 weighted.

Speaker 4

So just wanted to understand what are some of the levers you can pull to achieve the $100,000,000 revenue target and what is underpinning your confidence in achieving that target? Second question is, what was the rationale for the MoneySmart acquisition? And more broadly, how should we think about inorganic growth strategy going forward? And finally, just want to understand how you're leveraging AI, the Shop Hero app and the Creativity platform to continue the improvement in the approved application conversion rates? And if there are any KPIs we should look to measure success against this?

Speaker 4

Thanks very much.

Operator

Thank you for the questions. I'll start with your first question around our revenue drivers and revenue line. Now as we look quarter on quarter, there are a few key revenue drivers we focus on. The first is wherever we see an opportunity for what we would like to call organic growth, a classic example is typically in the last quarter of this year, we have what we call a tax loan season in a couple of our markets. And here, we see an organic growth in demand for personal loans.

Operator

So that's a real good opportunity for us to attract that demand, convert that demand as and when people do come to our platform looking for this product. The second thing is we typically see in the last couple of quarters, especially around our banking acquisitions, we do see a beautiful sort of scale up of the budget from a lot of our providers. As you'll appreciate, this is also close to the annual targets. So majority of that budget allocation typically comes to us. We are, for many of the providers, one of the largest sort of digital partners.

Operator

So we do get the first port of call to use that budget, and that's where we have a lot of marketing campaigns, especially in the last couple of quarters. Insurance, now we've been really thoughtfully building the insurance vertical. If you take a look at travel insurance, for example, today you can buy travel insurance on our platform in Singapore and Hong Kong. We've been really optimizing our U. S.

Operator

And UI. And that really sets it up beautifully as we head towards the last quarter of the year, where again there's a seasonality spike of travel, especially in the markets we operate. And these sort of investments we've made in our capabilities allows us to attract the demand and convert that demand. And Creatory, again, is a very new business for us. We don't really try and set targets for Creatory because it's such a really interesting space we are operating in and really learning how to capture more of the space across all our markets.

Operator

So there are some interesting plans and interesting things we're going to also invest in to try and expand that B2B brand that's very unique and innovative, doesn't exist in our industry that we operate. So the beauty of our business is we are multi market, we are multi vertical and we have different sort of core businesses that we can scale and a lot of this will also start to demonstrate returns on the investments we've made, especially in the 1st two quarters this year. Those were very deliberate investments we made in acquisition. Today, we have about 6,500,000 members, registered members as of June 30. This now allows us to also cross sell and upsell to this base.

Operator

We've made investments in data. We've made investments into our technology infrastructure. And now we're going to be launching a mobile app. So we do believe we have the drivers now to expand our revenue, and we'll be very focused on execution against these. Now I'll go on to your second question, which was around the recent announcement of an acquisition and what synergies we were expecting.

Operator

Firstly, the point I would like to make is we are the largest aggregator platform in the region. And we have a very unmatched footprint across 4 key markets. No other aggregator operates at our scale within these markets. That's an important point to note. 2nd, since 2015, we've seen numerous aggregators enter and exit the region.

Operator

We are the only one from that early batch to have successfully gone public. We strongly believe the market is ripe for consolidation, as Hau mentioned, and we see ourselves as a key player in helping drive that process, rather than just merely engaging in direct competition. Having said that, we are well capitalized and ready to compete, but we prioritize partnerships and collaboration first over competition. And the recent transaction in Malaysia is a prime example of that, where we ourselves transition from being an operator to an investor in a competitor to facilitate market consolidation. The third thing to note is we had a highly successful IPO backed by top investors and we've raised substantial capital as a result.

Operator

While we are happy to see this capital generate returns, we've received a number of inbound inquiries regarding our M and A strategy. Consequently, as a management team and a Board, we are now actively exploring acquisition opportunities. And 4th, we have a proven history of M and A. I mentioned in 2020, we acquired Seadly, a leading personal finance platform. Many consider Seadly our biggest competitor in Singapore.

Operator

Post acquisition, CG has continued to thrive as a brand, and this is a testament of how we approach M and A with a focus on fostering growth, not just absorbing competition. And finally, there are several similar smaller FinTech platforms that could be of interest for us for a potential merger. As I mentioned before, our approach has centered around a buy overbuild strategy, which is evident in how we scale key areas of our business, especially in insurance and Creatry. As for synergies, any acquisition target will ideally provide value across multiple dimensions. Number 1, data integration, technology enhancements, revenue expansion and operational efficiencies through consolidation.

Operator

This is the strategic framework that we use and that allows us to fully leverage the benefits of any acquisition and generate significant growth. And coming to your final question around how we are leveraging AI and the app and the PayTree platform. Look, AI is a very interesting and exciting space for us. We have already started leveraging AI and automation to drive efficiencies across every aspect of our business from content generation to customer service. And this approach is helping us achieve operational leverage by reducing costs while at the same time scaling our operations.

Operator

AI is a crucial tool for us, also allowing for more personalized customer journeys, automating our workflows and really optimizing our decision making processes. All of this contributes to a higher conversion rate for approved applications. Regarding the app, the Shopify rollout after our initial soft launch, we are now transitioning into a fully functional mobile app with an integrated marketplace. We expect to roll this out in the next quarter. This will be our primary mobile app play, enhancing the end to end user journey with an improved UX and UI.

Operator

As we mentioned, we are very focused on traffic utilization, and this will allow us to drive that and also focus on monetizable metrics like conversion rates and completed applications. And through this, we aim to significantly improve our performance and engagement. Coming to Createry, as I mentioned, still very much in the early stages. We're very steadily adding content creators and strategic partners. The addressable market here is vast, and we see several exciting opportunities for growth.

Operator

Creati offers a very unique platform that combines a content play for us, a distribution play, a traffic play and a conversion play. And we are really confident in its potential and excited about the potentials and possibilities as we continue to scale this B2B brand. And finally, in terms of KPIs to watch, as I mentioned, we are now pivoting and focusing on application conversion rates, traffic engagement and utilization and user retention metrics across our platforms. These will be the key indicators on how well we drive operational efficiency and improve our monetization. Thank you again for the question.

Speaker 1

Thank you. And our next question coming from the line of Nirgunan Tiruchilvan with Alethia Capital. Your line is open.

Speaker 5

Thank you for giving me this opportunity to pose a question at this forum. First of all, I'd like to congratulate the management on a phenomenal set of results and the eloquent manner in which the CEO has presented them is very encouraging. In terms of the questions, what would your guidance be for the FCF burn in FY 2024?

Speaker 3

Okay. Let me address this question, please. So we are not giving specific guidance for free cash burn in FY 2024. However, we expect EBITDA loss to be reduced to be between RMB5 1,000,000 to RMB6 1,000,000 next quarter, driven by key actions to optimize market investment, streamline operation and the focus on efficiency optimization. We expect to reach adjusted EBITDA profitability on a monthly basis by year end as we have been very focused on efficiency and optimize the return on our growth investments.

Operator

I

Speaker 5

see. My next question is about the markets that would drive the revenue growth in the next 2 years. Can you identify them, please?

Operator

Sure. Let me take that. We anticipate sustained growth from our core markets, our core markets being Singapore and Hong Kong. They remain our largest revenue drivers. And in these markets, insurance will be our fastest growing vertical as we roll out several key initiatives.

Operator

I mentioned the revamped mobile app, an enhanced sort of membership feature, a new car insurance vertical, a refreshed site architecture and an improved UX and UI. All these upgrades will elevate the customer experience and drive deeper engagement. Beyond Singapore and Hong Kong, we are seeing strong growth in the Philippines, where the market is again expanding beautifully. We have also strategic plans in place for Taiwan, positioning us for future growth in the region. I mentioned about Creatry, our B2B business, relatively young, but has already demonstrated impressive growth and unique brand with incredible growth potential that I would like to believe is ahead of its time.

Operator

Meanwhile, our insurance engine is just getting started. We are constantly enhancing our platform and user journeys, and all of this, we believe will solidify our position in the market, but also fuel long term growth across all our business segments. Thank you.

Speaker 1

Thank you. And I see no further questions in the Q and A queue at this time. I will now turn the call back over to Mr. Rohit Murti for any closing remarks.

Operator

Thank you again all for your time, and I look forward to sharing our next set of results. For those back in Asia, again, wishing you all a very happy mid autumn festival.

Speaker 1

Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation, and you may now disconnect.

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