Moonpig Group Plc · LSE:MOON
Moonpig — FY2023 Earnings Presentation
42 slides from Moonpig's earnings presentation, Jun 29, 2023
Slide 1: Full Year Results Presentation
Full Year Results Presentation Year ended 30 April 2023 29 June 2023 Strictly Private and Confidential
Slide 2: Disclaimer
Disclaimer This presentation and the discussion which follows it may include certain forward-looking statements with respect to the business, strategy and plans of the Company (together with its subsidiaries, the “Group”) and its current goals and expectations relating to its future financial condit
Slide 3: Agenda
Agenda 1 Overview – Nickyl Raithatha 2 Financial performance – Andy MacKinnon 3 Strategic update – Nickyl Raithatha 3
Slide 4: Resilient financial performance and strong cash generation
Resilient financial performance and strong cash generation Resilience and Strong cash generation high profitability and deleveraging Revenue Operating cash flow1 £320.1m, £56.2m annual +5.2% YoY operating cash flow Gross margin rate Pro forma net leverage 56.1% 1.97x April 20232 +680bps YoY 2.45x Oc
Slide 5: Focus on innovation and technology-driven growth
Focus on innovation and technology-driven growth ● Continued investment in our strategic pillars: ○ Moonpig and Greetz unified technology platform ○ New in-house operational facilities in the UK and NL ● Shift from replatforming to a focus on innovation and growth at Moonpig and Greetz ● Acquisition
Slide 6: Financial performance
6 Financial performance Andy MacKinnon Chief Financial Officer
Slide 7: Solid financial delivery in challenging conditions
Financial performance Solid financial delivery in challenging conditions, reflecting the resilience and flexibility of our model Rapid deleveraging and Solid Adjusted EBITDA significant liquidity revenue performance In line with our expectations headroom £84.2m 1.97x £320.1m Adjusted EBITDA Revenue
Slide 8: Strong AOV growth at Moonpig and Greetz, driven by cards
Financial performance Strong AOV growth at Moonpig and Greetz, driven by cards Moonpig and Greetz Moonpig and Greetz • AOV grew by 8% year-on-year: Average Order Value Total Orders • Card price changes £ / order Millions of orders FY23 FY23 • More targeted use of 4YoY % YoY % +8% promotional discoun
Slide 9: Underlying growth of +8% in revenue from existing customer base
Financial performance Underlying growth of +8% in revenue from the existing customer base at Moonpig and Greetz Moonpig and Greetz Moonpig and Greetz Revenue from Existing Customers Revenue from New Customers £m £m • Existing customers Existing represented 89% of total customers 87% 89% revenue at M
Slide 10: FY23 revenue reflects the resilience of our cards-first business model
Financial performance FY23 revenue reflects the resilience of our cards-first business model Cards revenue growing Gifting at Moonpig and Greetz impacted Experiences grew, with the rate of on an underlying basis driven by AOV by trading down to lower price points growth slowing to 4% YoY in H2 Moonp
Slide 11: Underlying revenue growth at Moonpig and Greetz of +5% year-on-year
Financial performance Underlying revenue growth at Moonpig and Greetz of +5% year-on-year Moonpig & Greetz Revenue £m FY23 FY23 4 Year % YoY % Growth - reported 132% (8.5)% • Underlying revenue growth at Moonpig and Greetz, after adjusting Growth - excl Covid Boost 132% 5.1% for prior year Covid boo
Slide 12: Group revenue including Experiences increased by +5% to £320m
Financial performance Group revenue including Experiences increased by +5% to £320m Group Revenue £m FY23 FY23 4 Year % YoY % Group growth 166% 5% • Revenue stronger at Moonpig than at Moonpig growth 131% -5% Greetz: Greetz growth 136% -20% • More severe lockdown restrictions in the Netherlands in W
Slide 13: Increased gross margin rate reflects improvements at Moonpig and Experiences
Financial performance Increased gross margin rate reflects improvements at Moonpig and the acquisition of Experiences Moonpig Group Gross Profit £m, % of total revenue • Gross margin rate improvements at Moonpig: Group gross margin 52.6% 49.3% 56.1% • Commercial negotiations to strengthen Moonpig gr
Slide 14: Delivered Adjusted EBITDA of £84.2m and margin of 26.3%
Financial performance Delivered Adjusted EBITDA of £84.2m and Adjusted EBITDA margin rate of 26.3% Moonpig Group Adjusted EBITDA £m, % of total revenue • Total Adjusted EBITDA increased by 12.4% Group margin rate 18.9% 24.6% 26.3% year-on-year Moonpig margin rate • Moonpig Adjusted EBITDA Margin rat
Slide 15: Delivered Adjusted PBT of £48.0m
Financial performance Delivered Adjusted PBT of £48.0m notwithstanding the challenging economic context and higher interest rate environment Adjusted EBITDA to Adjusted PBT £m FY23 FY22 YoY • Higher amortisation on acquired intangibles (not Adjusted EBITDA1 84.2 74.9 9.3 excluded from Adjusted EBITD
Slide 16: Strong operating cash conversion of 111% in H2 FY23
Financial performance Strong operating cash conversion of 111% in H2 FY23 Adjusted EBITDA to Operating Cash Conversion £m FY23 FY22 H2 FY23 H2 FY22 Adjusted EBITDA 1 84.2 74.9 49.6 39.9 • Full year Operating Cash Flow of £56.2m Intangible capital expenditure (12.9) (8.3) (6.3) (4.6) • Strong operati
Slide 17: Significant balance sheet liquidity with continued rapid deleveraging
Financial performance Significant balance sheet liquidity with continued rapid deleveraging Net Leverage • Net debt to pro forma Adjusted EBITDA was £m April 2023 Oct 2022 1.97x at 30 April 2023, in line with expectations. We Senior borrowings1 (170.5) (229.9) expect continued deleveraging in FY24 G
Slide 18: Current trading and FY24 guidance
Financial performance Current trading and FY24 guidance • Trading since the start of the year has been in line with our expectations. • In the context of the current macroeconomic environment, we expect pro forma revenue to grow at a low single digit percentage rate in the first half of FY24, underp
Slide 19: Strategic Update
19 Strategic Update Nickyl Raithatha Chief Executive Officer
Slide 20: The environment remains challenging, however we have clear resilience
Group strategy The environment remains challenging, however we have clear resilience Card-first strategy which leverages the Across Moonpig and Greetz, more than Clear online counter-cyclicality of the cards market 19 out of every 20 orders contain a greeting card leaders in core, stable markets Cle
Slide 21: Our resilient, flexible model has enabled us to maintain profitability
Group strategy Our resilient, flexible model has enabled us to maintain profitability Ability to shift emphasis • Short term prioritisation of resources towards higher-margin cards between categories and events • Focusing of marketing investment ahead of peak trading events Ability to change the gif
Slide 22: A milestone year of delivery, completing the foundations for growth
Group strategy A milestone year of delivery, completing the foundations for growth Technology team scaled to Completed the migration to Opened two new, major Strategic progress 250 FTEs and refocused a unified technology operational facilities at Experiences towards growth initiatives platform Techn
Slide 23: Moonpig and Greetz
moonpig group ple Moonpig and Greetz 23
Slide 24: Business model leverages data to increase loyalty and gift upsell
Moonpig and Greetz segments At Moonpig and Greetz, our business model leverages data to increase customer loyalty and drive gift upsell Card-first Gift Attach Profitable customer acquisition The most relevant gifting platform with high loyalty with minimal acquisition cost ✔ 541 million card buyers
Slide 25: Continued capture of UK market share across the last four years
Moonpig and Greetz segments Continued capture of UK market share across the last four years Market share of UK major online specialists Market share of Netherlands top three online operators % of total 2019, 2021 & 20221 % of total 2019, 2021 & 20221 Other competitors Competitor #2 Competitor #2 Com
Slide 26: Moonpig and Greetz have three compounding growth drivers
Moonpig and Greetz segments Moonpig and Greetz have three compounding growth drivers 72% of occasions Monetising the base where a gift is purchased alongside a card1 × Gift Attach 23 total cards per year2 × shift to online Driving the Share of Wallet 53.8m total card customers in our markets3 Custom
Slide 27: Best-in-class technology and data drive customer loyalty and retention
Moonpig and Greetz segments Best-in-class technology and data drive customer loyalty and retention Our growing reminders database We focused on raising app penetration We are leveraging Moonpig group allows contact with customers at at Greetz, following launch of new cards to convert message points
Slide 28: Moonpig Plus subscriptions launched to drive purchase frequency
Moonpig and Greetz segments Moonpig Plus subscriptions launched to drive purchase frequency • Moonpig Plus launched in the UK on 31 May 2023 • Based on extensive testing across FY23 we expect it to increase purchase frequency and customer lifetime value • Low cost annual subscription of £9.99 • We w
Slide 29: New features to grow gift attach rate and basket size
Moonpig and Greetz segments New features to grow gift attach rate and basket size New recommendation Greetz personalised balloons Moonpig suggested Gift cross-sell at the basket algorithms tailored for Greetz launched, ahead of roll-out gift bundles stage of the customer journey customers in the UK
Slide 30: Roll-out of free personalised video messages across Moonpig's range
Moonpig and Greetz segments Roll-out of free personalised video messages across Moonpig’s range • Free-to-use feature, launched for 13,000 designs for Valentine’s Day 2023 • Now available across all card designs, differentiating our cards from competitors • Over 75,000 video messages sent by Father’
Slide 31: New features to enrich the content inside our greeting cards
Moonpig and Greetz segments New features to enrich the content inside our greeting cards Flexible text Surfacing our Stickers Flexible Photos editor (Greetz) handwriting options 31
Slide 32: Journey towards revenue synergy - experience gifts in a card
Moonpig and Greetz segments Journey towards revenue synergy - launch of experience gifts in a card Moonpig is already Launched digital gifting Experiences’ largest online through a code printed • Moonpig has taken its first step towards realising the retail partner inside a Moonpig card potential fo
Slide 33: Experiences
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Slide 34: Experiences growth flywheel focused on converting recipients into customers
Experiences segment The strategy for Experiences is to create a growth flywheel by focusing on the conversion of recipients into new customers Customers Recipients Quality and breadth of range underpinned by Simple redemption journey, flexibility and convenient shopping experience broad choice enhan
Slide 35: Investment in leadership, technology and operations at Experiences
Experiences segment Investment in leadership, technology and operations at Experiences Renewed leadership and Operational efficiencies and Range expansion, Investment in marketing human capital enhanced fulfilment with “hero” partners capability • New Managing Director • Relocation to the Group’s •
Slide 36: Investing to transform the Experiences technology platform
Experiences segment Investing to transform the Experiences technology platform Redesigning the entire Enhancing the buying Enhancing the Building a data-first Replacing shopping journey experience redemption experience business platform foundations • New content • New, better- • Direct voucher • New
Slide 37: Resilience, profitability and an expected return to growth in FY24
Resilience, profitability and an expected return to growth in FY24 1 Delivered Adjusted EBITDA in line with expectations 2 Strong operating cash flow and continued deleveraging Resilience and flexibility of our model highlighted against a 3 backdrop of challenging conditions 4 Milestone year of stra
Slide 38: Moonpig Group plc
MOONHIG group ple
Slide 39: Appendix
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Slide 40: Technical guidance (1/2)
Technical guidance (1/2) • Expected cost of Pre-IPO Legacy Incentives is between £3m and £4m in FY24 and nil thereafter. FY24 costs previously estimated at around £3m, however there has been a re-phasing of costs from FY23 into FY24 due to the scheme’s operation. As set out in the prospectus, if a p
Slide 41: Technical guidance (2/2)
Technical guidance (2/2) • For FY24, we expect a total charge for amortisation and depreciation of between £27m and £29m. • The combined charge for depreciation of purchased tangible assets and amortisation of internally generated intangible fixed assets is expected to increase to between Depreciati
Slide 42: Adjusting Items
Adjusting Items Reconciliation of Adjusted Measures to IFRS Measures FY23 FY23 FY23 FY22 FY22 FY22 Adjusted Adjusting IFRS Adjusted Adjusting IFRS £m Measures Items Measures Measures Items Measures Pre-IPO share based payment charges (5.4) (7.0) Pre-IPO bonus awards (3.3) (3.6) M&A-related transacti