Moonpig Group Plc · LSE:MOON
Moonpig — H1 FY2023 Earnings Presentation
34 slides from Moonpig's earnings presentation, Dec 7, 2022
Slide 1: Half Year Results Presentation
Half Year Results Presentation Six months ended 31 October 2022 7 December 2022 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: Solid H1 performance despite progressively more challenging conditions
Solid H1 performance despite progressively more challenging conditions Continued A milestone period for Successfully navigating more high profitability strategy delivery challenging conditions Revenue Unified technology platform Resources focused towards £143m, +0.1% YoY for Moonpig and Greetz highe
Slide 5: Strengths of our business model support reiteration of expected full year profit
Strengths of our business model support today’s reiteration of expected full year profit Sustainably high Strong cash High resilience generation profitability Card market track record of stability Attractive unit economics from Inventory light across two decades card-first and gift-attach strategy 9
Slide 6: Financial performance
6 Financial performance Andy MacKinnon Chief Financial Officer
Slide 7: Solid financial delivery in a challenging environment
Solid financial delivery in a challenging environment Adjusted EBITDA Significant balance sheet Solid overall margin rate above our liquidity with expected rapid revenue performance expectations deleveraging in H2 £143m 24.2% £209m 2 Revenue Adjusted margin Net debt +0.1% £34.6m 2.45x Year-on-year g
Slide 8: Strong AOV growth at Moonpig and Greetz, driven by Cards
Strong AOV growth at Moopig and Greetz, driven by Cards Moonpig and Greetz Moonpig and Greetz Total Orders Average Order Value m £ / order • Total orders decreased by 13%, driven primarily by annualisation against prior year Covid boost • UK card orders impacted by industrial action at Royal Mail in
Slide 9: Existing customer base continues to grow and represents 90% of revenue
The Moonpig and Greetz existing customer base has continued to grow on an underlying basis and now represents 90% of revenue2 Moonpig and Greetz Moonpig and Greetz Revenue from Existing Customers Revenue from New Customers • Revenue growth from existing £m £m customers has been the key Existing grow
Slide 10: Cards revenue growing, Gifting impacted by trading down, Experiences in line
Cards revenue growing on an underlying basis, Gifting impacted by trading down, Experiences in line with expectations Cards revenue growing Gifting at Moonpig and Greetz impacted Experiences has traded in line with our on an underlying basis by trading down to lower price points expectations at the
Slide 11: Revenue has grown +115% over three years versus pre-Covid comparatives
Revenue has grown +115% over three years versus pre-Covid comparatives Moonpig Group - Revenue £m H1 FY23 H1 FY23 3 Year % YoY % • Group revenue of £143m was in line with prior Group growth 115% 0% year reflecting: Moonpig growth 119% -5% • Acquisition of Experiences (£12m) on 13 46% -18% July 2022
Slide 12: We have strengthened gross margin rate by 511bps year-on-year
We have strengthened gross margin rate by 511bps year-on-year Moonpig Group Gross Profit £m, % of total revenue Group gross margin 53% 49% 54% • Gross margin rate improvement at Moonpig: Moonpig gross margin 58% 50% 52% • Commercial negotiations to strengthen intake margin Greetz gross margin 42% 47
Slide 13: Adjusted EBITDA margin rate of 24.2%, ahead of our expectations
Adjusted EBITDA margin rate of 24.2%, ahead of our expectations Moonpig Group Adjusted EBITDA £m, % of total revenue Group margin rate 22.7% 24.5% 24.2% • Adjusted EBITDA more than doubled versus H1 FY20 Moonpig margin rate 31.0% 25.6% 25.3% • Moonpig Adjusted EBITDA Margin rate reflects: Greetz mar
Slide 14: Operating cash conversion has a seasonal profile
Operating cash conversion has a seasonal profile, with strong cash flow and deleveraging expected in the second half of the year Moonpig Group Adjusted EBITDA to Cash Conversion • Strong annual operating cash conversion of £m H1 FY23 H2 FY22 H1 FY22 80%-115% across the last four full financial years
Slide 15: Significant balance sheet liquidity with deleveraging expected in H2
Significant balance sheet liquidity with deleveraging expected in H2 Net Debt to pro forma LTM Adjusted EBITDA £m Oct 2022 • Total net debt to pro forma Adjusted EBITDA was 2.45x at 31 October 2022, lower than our expectation Senior borrowings (229.9) • We expect to deleverage in H2 FY23 to between
Slide 16: Unchanged expectations for full year Adjusted EBITDA in FY23
Unchanged expectations for full year Adjusted EBITDA in FY23 • Trading conditions have become progressively more challenging through October and November, and given the continued macroeconomic uncertainty, we now expect revenue for FY23 to be approximately £320 million. • The actions that we have ta
Slide 17: Strategic Update
17 Strategic Update Nickyl Raithatha Chief Executive Officer
Slide 18: Our card-first model leverages data to increase customer loyalty and drive gift upsell
Our card-first 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 in UK & NL ✔ >70%2 cards given with a gift ✔ St
Slide 19: … which increases our resilience in more challenging conditions
… which increases our resilience in more challenging conditions 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 leader in a stable market Clear online market leadership
Slide 20: The cards market is stable and has been resilient through recession
The cards market is stable and has been resilient through recession, supported by relatively low price and high emotional relevance Market growth through the 2008-09 downturn Limited Impact in a Recession UK Single Greeting Cards Market Value Correlation with % change in real GDP(2) Year on Year Gro
Slide 21: The flexibility in our model has enabled us to maintain profitability
The flexibility in our model has enabled us to maintain profitability … Ability to shift emphasis • Short term prioritisation of resources towards cards between categories and events • Focusing of marketing investment ahead of peak trading events Ability to change the gifting • Moonpig “Moments for
Slide 22: Delivering on our three strategic pillars
… whilst continuing to deliver on our three strategic pillars Leveraging data and technology to make the gifting experience effortless Becoming the Building our brands so Ultimate receiving our product Gifting always means more Companion Ensuring the perfect range of cards and gifts for every occasi
Slide 23: A single unified technology platform across Moonpig and Greetz
Leveraging data and technology A single unified technology platform across Moonpig and Greetz … Voor hem Voor haar Mama Vader Zus • Greetz migrated onto our central technology platform three months ahead of plan • Our recommendation algorithms are optimising for the behaviour and preferences of the
Slide 24: … which will increase the pace of technology development
Leveraging data and technology … which will increase the pace of technology development Personalisation of Personalised promotions extended Magic cards: Using AI to arrange up My Account with logic-based throughout online customer journey to 10 photos on one card next best action 24
Slide 25: Initial launch of video cards and ongoing testing of Moonpig Plus
Leveraging data and technology Initial launch of video cards and ongoing testing of Moonpig Plus Video cards Moonpig Plus subscription service ● Customers access benefits such as free cards and ● Video greeting cards launched discounts for an up-front for 50 designs with roll out annual fee across o
Slide 26: Brand leaders in all of our markets, uniquely positioned through reminders
Building our brands Brand leaders in all of our markets, uniquely positioned through reminders to capture customer purchase intent Ongoing growth of reminders database enables communication Continued strong awareness for with customers at points of maximum purchase intent our card brands Reminders s
Slide 27: Expanded design range across cards and gifts at affordable price points
Expanding our range Expanded design range across cards and gifts at affordable price points Card range expanded to 45,000 designs1 with new licenced “Moments for Less” are a range of gifts at price points of sports and childrens ranges and Disney at Greetz between £8 and £15, visible within our cros
Slide 28: Experiences: range strengthening, marketing optimisation and technology journey
Experiences Our focus at Experiences has been range strengthening, marketing campaign optimisation and commencing the technology and data journey Opportunity to strengthen and differentiate New partnerships with popular the Red Letter Days and Buyagift brands brands around the UK • Almost a quarter
Slide 29: Encouraging early sales of Experiences gifts on Moonpig
Experiences Encouraging early sales of Experiences gifts on Moonpig, with technology development ongoing ahead of launching a digital gifting proposition Moonpig.com is already the Experiences Work ongoing to build Moonpig segment’s largest online retail partner digital gifting capability during H2
Slide 30: Resilience, flexibility and unchanged Adjusted EBITDA expectations
Resilience, flexibility and unchanged Adjusted EBITDA expectations 1 Solid H1 trading and a milestone period of delivery against our strategy Resilience and flexibility of our model highlighted against a 2 backdrop of challenging conditions 3 Unchanged expectations for FY23 Adjusted EBITDA 30
Slide 31: Moonpig Group plc
MOONHIG group ple
Slide 32: Appendix
moonpig group ple Appendix 32
Slide 33: FY23 Technical Guidance (1/2)
FY23 Technical Guidance (1/2) • Full year FY23 revenue cannot easily be compared against FY20, as the second half of that year was impacted by Covid-related lockdown restrictions from March 2020 Moonpig and onwards. However the preceding year provides a benchmark. Greetz Trading seasonality • For Mo
Slide 34: FY23 Technical Guidance (2/2)
FY23 Technical Guidance (2/2) Interest Rate Hedging Structure £m £160m £125m SONIA Swap Notional Swap rate 2.4725% Floor strike rate 0% £90m notional to 30 November 2022 £55m notional to 30 November 2023 £70m SONIA Cap Cap strike rate 3.0000% £70m notional Term to 30 November 2024 Nil 01 Aug 2022 30