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PensionBee in expansionary phase

The online pension provider has seen an encouraging rise in assets under management
September 21, 2021
  • Rising marketing and headcount costs
  • Targeted profitability by 2023

At this stage of its development, PensionBee’s (PBEE) financial performance is of secondary importance to its market capture, particularly given that the online pension provider has given itself a couple of years to move into profitability. Nevertheless, revenues more than doubled at the 2021 half-year, and if you discount marketing costs then the negative cash profit margin decreased from 45 to 28 per cent – progress of sorts. 

The company raised £55m on the High Growth Segment of the London Stock Exchange in April this year, although cash profits contracted as employee and marketing expenses ballooned through the early expansionary phase. Headcount increased to 151 full-time employees from 99 at the end of June 2020. And there were also increased costs linked to share-based payments, specifically the accelerated vesting of options. 

The increased capital demands are understandable, but new business volumes are more illuminating. Assets under management grew by 117 per cent from the 2020 interim mark to £1.99bn, aided by a stable retention rate of 95 per cent. The number of invested customers increased by 81 per cent to 92,000, but pro-rata costs were on the rise, so any benefits of scale were wiped out by the costs of expanding the business.

It’s still early days, so we can expect further investments in marketing, coupled with the roll-out of new features on the technology platform, tempered by a disciplined approach to customer acquisitions costs, according to management. Bosses expect high double-digit revenue growth through the remainder of the year, yet there is always a significant ‘blue-sky’ element to these types of market disruptors. So, if you’ve already bought shares, you may as well stay invested. Hold.

Last IC view: Hold, 168p, 22 Jul 2021 

PENSIONBEE (PBEE)   
ORD PRICE:148pMARKET VALUE:£326m
TOUCH:147-151p12-MONTH HIGH:170pLOW: 149p
DIVIDEND YIELD:NILPE RATIO:NA
NET ASSET VALUE:24pNET CASH:£55m
Half-year to 30 JunTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20202.59-5.22nanil
20215.40-12.8-6.54nil
% change+109---
Ex-div:-   
Payment:-