Shares in Moneysupermarket.com (MONY) soared to an all-time high after the price-comparison website issued better-than-expected first-quarter numbers. Total underlying revenues rose by 12 per cent to £105m – above broker Numis’s estimate of “high single digit” and Liberum’s forecast of 7 per cent. These metrics exclude Decision Tech, the communications comparison business bought last August for £40m.
Home services was integral to the group’s success, with sales here escalating by 70 per cent to £19.6m. Moneysupermarket attributed such growth to “exceptionally strong” levels of energy switching over the three months to March 2019 – stemming from attractive offers, and the announcement of an increase to the energy price cap.
Earlier this year, Ofgem – the UK’s energy regulator – revealed that caps for default energy tariffs would rise by £117 to £1,254 a year as of April, while pre-payment meter limits would rise by £106 to £1,242. It cited higher wholesale costs as the driver behind this ascent, and noted that “households could save more money by switching”. Unsurprisingly – given this short-term stimulus – management at Moneysupermarket expects home services’ performance to “moderate” throughout the year.
Elsewhere, the group’s money division reported a 9 per cent improvement in revenues to £25.3m – although, in fairness, this benefited from a favourable comparison with a weak quarter in 2018. Meanwhile, the largest business – insurance – edged up by 3 per cent to £48.3m, reflecting improved conversion within motor insurance tempered by “subdued trading” in the competitive life insurance arena. So-called ‘other revenue’ was up by over three-quarters to £11.7m, including £6.2m from Decision Tech.
In all, bosses remain confident about meeting current market expectations. Liberum does point to the likelihood of challenges in home services in the third quarter because of tough comparatives and a reduction in the price cap – but concedes that “the strong start to the year is an obvious plus”. It has previously suggested that Moneysupermarket could become something more akin to a “subscription-style” business, resulting in lower marketing expenditure, greater revenue momentum in future years, and higher margins.
