MONY Group plc (MONY) Earnings Call Transcript

Good morning, and welcome to MONY Group's 2026 Interim Results Call. We are joined today by Peter Duffy, Chief Executive Officer; Niall McBride, Chief Financial Officer; and Jennifer Cooke, Head of Investor Relations. [Operator Instructions] I would now like to hand the call over to Peter. Please go ahead.

Thank you, and good morning, everybody, and thank you for making the time to join us this morning. Hopefully, you've all had a chance to watch the results video that we released at 7:00 a.m. But perhaps before we open up for questions, let me just go through a quick recap. Our business only succeeds when we save customers' money. So in the first half, we were absolutely thrilled to have helped U.K. households save an estimated GBP 1.5 billion. And it's through doing this that we delivered a strong start to the year. Record revenue was up 6% on a like-for-like basis. That was to GBP 227 million. Adjusted EBITDA was up 3% to GBP 76 million. That's our fifth consecutive interim period of growth. I think that really speaks to the strength in our breadth, and we've expanded basic and adjusted EPS by 4% and 5%, respectively. We've grown our engaged member base. We've added an additional 1 million members to the SuperSaveClub over the last year. We now have 2.5 million members. Now I went through some metrics, which I think really spoke for themselves. MoneySavingExpert now has over 3.5 million app downloads and 9 million people signed up for the weekly MSE newsletter. And Quidco continues to offer more ways for customers to engage and save with us. But I think it's also been the strategic progress as well as a strong financial delivery that's characterized the half. We are leveraging AI for growth to sharpen the customer experience, to bring new propositions to the market faster and to run the business more efficiently. We've transformed the MoneySuperMarket app into a genuine everyday financial companion, one trusted place to compare, to switch, to save, to invest, to earn cash back, and it's going to give more reasons for households to come to us directly more often. And this innovation is moving at pace. We've launched investments by MoneySuperMarket now live. We've launched initially with a fund supermarket, enabling customers to invest from just GBP 1. We're launching our own digital broker, starting with Motor Insurance, that's SuperSaveClub Insurance. That's coming in the coming days, and that means customers can compare, can buy, can manage, can renew entirely within our own app. And then we also announced this morning that we've opened the waitlist for our business banking proposition. Our first dedicated SME proposition that will be launching in August. So I'm sure you'll agree that we have been busy. And for shareholders, we're planning to return over GBP 90 million this year. That's through our ongoing GBP 25 million buyback, but also our progressive dividend. So our brands, our established vendor base, our capacity to leverage AI, thanks to our leading platform, it's all putting us into a strong position. It's a powerful combination. We are uniquely positioned, and we're confident in the opportunities ahead, and we've got plenty more to come. So with that, let's open up to Q&A.

[Operator Instructions] The first question is from Andrew Ross from Barclays.

I've got 2 questions, please. First one is about double-clicking into your PPC costs and the dynamics in terms of gross margin. So the online spend was up 34% year-on-year on a like-for-like basis, excluding travel in H1. And hearing you that there's been a lot of inflation through the PPC costs. But when I listened to your remarks, it kind of sounds like you're starting to see now some stabilization in that market. I was hoping you can give us a bit more color in terms of what gives you confidence there? And I guess, particularly in the context of Google now looking to implement AI mode into the search, why would we be so confident that isn't going to be further squeeze on acquisition from Google funnel? And as part of that, if you can just give us some expectations about how you're thinking about your gross margin into H2 and into 2027, that would be very helpful. And then second question is on the dynamics in the energy market. And any color you can give us in terms of what you're seeing in Q3. Obviously, the price cap is high. There seems to be some pretty good savings out there on from those e-mails. But then there's also still a lot of volatility in terms of geopolitics and wholesale costs. So what are the kind of big dynamics we should be thinking about when thinking about energy into H2?

Great. Thanks, Andrew. I'll do energy. Perhaps, Niall, do you want to kick off with PPC costs?

Yes. So I think you're right, Andrew, there's a lot of change in dynamics over the course of the last year. So I think we were talking last year about uplift -- sorry, inflation in PPC costs of sort of 20% plus. And the reason that we're seeing that level of inflation coming through really was the introduction of AI overviews. And you're calling out the extension of that now into AI mode as well, into the search results. So a year -- more than a year ago now, many, many results didn't have that there at all. Now actually, Google has extended that sort of far and wide throughout its estate. What that also drove though was SEO was obviously pushed further down the page. And what we talked about was that we saw a lot of volatility in the SEO algorithms. You could be kind of position 1 in the morning, position 10 in the afternoon and sort of move up and down between that. And we saw a different layout of PPC. So PPC now looks very different to how it used to look. The sort of the classic box at the top of the page has kind of been shunted down and many of those results now just look like any other results. So that's why we saw that level of uplift coming through. A lot of that change has now happened. That sort of rollout across the estate is there. And what we've seen in the first half is a moderating of that level. Obviously, we are comping it into these numbers. So part of the sort of uplift that you're seeing there is the comping from this year. If you look at H2 last year to H1 this year, we're in sort of broadly similar places, but we are taking that inflation through. At the -- exiting the period, we're running at about 8% at the unit cost level for Google PPC. So that's obviously well down on the 20%, but also, I think a reflection of that settling for the moment of where Google is at. And I'll hand over for energy there.

Great. Thanks, Niall. So just to recap, Home Services was up 30% in the half. Look, our power in energy comes from 3 things really, editorial reach, our deep provider relationships and exclusive deals. And I think what we've been able to show in the first half of the year is that when we get those deals coming in, consumers are very interested in getting value on their energy. They really are up for switching essentially. And I think there have been questions in previous sessions about is the market as competitive as it has been, say, 5 years ago, I think what we've slightly proven out in the last 6 months is that it can be. But your question, Andrew, is about the dynamics. And I think the dynamics really are about deal flow. And it's the relationship between the wholesale markets and the price cap essentially. So the price cap, obviously is going up, and that sets the maximum amount that the customer will pay. We need wholesale markets to be at a point where providers are then able to offer deals that provide value for consumers. Now I think last Friday, wholesale markets weren't far off where they were at the start of the war. Let's not lose hope on that because it's been extremely volatile and these things are very dynamic. But I think that is the slight unknown that we face going into H2. We're very confident about our ability to reach customers. We're very confident in our relationships. We're very confident that this competitive market is attractive to consumers. It's just about the rate of deal flow.

Got it. That's helpful. If I could just follow up on the first question and extend it into your thinking then on gross margins into H2, and kind of how much incremental compression is baked into your guidance, that would be helpful.

So I think take a step back on gross margin, Andrew. It's always a function of mix. We've launched Which? And Blue Light Card as B2B in this half. Obviously, those will hopefully scale up as we go through the second half. As we've talked about in the past, when we will absolutely do those B2B deals, they add pounds, but they will affect the margin. And some of that is -- some of the effect that we've seen in H1 is a mix effect as well. So if you think in the sort of 2/3 PPC, 1/3 business mix, and that comes from a number of different areas. So I think I'd say PPC feels more stable. The business mix then will evolve as it always does.

We will now move to our next question from Jo Barnet-Lamb from UBS.

Yes, 3 from me. So firstly, SuperSaveClub is obviously doing fantastically, but we've now seen the launch of the club in your largest vertical insurance and with a differentiated AI-powered experience. You say initially, the financial contribution will be modest. Is that sort of a 2026 comment? Should we see it sort of more materially aiding the group through '27? A little bit more color on your thoughts around that. Secondly, we've clearly seen an accelerated cadence of product innovation. I assume sort of aided by the foundational work you've done on tech and data, but also aided by AI efficiency savings. Clearly, we'll see the benefits of that new product in due course. But do you expect to leave that cost in to keep that faster product cadence going forward? Or over time, could we see some selective cost savings from here? And then finally, you launched on ChatGPT earlier this year. Just if you could give us a bit more color on what you're seeing around that post launch and sort of how much traffic is coming from it? Just a bit of an update there would be helpful.

Thanks, Jo. So look, maybe I'll try and sort of answer your question strategically and then ask Niall to pick up the sort of numeric dimensions to it. So yes, on SuperSaveClub, we've done -- it's maybe worth just taking a step back, Jo, if you'll let me, and talk about the context of what's happened here. So if you go back to what we did with MoneySuperMarket within the group, all the technology was fragmented. We brought that together so customers could essentially buy more things more easily, and that was the first base that we hit. The second base was then to incentivize them to do that with the SuperSaveClub. The third base is then to bring that all together in the app. And then the fourth base is then to begin to infill some of the gaps in the proposition, savings, investments and in this case, brokered insurance, which would just provide a more complete offer for the customer. So as a result of having what is now becoming a sort of closed user group of customers who are putting their hands up to say they're interested in saving money, we can think about how we can begin to offer our consumers more value there. We can think about how we can offer providers more value there. And so brokered insurance is one way that we can begin to do that. You'll know that our model historically has worked on a CPA basis. Brokered insurance takes us into a place where we can actually begin to renew as well as just get that one-off acquisition benefit and the customer can take advantage of providers who are absolutely bidding for their business. So we think it's an important strategic move. We're starting off with Motor. You can probably guess where that would go to. We're going to take it step by step, which is really what the guidance is about in terms of limited '26 impact because we have to get our pricing right. We have to roll that out. We have to understand how customers react to it. But I'll get Niall to pick up on that in a little bit more. Accelerated cadence of NPD. So yes, new product development has really kicked off, as you can see. That has, to a large degree, been facilitated by the tech and data work that we've done over the last few years. But obviously, because that is well structured, it puts us in a really strong position to take advantage of everything that is AI. So I'd point to the fact that our CapEx of GBP 5 million is the lowest in 10 years. But equally, it's been a year of -- or half of phenomenal delivery in terms of our new products there. So will that cost stay? I think that's a very low level of CapEx anyway. So I'm not suggesting that, that is going to wither away to nothing. And if you want to have a tech stack that is healthy and is current, you're going to have to continue investing in it. But please don't hear that there's going to be some massive step-up in it. It's particularly low at the moment. We will just keep that at very sensible levels. And then in terms of ChatGPT, so you'll remember that we did 2 major things, I think, or we announced 2 major ChatGPT initiatives at the full year. The first was to put price optimizer on to our motor insurance journey. And if you remember, that's the thing that says to customers, the answers you're giving maybe driving unnecessarily high quotes. So you're -- here's an example. You're saying that you drive 8,000 miles a year, but when we check your MOT, we see that you only drive 6,000 miles a year or you're suggesting a certain level of excess, not understanding what that is doing to the overall premium. So we make suggestions to customers in that application process, and they correct their answers if that is something that makes sense to them. And we've seen about 200,000 people save, on average, GBP 25, really, really significant. At the same time, we launched initially with 4 products, but we've now rolled that out to all the products that are on SuperSaveClub. Travel insurance was the last to go live just a few weeks ago now. And that's for customers who want to essentially operate entirely within the ChatGPT environment. We're not releasing numbers on that, Jo. But what I can say is it's nowhere near the scale of using AI on existing journeys. Now we are an early adopter of ChatGPT advertising. They've got a number of companies in the U.K. who are trialing advertising with them at the moment. We're just going through that. Let's see how that begins to change things. But as we sit here today, we're still getting very limited traffic coming through LLMs. Essentially, whilst you're seeing 1 in 5 searches in the U.K. coming through LLMs, really for us, we haven't got significant volume coming through yet. Niall, do you want to pick up on the when question that Jo has asked.

I think probably going to give you an unsatisfactory answer, Jo, and then I'm going to say we're going to -- we are doing exactly what Peter said, which is we're testing, and we're learning. We've just launched it, and it's going to take us a little bit of time to kind of get it up to speed. So as you can imagine, we're going to roll that out slowly and sort of ramp it up to the amount of traffic that sees it. This is for SuperSaveClub to start with. And basically, I'd say, remember the comparison will still be a very big part of it. This is still a -- compare is the first thing you do in broker comparison. The core product will still be there. The difference here is we're expanding it so that you can compare, buy, manage and renew. So I think we will see it scale up. The first KPI that we'll be measuring, if you like, is really around engagement. This is a connected ecosystem of things where we're bringing together for people being able to manage their everyday bills, their savings, their investments. And what we want to see is people engage in this product as well. So that's what we'll be looking at as well as just seeing -- getting the product right over the next number of months.

Useful color there. I guess maybe just one very brief follow-up. But I mean, is it fair to sort of propose that the benefits of the SuperSaveClub are going to be seen more materially over time as you fold in your largest product area in insurance. I mean, obviously not having had insurance in there means that the benefits of the SuperSaveClub have been materially more limited. And as you roll that out and you get that product market fit right, you should see the benefits of compound through to the group selling materially.

So I think what I'd say to that, Jo, is, to some degree, SuperSaveClub is changing. What started as an incentive program for certain products is now becoming this closed user group where we're looking at it in a way that says, how can we help customers save more across a broader range of activities. So we've launched investments as an example. If you want to buy a Vanguard Fund, it's cheaper to buy it with us than it is with Hargreaves. We've launched savings, for example. If you want to get a top paying instant access account, so I think Revolut offered 3.5%, 3.75% at the moment. We're at 4.1%. We're on better deals. If you want to get your car, your home insurance through us, we'll guarantee that we give you the best price. And the point is that this is all in one place, and we have simplified it, and we have made it really easy for customers to do it. So I think the dimension that we're looking to unpack here is how do we get our existing customers to do more with us. And then, of course, there are some changes in the offer as we begin to put our own product through that, whether that's our own instant access savings account or our own motor insurance policy. And the consumer has a real advantage in doing that. Just one thing on the motor insurance policy. We don't charge you any extra for paying monthly. That is really rare in the market and many, many customers are going to find that beneficial. 40% of customers pay for their car insurance monthly. A lot of the 60% only pay it annually because they have to pay a fee to pay it monthly. So I think that's going to be a very big benefit for many people.

We'll now move to our next question from Luke Holbrook from Morgan Stanley.

My first is just on the motor insurance premiums, which looked like they're beginning to rise if I look at external data in the past quarter for the first time in 2.5 years. I'm just wondering what you're experiencing through your platform and the possibility of premiums rising and volumes improving in car insurance through the second half of this year. And then the second question that I have is just on the consolidation in the industry and given where the backdrop of AI, valuations and where they're sitting, what's your view on the potential for more consolidation and also on M&A, it would be useful to hear your thoughts there.

Niall, do you want to pick up motor insurance premiums and the consolidation?

Yes. So I think what we've seen in the half, obviously, is that the sort of fall in premiums has been narrowing. So by definition, there will be some stuff in there that is rising. But when we look at it, minus 9% was what we saw in terms of deflation in the second half of last year, minus 5%. So it's definitely narrowing up. And clearly, what we saw a number of years ago, raising prices does cause people to come. I would put this in the context, though, we have a very, very robust switching market this year. This is a large market. We're not out there saying that this is sort of a very down year.

No, I think that's absolutely right. We said at the full year back in February that we felt we were sailing into calmer waters, and kind of war on the other side of the world aside. That has broadly been the case, I think, in the first 6 months of the year. Luke, your second point then was on market consolidation. So look, the balance sheet is clearly an advantage to us. But I think also what you're seeing in our announcement today is a very thoughtful approach to when we would do M&A versus when we would actually build out organically. Many of the initiatives that we put in place, savings, investments, business banking, even the brokerage side, you could have actually got there through M&A, but we've made a decision that says with everything we've done on the platform, with everything we can do with AI, it makes more sense for us to build that out ourselves in a way that absolutely ticks the boxes that our customers kind of require. So that means the balance sheet is there when there is an opportunity which is attractive for us, which is attractive for our shareholders, which is attractive for our customers. And as you would expect, we scan the market. So we look at a lot, we consider a few, we do very little, which I think is just how it should be really. So just because there hasn't been any meaningful M&A for quite a while, don't think that it is because we are not looking. We absolutely do look, but we just have a very high hurdle that needs to be jumped, particularly when the share price has been at a level that it's been over the last few months.

Our next question is from Tim Ramskill from Bank of America.