Multitude AG (0R4W) Earnings Call Transcript

Dear shareholders, the past year was one of the transformation for us, a transformation on the next state of financial disruption. We successfully implemented our new agile way of working across the whole group, executed our new business strategy that has led us on the new growth path and rebranded the group from Ferratum to Multitude. As many times before during our more than 16 years of history, in 2021, our resilience was tested. This time, it was ongoing COVID pandemic. I am proud to state and show that our ability as a team to adapt, evolve and transform successful was evident. This is shown by each of our business units growing profitably again. We are also proud that we could stand by our customer in those challenging times. The thank you for those achievement must go to our fantastic team across the globe and naturally also to our customers, stakeholders and investors. But before we go more detail in the year, I want to share 4 key takeaways with you, the main headlines of what I want to share. The first one, we have implemented our new strategy, new branding and agile model of working. Second one, we have a strong asset quality. The third one, we are back to profitable growth in all 3 business units post COVID. And the fourth one, we are -- we have a diversified investment case portfolio through our 3 brands, SweepBank, which has strong growth rates and pretty good revenue per user, Ferratum with a strong profitability and growing revenues, CapitalBox that is ready for profitable growth. Last year, I wrote about how we believe that true disruption in finance is yet to come and that just a disruption across the industries has only ever been achieved through scalable platforms. This is what we have built this year to explain how we got to this point and show how every step to our journey has led us to pull position in the race of disrupting finance as an industry, allow me to describe our evolution briefly. We have evolved from our roots in pure consumer lending in the growth platform that cater and nurtures the wider variety of financial service. Ferratum as a brand is still with us now solely used by our oldest business unit, consumer lending in addition, we have a CapitalBox as a business lender and SweepBank as a shopping and financing app. As independent units, each can serve and execute on their own unique customer promise and experience. All of those independent business units and in the future more, gain in scale and from a strong tailwind by utilizing the foundation skills, experience and know-how in providing the digital financial service that what we have built over more than 16 years. SweepBank has already moved in the monetization phase and strongly benefits from the growing trend of online shopping. We have reached impressive unit level profitability even through that the overall EBIT was negative due to investing in the brand and development of the app. Our approach to mobile banking is proven to be unique as SweepBank has already given us a revolutionary average revenue per user or ARPU in the industry. Our ARPU last year was around EUR 190, which is as much as 10x higher than most of the neo banks in Europe. SweepBank is also different by being a mobile bank with a freemium credit card to finance short-term needs. Customers have praised the credit card and our app reached the top position in the App Store in Finland after the launch. Now we are ready to launch the card in German during the 2022. In addition, SweepBank offers prime loan for larger purchase. Overall, revenues nearly tripled in the past year, reaching the EUR 9 million, and we expect that growth to stay strong also going forward. We are excited to see that CapitalBox has found its growth mode in loan sales again. And it's already one of the leading player in its field as a digital business lender in the market it operates in. Paired with the tailwind for sales through a post-COVID boost in the economy, new service such as the launch of the Credit Line in Sweden, give additional opportunities for growth further rollout in this year. Improvement in our automated decision process and the simplification of the customer process as a whole have already shown increased customer satisfaction and loan sales. In 2021, CapitalBox recorded revenue of EUR 22 million and net account receivables was EUR 75 million, with loan sales having increased strong in last quarter. Last but certainly not least, Ferratum achieved a great result with 3 consecutive quarter of revenue growth and strong profitability again. It is important to note that even though this business unit is our oldest, it is still growing in our focus market, and we plan to expand it further. I'm also proud that even after all those years, Ferratum continues to satisfy its customers showing a whopping 94% customer satisfaction score. The changes in our brand have brought more clarity into customer communication and allowed us to become more precise in our customer promise. Our new strategy and operations have resulted in a solid position against the competition. As Multitude, we have shown a revenue turnaround since Q2 last year, recording average growth of 1.8% towards end of year. Yearly revenue decreased from EUR 231 million to EUR 214 million year-on-year. The overall lending portfolio across all business units has grown from EUR 361 to EUR 440 million, translating to 23% growth rate. We improved the payment behavior and decreased impairment loss over net account receivables to 16.2% compared to 25.2% in previous year. We improved our asset quality and have a strong cash and equity position at EUR 302 million and EUR 170 million, respectively. Our consolidated interest-bearing debt, excluding the customer deposits stood at EUR 145 million at end of the year. A perpetual bond issue in second half allowed us increased flexibility in financing planning. In addition, our cost of debt capital has been reduced to a 5-year low and stands at 1.76% at the end of the last year, excluding the perpetual bond. Across all independent business units within Multitude or as we call them tribes, we have successfully implemented our agile way of working that we laid on foundation for in 2020. This new way of working has clarified responsibilities and internal way of operating. It has allowed us to serve our customers better and faster and allowed us now to stand on the strongest foundation for scalability so far. Everything we do, we do to serve our customers. I'm proud to state that in addition to the higher than average satisfaction level across our brands, a further proof point to our highest level of customer experience is that contracts handled by our customer service agents decreased by 31% in the last year and that our chatbot can handle 71% of all the inquiries without human involvement. This means that our process works well and that our customers get 24/7 omnichannel service whenever they need it. As a purely digital player from the beginning, we have always operated in an environmentally sustainable manner. We will continue building on our achievements so far. And with our new ESG strategy, metric and framework, we want to have an even stronger ESG standing going forward. The new framework has been approved by the Board and is built up on our purpose and mission as the foundation, changing the world by making banking and finance accessible to everybody and positively impacting society. Our mission as Multitude, is to democratize financial service through digitalization, making them fast, easy and green. Furthermore, the framework includes our ESG goals on group and tribe level, ESG values, the process and governance and reporting and engagement. We will build on further context and content throughout '22 and beyond. In our first-ever annual report as a stock-listed company in 2014, I personally stated that we want to offer more than money to everyone. Our promise to customers is that we provide simple, easy-to-use product application, fast and transparent confidential loan process. I'm extremely happy that I can state that we have done precisely that and beyond. With the historical year of 2021 as the year of substantial transformation, we have built the strongest business foundation so far and are ready for a new era of financial disruption. Even though, we have transformed and will disrupt the industry, our customer promise remains the same as we stated in 2014. We will continue driving organic profitable growth and increase the level of automization in our business to allow even greater scale. In addition, we are exploring the new opportunities in terms of countries, products partners and M&A to accelerate further grow. One might wonder what it is that makes a company versatile and stable at the same time? I believe it is our entrepreneurial spirit that allowed us to fail and learn fast. It is that we have been around for so long that we have seen and navigated successfully through so many changes together as a team already. This allows us to expedited ability to react to change and find the right solution. It is a diverse team of exceptional talent. It is that we share one goal, the goal of become the most valued financial ecosystem. This ecosystem is what we have been building toward over all those years. And it is what we will accomplish. Thank you for joining our video and let's disrupt financial industry together.