Moonpig Group delivers full-year growth in both revenue and profit

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Moonpig Group plc (LON:MOON) has announced its final results for the year ended 30 April 2024.

Summary financial results

	Year ended 30 April 2024	Year ended 30 April 2023	Year-on-year growth %
Revenue (£m)	341.1	320.1	6.6%
Gross profit (£m)	202.5	179.7	12.7%
Gross margin (%)	59.4%	56.1%	3.2%pts
Adjusted EBITDA (£m)¹	95.5	84.2	13.5%
Adjusted EBITDA margin (%)¹	28.0%	26.3%	1.7pts
Reported profit before taxation (£m)	46.4	34.9	32.9%
Adjusted profit before taxation (£m)²	58.2	55.4	5.0%
Earnings per share – basic (pence)	10.0	7.8	28.2%
Earnings per share – diluted (pence)	9.6	7.7	24.7%

1 Before Adjusting Items of £3.5m in FY24 and £13.1m in FY23. See Adjusting Items at Note 6 and definition of Alternative Performance Measures below.

2 Before Adjusting Items of £11.8m in FY24 and £20.6m in FY23. The Group has amended its definition of Adjusting Items such that £8.3m of acquisition amortisation (FY23: £7.5m) is treated as an Adjusting Item in both the current and prior year. See Adjusting Items at Note 6.

Results summary

· Delivered revenue growth of 6.6% to £341.1m driven by strong performance at the Moonpig brand.

· Adjusted EBITDA growth to £95.5m (FY23: £84.2m) reflecting revenue growth and improved gross margin rate.

· Adjusted profit before taxation of £58.2m (FY23: £55.4m) reflecting stronger trading offset in part by higher interest charges and the amortisation of technology platform investments.

Strategic and operational highlights

Organic revenue growth accelerated through the year:

· Underpinned by Moonpig, which grew revenue by 8.2% through growth in both orders and average order value.

· New customer revenue returned to growth at Moonpig in the second half of the year.

· Improving trajectory at Greetz, with revenue declines abating to 5.3% in H2 FY24 from 9.8% in H1 FY24 and 20.4% in FY23.

· Across Moonpig and Greetz, growth in orders improved from a decrease of 5.1% in H1 to an increase of 5.2% in H2 FY24.

· At Experiences, pro forma revenue increased by 1.5% year-on-year to £48.6m. This includes mid-single-digit million upside from temporarily higher breakage on gift boxes and vouchers that were sold during Covid with extended expiry dates; these expiry dates have now passed, so this benefit is not expected to recur in future years.

Strong cash generation:

· The Group remains strongly cash generative, with operating cash inflows of £74.2m (FY23: £56.2m).

· Net leverage improved to 1.31x at 30 April 2024, from 1.99x at 30 April 2023.

· Significant liquidity and covenant headroom, with a new £180m four-year, committed revolving credit facility in place.

Continued technology innovation to drive higher customer lifetime value:

· 89% of Moonpig and Greetz revenue (FY23: 89%) delivered from existing customers.

· Moonpig Plus subscriptions surpassed our expectations with over half a million members within a year of launch.

· Greetz Plus launched in January 2024 and is following a similar encouraging trajectory to the UK.

· Database of customer occasion reminders grew to 90 million (April 2023: 84 million).

· Our creativity features were used over 10 million times to add video and audio messages, “sticker” images, digital gift vouchers and AI-driven customised messages to the inside of greeting cards.

· Same-day gifting launched on Moonpig, by combining of e-cards with new digital gift experiences. Encouraging early traction across peak event days so far.

· Technology re-platforming of the Red Letter Days and Buyagift websites continues at pace with a full rebuild of the front end now complete.

Enhanced deployment of AI to personalise customer experience:

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· Significant upgrade to our algorithms by incorporating individual customer level data into our gift recommendation engine, unlocking the ability to show different price ranges to different cohorts.

· Introduced personalisation elements into all parts of the journey, including homepage banners and promotions unique to the individual customer.

· Enhanced the capabilities of our AI-powered Customer Service chatbot, driving a significant reduction in the number of customer contacts being handled by agents.

· Launched AI semantic search capability, using large language models to better understand and interpret customer search terms, which will drive increasingly more relevant search results over time.

Capital allocation

We remain disciplined in our approach to allocation of capital and continue to prioritise organic investment to drive growth, including investment in technology and marketing. Future investments may extend to new geographical markets, contingent upon achieving optimal customer acquisition costs and confidence in customer lifetime value. We will also selectively consider value-accretive M&A opportunities, maintaining a high threshold for strategic and financial returns.

Over the past two financial years, we have also focused on balance sheet deleveraging. In FY24, we reduced net leverage from 1.99x to 1.31x, a decrease of approximately 0.7 turns. Given our strong cash generation, there is potential for a similar reduction in net leverage in FY25. To maintain an efficient capital structure, our target is to operate with net leverage of approximately 1.0x over the medium term, with flexibility to move beyond this as business needs require.

We will continue to prioritise investment to drive the execution of our growth strategy. With our consistent strong operating cash generation and the progress being made with deleveraging, we will also have the financial flexibility to consider returning excess capital to shareholders.

Outlook

Trading since the start of the year has been in line with our expectations with both new and existing customer orders in growth. In the context of the current macroeconomic environment, we expect FY25 revenue growth (after adjusting for temporarily higher breakage on experience vouchers in FY24) at a mid to high single digit percentage rate, underpinned by growth in orders at the Moonpig brand.

Our business is well positioned to deliver sustained growth in revenue, profit and free cash flow, driven by our continued focus on data and technology. With respect to the medium-term, we are targeting double digit percentage annual revenue growth, an Adjusted EBITDA margin rate of approximately 25% to 26% and growth in Adjusted earnings per share at a mid-teens percentage rate.

Nickyl Raithatha, CEO, commented

“We are delighted that the Group has delivered full-year growth in both revenue and profit, with trading performance strengthening across our peak trading periods in the second half of the year. This has been driven by our multi-year investments in technology and innovation, which continue to foster extraordinary customer loyalty.

The Moonpig Plus subscription scheme has exceeded our expectations, passing the milestone of half a million members within one year. Our investments in new AI technologies are delivering an increasingly personalised experience for our customers. As the clear online leader in greetings cards, Moonpig Group is well positioned to benefit from the long-term structural market shift to online.”

Investor and analyst meeting

The full year results presentation will be available on the Investor Relations section of Moonpig Group’s corporate website (www.moonpig.group/investors) shortly after 7:00 am on 27 June 2024.

Nickyl Raithatha (CEO) and Andy MacKinnon (CFO) will host a Q&A for analysts and investors via webcast at 9:30am. Please note that the presentation will not be repeated during the webcast.

Analysts wishing to register for the event should email [email protected].