Moonpig Group plc (LON:MOON) has announced its half year results for the six months ended 31 October 2023.
Summary financial results
| Six months ended31 October 2023 | Six months ended31 October 2022 | Year-on-yeargrowth % | |
| Group revenue (£m) | 152.1 | 142.8 | 6.5% |
| Gross profit (£m) | 89.0 | 77.2 | 15.3% |
| Gross margin (%) | 58.5% | 54.1% | 4.4%pts |
| Adjusted EBITDA (£m)1 | 41.4 | 34.6 | 19.9% |
| Adjusted EBITDA margin (%)1 | 27.2% | 24.2% | 3.0%pts |
| Reported profit before taxation (£m) | 18.9 | 9.1 | 107.8% |
| Adjusted profit before taxation (£m)1 | 20.8 | 18.9 | 9.7% |
| Basic earnings per share (pence) | 4.1 | 1.7 | 141.2% |
| Adjusted basic earnings per share (pence)1 | 4.6 | 4.3 | 7.0% |
1 Before Adjusting Items of £1.9m in H1 FY24 and £9.8m in H1 FY23. See Note 3 and Note 19.
Results summary
· Revenue growth of 6.5% year-on-year to £152.1m. Pro forma revenue growth (adjusted for acquisitions) was 2.1%.
· Adjusted EBITDA growth to £41.4m (H1 FY23: £34.6m) reflecting improved gross margin rate and disciplined cost control.
· Adjusted Profit before Taxation of £20.8m (H1 FY23: £18.9m) reflecting stronger trading offset in part by higher interest charges and the amortisation of technology platform investments.
Strategic and operational highlights
The Group delivered revenue growth in H1 FY24:
· Trading performance has been underpinned by Moonpig, which grew revenue year-on-year by 4.9% and has consistently delivered growth at a mid-single digit percentage rate in recent months.
· Greetz revenue decreased by 9.8% year-on-year during H1 FY24 with a continued trajectory of improvement in trading across the period.
· At Experiences, pro forma revenue increased by 4.5%, albeit with lower new voucher sales. There has been good delivery against our strategy for this segment.
We have driven revenue growth through continued focus on technology innovation, including new features to drive order frequency:
· Encouraging traction with Moonpig Plus subscriptions, which are driving consistently higher customer order frequency.
· Greetz Plus subscriptions scheduled for roll-out during the second half of this financial year.
· Nearly 4 million customers used our innovative card creativity features, including video and audio messages, stickers for the inside of cards, emojis, flexible photographs, moveable text boxes and AI-driven customised messages.
We continue to improve how we leverage AI to personalise recommendations to customers:
· Significant upgrade to our AI capabilities, which now incorporate customer-level data alongside data from card personalisation into our gift recommendation algorithms.
· New features that make it easier for customers to attach a gift, such as “perfect pairings” for cards and gifts frequently bought together, suggested add-ons and a redesign of the product details page for gifts and flowers.
· A tailored online journey for every user, including personalised homepage banners and personalised promotions.
We are investing in technology at Experiences and upgrading how we cross-sell gift experiences to Moonpig customers:
· Full re-platforming of Experiences, with new home pages and product detail pages already launched.
· New payment options for Red Letter Days and Buyagift.
· Faster experimentation, including the introduction of upsell recommendations.
· An upgraded Moonpig user journey for gift experiences and launch of instant delivery of a digital gift with an e-card.
Our business is resilient, profitable and cash generative:
· Continued focus on profitability, with gross margin rate strengthened by 4.4%pts year-on-year. This includes the benefits of insourcing UK fulfilment at our Tamworth facility.
· Resilience is rooted in the stability of the greeting cards market and in our loyal customer cohorts, with 91% of Moonpig and Greetz revenue from existing customers (H1 FY23: 90%).
· Strong operating cash conversion on an annual basis, with cash inflows seasonally weighted into the second half of the year. Net debt maintained at £166.9m as at 31 October 2023 (30 April 2023: £167.7m, 31 October 2022: £208.8m).
· Net debt to pro forma Adjusted EBITDA decreased to 1.83x as at 31 October 2023 (1.97x as at 30 April 2023, 2.45x as at 31 October 2022).
· Significant liquidity and covenant headroom, with debt facilities committed until December 2025.
Outlook
Current trading remains in line with our overall expectations. Consolidated revenue growth in recent weeks has continued the positive trends seen in the first half, underpinned by growth at the Moonpig brand. Whilst the external environment remains challenging, our expectations for full year consolidated revenue and Adjusted EBITDA remain unchanged. We remain focused on deleveraging and expect to reduce the ratio of net debt to Adjusted EBITDA by approximately 0.5x during FY24.
Nickyl Raithatha, CEO, commented
“We are pleased to report year-on-year growth in both revenue and profit despite the challenging macro-economic environment, marking the Group’s return to revenue growth. Our focus on technology is driving this growth, underpinned by our resilient, profitable and cash generative business model, leveraging our unique use of data to drive customer loyalty.
We continue to innovate to attract and retain our loyal customers. During the period nearly 4 million customers used our innovative card creativity features such as audio and video messages, AI-generated text suggestions, stickers, flexible photos and digital gifting solutions. As the clear online leader in greetings cards, we remain 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 7:00am on 5 December 2023.
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].
Investors wishing to listen to the Q&A should register via the following link: https://www.lsegissuerservices.com/spark/MoonpigGroup/events/fba22c69-8df2-4cb2-9703-f06922f8268f
