MoneyHero's Turnaround And Future Growth Catalysts

The personal finance platform's gross margin rose by 16 percentage points in the second quarter, as it focused on its higher-margin insurance and wealth segments

Key Takeaways:

• MoneyHero's adjusted EBITDA showed strong sequential improvement in the second quarter as it concentrated on higher-margin products and achieving greater efficiencies
• Under a CEO appointed last year, the company's shares have rallied on growing investor confidence in its path to profitability.

After spending most of its life advising others on their finances, MoneyHero Ltd. (NASDAQ:MNY) began getting serious on its own finances last year with the naming of a new CEO. More than a year later, the company's transformation efforts are bringing it closer to profitability, with its second quarter marking a turning point as it reported positive net income, stronger margins and growing contributions from its wealth and insurance businesses.

While revenue was lower year-on-year due to the planned shift away from low-margin products, it grew 26% sequentially, a trend management expects to continue into the second half of 2025 as margins strengthen.

Its integration of AI across its operations and addition of digital asset collaborations, as well as its growing network of commercial partners, also contributed to the improving profitability.

Investors seem to be taking note, lighting a fire under MoneyHero's stock that has seen significant gains in recent months as more profitability milestones appeared. All that happened as the company began to show some early results under the leadership of Rohith Murthy, who became CEO in February 2024. The momentum continued as the company unveiled more encouraging results in the latest quarterly report released on Sept. 19.

Founded in 2014 with a dual headquarters in Hong Kong and Singapore, MoneyHero sits in a sweet spot between consumers and providers of financial products like insurance, wealth products and credit cards, meaning it has relatively low costs and risk levels. It helps consumers compare products in different categories, and then makes its money by directing them to the best products and collecting fees from the providers.

AI drives efficiency, lowers cash burn

As it hones its focus on businesses with high margins and profit potential, the company is also embracing AI to further lower costs and boost margins, including embedding AI in customer acquisition, conversion and service.

The company reduced customer acquisition costs per approved application by automating 70% to 80% of inquiries with AI, improving approval quality and first-contact resolution, Murthy said on the second-quarter earnings call. Other AI efforts include a WhatsApp agent for auto insurance in Singapore to boost conversion rates. These initiatives lower service costs and maintain headcount at current levels as volumes grow.

The AI integration contributed to lowering its cost of revenue to 51% of revenue in the second quarter of this year from 67% last year, while operating costs fell 37% year-on-year.

Future growth catalysts

Some of the company's latest major initiatives include moves into virtual assets and personal credit scores, showing MoneyHero is starting to move more aggressively in Hong Kong, which is trialing two related programs and has become its fastest growing market. The company's other major market is Singapore, while it also operates in Taiwan and the Philippines.

It holds out big hopes for the two new products being developed in Hong Kong, led by a Credit Hero Club that it's co-developing with local credit data company TransUnion, with a planned official launch by year end. That product, which could later expand to other markets, will provide users with access to their personal credit information, and suggest products that align with their credit needs. The product is expected to deepen customer engagement and potentially secure higher approval rates.

The other initiative involves an alliance announced in June with OSL Crypto Exchange, which could generate business by giving MoneyHero's users access to virtual asset trading through collaborations with licensed digital-asset platforms.

The company also realizes the importance of building its partner ecosystem and cultivating strong relations with the service providers on its platform. In July, it held an awards event in Singapore that brought together more than 170 partners, providing an opportunity to both cement collaborations and further strengthen ties. The list of award recipients, who were all presumably in attendance, reads like a who's-who from the local financial services sector, including names like HSBC, DBS, Citibank, United Overseas Bank (UOB) and Allianz.

"When I became CEO last year, we set a simple goal. Reshape MoneyHero for durable, profitable growth," Murthy said on MoneyHero's latest earnings call. "It's clear we are a simpler, stronger and more focused company than we were a year ago. This is reflected in our improved mix, rising margins and controlled operating expenses."

MoneyHero's latest results weren't completely rosy, notably including a 13% year-on-year revenue decline to $18 million for the three months to June. But officials noted the company's higher-margin insurance business posted strong growth for the quarter, while its wealth business, another key focus area, was flat year-on-year. Much of the declines came from areas the company is de-emphasizing due to their lower margins and non-recurring nature, led by credit cards, which still account for more than half of the company's business.

Officials were also quick to point out that despite the year-on-year revenue decline, MoneyHero's revenue grew about 26% from the first quarter to the second. They expect similar sequential growth for the rest of the year, as recent margin improvements are expected to continue. As that happens, the company expects to become profitable on an adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) basis by year-end. Its adjusted EBITDA loss of $2 million in the second quarter already marked a strong improvement from the $3.3 million loss on that basis in the previous quarter and $9.3 million loss a year earlier.

Margin boost

While the company's revenue fell year-on-year for the quarter, most of its other major metrics showed improvement as it focused on cost controls and high-margin products. Its insurance business rose 18% year-on-year to $2.6 million, growing to 14% of revenue from 11% a year earlier. Its wealth revenue was flat year-on-year, but also rose to 13% of revenue from 11% a year earlier. Those two business lines, which have become key focuses, collectively made up 27% of revenue, up five percentage points from a year earlier, and the company expects the contribution could grow to 30% by year end.

Hong Kong's contribution rose to 43% of the company's revenue in the latest quarter, up from just 35% a year earlier, while Singapore stayed constant at about 43% as well.

As it focused on higher-margin products, MoneyHero's cost of revenue fell 34%, far faster than its revenue decline, helping to sharply boost its gross margin to 49.5% from 33.3% a year earlier. That improvement, combined with a 37% decline in operating costs, were the main factors behind the sharp narrowing of the company's adjusted EBITDA loss. On the bottom line, the company reported a net profit of $216,000, reversing a $12.2 million loss the previous year.

MoneyHero's strategic roadmap highlights the company's transition to becoming a leaner and AI-optimized platform. With sequential revenue growth, an improving insurance and wealth business mix, and future growth catalysts like Credit Hero Club, the company appears to be on track to reach adjusted EBITDA breakeven in the fourth quarter.

Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.