In a trading update, the FTSE 250-price comparison site said revenues had risen 19% to £104.9mln in the quarter, boosted by a 70% jump in its Home Services arm to £19.6mln as a result of the uptick in switching numbers. On an underlying basis, excluding comparison firm Decision Technologies which was acquired in August, revenue was up 12%.
The UK’s energy regulator, Ofgem, announced in February that a price cap of two frequently used tariffs would increase due to higher wholesale prices, prompting the flurry of switching.
Growth in the larger Money and Insurance arms was less dramatic, with revenues up 9% and 3% respectively.
The company said motor insurance had benefited from improved conversion, which had helped offset subdued trading in life insurance as a result of more incentives from competitors.
Looking ahead, Home Services was expected to “moderate” in the rest of the year as the dust settled on the price cap, although the firm said it was confident of meeting current expectations.
READ: Moneysupermarket.com up as full-year numbers accompanied by additional cash return, chairman news
The group’s chief executive, Mark Lewis, added that the company had brought in “new branding and advertising” along with new products like Credit Monitor as part of its innovation strategy.
The firm is trying to reinvent itself by making itself more personalised and moving deeper into product areas like mortgages, in a push to become a more subscription-style service as opposed to the tradition price comparison model which relies on heavy marketing spending and is more vulnerable to disruption by search engine algorithms.
Further to its announcement of a £40mln return of cash to shareholders in its full year results in February, the company also said it would pay out a special dividend of 7.46p per share on 21 May.
Investment likely cause of maintained guidance, says analyst
Russ Mould, investment director at AJ Bell, said that the first quarter numbers were “all the more impressive when you consider demand for [the company’s] services are often seen as being linked to the fortunes of the UK economy”.
“While the latter might be struggling, mired in political and economic uncertainty, Moneysupermarket is forging ahead investing in new technology and expanding into new areas.”
Mould added that the need for increased investment in its new strategy was probably the reason why Moneysupermarket was keeping its full year guidance unchanged despite the “stellar” first quarter.
“A new strategy built around a tailored service which would push products to consumers based on their needs and profile is seen as a potential game-changer for the business. It could create more of a subscriber-based model, with a stronger connection with users which could help address the significant marketing costs and competition associated with the price comparison market.”
Performance beats predictions at Liberum
In a note to clients, analysts at Liberum said the first quarter trading had been “much stronger” than they had expected, with the underlying revenue growth of 12% beating their own estimates of 7%.
“We would expect consensus revenues to tick up but the company has said it is happy with current market consensus, suggesting adjusted profit numbers will stay the same.”
Liberum has a ‘buy’ rating and 520p target price on Moneysupermarket.
In early deals on Thursday, shares were up 7.9% at 375.9p.
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