Shares of Chester-based price comparison website Moneysupermarket.com fell 15% after it said its earnings would not grow this year as it tries to reinvent itself to focus on more personalization.
Moneysupermarket.com, which offers deals on products like insurance, credit cards and utilities, said its revenue would also grow more slowly than the market while it shifts strategy.
For the year ended December 31, 2017, Moneysupermarket.com reported a 5% rise in core earnings to £127.2 million on revenue of £329.7 million, up 4%.
In its outlook, Moneysupermarket.com said: ” … we have growth plans to extend price comparison and add new market growth with innovations to further personalise price comparison, making it even easier for users and we will redefine our mortgage comparison.
“To achieve this, we are investing £5 million to build out our product engineering teams, focused on customer experience optimisation.
“Our core markets are expected to grow at around 6-7% and we forecast our growth to be slower than that in 2018, accelerating afterwards.
“We have started the year at a similar growth rate to last year.
“This means that adjusted EBITDA for 2018 is expected to be broadly flat before growth resumes from 2019 onwards.
“We also expect to incur one-off transitional costs of £6-9 million during 2018, relating to the necessary reorganisation.”
Analysts at Peel Hunt wrote: “FY17 revenue was a shade behind but profit slightly ahead.
“Today will be dominated by the reduced guidance on revenue – growth is slightly slower than the broader market in FY18 exacerbated by incremental IT staff costs to fully exploit the substantial CAPEX of recent years.
“The result will be a flat EBITDA year-on-year profit performance.
“The market will react weakly to this.”
Analyst Ian Whittaker at Liberum told Reuters: “While the new strategy does make sense, it highlights the fundamental issue, i.e. that barriers in price comparison websites are low, although Moneysupermarket’s new strategy is looking to address that.”
Kamran Hossain, analyst at RBC Capital Markets, said: “The medium term plan for Moneysupermarket seems sensible, and shows that the company is aware of the challenges and opportunities that lie ahead.
“However, 2018 is likely to be disappointing for earnings.”
Moneysupermarket.com CEO Mark Lewis said: “In 2017, customers saved more through us than ever before – £2bn.
“And we’re not stopping there.
“We are committed to leading the way in price comparison to make saving with us easier, quicker and simpler.
“Our goal is to offer our customers ways to save that they didn’t know existed and to do so in a way that is as effortless as we can make it.”