MoneySupermarket shares jump as it buys cashback site Quidco

MoneySupermarket shares jump 8% as it buys cashback site Quidco – but it warns energy switching won’t be worth it this year

  • MoneySupermarket revenues from home services down 46% in energy crunch
  • MoneySupermarket’s insurance offering was also down 10% on ‘competition’ 
  • Business saw recovery in its money divisions as loans and borrowing jumped

MoneySupermarket shares jumped by more than 8 per cent in morning trading after it revealed it had bought cashback site Quidco for £101million.

The comparison website saw sales over the past three months significantly dented by the energy crisis, with revenue from its home services division down 46 per cent as prices rose and customers saw little benefit from switching provider.

MoneySupermarket, for which energy switching made up 16 per cent of revenues in the final three months of last year, said there would be little point in households moving supplier this autumn and winter.

It said: ‘We do not anticipate energy market conditions will improve this year and therefore expect that switching will be negligible in Q4’ 

Total revenues for the three months were down 10 per cent to £76.4million after a 46 per cent hit to the comparison website’s home services division

Home services revenues were £13.9million in the three months to 30 September, while its insurance offering was also down 10 per pent to £41.3million, as ‘competition for visitors intensified’ and travel insurance income remains at half of pre-Covid levels.

However, MoneySupermarket saw 58 per cent growth in its money division, which includes bank accounts, savings, credit cards and loans, to close in on 2019 levels. This brought in £19.7million for the third quarter, as borrowing conversion continued to improve and banking benefitted from further promotional deals.

Travel also saw a 29 per cent recovery in its TravelSupermarket business, but in the Covid-hit market revenues remain at just 30 per cent of 2019 levels at £1.5million.

Total revenues for the three months were down 10 per cent to £76.4million. 

Overall the firm was able to deliver a ‘slightly higher quantum of gross profit’ compared to the same time last year, as the firm’s strategy to ‘efficiently attract, retain and grow our customer relationships’ offset the impact of energy market conditions.

Despite the collapse in energy switching, MoneySupermarket said it expects full-year earnings to be in line with expectations.

Separately, the firm announced the acquisition of Quidco, for which it will pay £87million upfront with £14million deferred.

MoneySupermarket also owns the lucrative MoneySavingExpert website, which it bought from founder Martin Lewis for £87million in 2012. MoneySupermarket does not split our MSE’s revenue or profits in its results.

Founded in 2005, Quidco has 10 million UK members, providing online and in-store cashback, a cashback comparison tool and a mobile app.

Analysts at Peel Hunt said they expect Quidco to add £6million, or 6 per cent, to MoneySupermarket’s 2022 full-year forecasts.

The analysts added: ‘This deal broadens the revenue base rather than present an opportunity for cost savings.

However, that said, there is expertise within MoneySupermarket that can be applied to Quidco to improve growth rates and margin.

‘Also, the appeal of cash back offerings can be presented to MoneySupermarket’s existing audience.’

Peel Hunt maintained its ‘Add’ rating for MoneySupermarket shares with a target price of 310p. The share price is up 8.1 per cent today and is currently treading at 219.6p.

CEO of Moneysupermarket Group Peter Duffy said: ‘We have continued to make improvements in our business, building towards a leading data, marketing and technology platform.

‘We maintained our strong margin performance and good cash conversion despite the very tough energy market.

‘We are encouraged by the performance of money and the early signs of travel recovery following changes to travel restrictions.’