Ten Lifestyle Group PLC

LSE:TENG

Earnings Call Transcript 2023-Q2

[Operator]

Welcome, everyone, to Ten Lifestyle Group PLC's webinar for its half year results that were announced yesterday. I'll hand over to Alex Cheatle, CEO; and Alan Donald, CFO in a moment, we will present the results. And then also we'll carry on a Q&A following results in which you can [indiscernible] any questions, please either type them into the chat function or raise your hand, everyone's questions. So, without any further ado, I will hand over to Alex to start the presentation.

[Alexander Cheatle, executive]

Great. Does that come up okay? Super. Well, hello, everybody. Thank you very much for coming along today. We're day 2 of our investor road show and good to have you all on this call. So essentially, as an overview, we'll dive straight in, we're very pleased with the financial results and the operational results over the last 6 months. So, revenue was up 49%. EBITDA, we did more in the first half of this year than we did in any previous year previously. And we also had our main positive profit before tax. So that was a big step forward, and we are now touching the close to cash generation, which we target for the current 6-month period that we're in now. particularly pleased to be able to report another period where we've had 100% corporate client retention. So, we've retained every corporate client that's worth more than GBP 250,000 a year with us. And we've never yet touchwood lost a corporate client where we've launched our digital platform. The net corporate revenue retention rate means that of the -- if we had GBP 100 of revenue last financial year or the last comparative period, what revenue now do we get from those same clients, and that's GBP 144 million. So that's 44% growth from existing clients shows a really solid business and good relationships with our corporate clients. And then active members are up 43%, and all of the success is partly down to our continued investment in tech and the better proposition that we're putting in front of our members. So you all know this, that our mission is to become the most trusted service platform working behind global brands. That remains to mission. And it also -- we are very much focused on 4 pillars -- more of that later on, but travel dining, entertainment and retail, which includes experiences and events. And all of those 4 pillars are supported by inspirational content, whether that's [indiscernible] or e-mails that we send out, other articles, videos that our members see that inspire them about those 4 areas and how to get the best from our service in those 4 areas. Corporate client list very strong. So, these are blue chip, market-leading banks and wealth managers on the whole as well as some credit card businesses as well. We have got no mid-tier U.S. banks City National Bank, which is like the [ Kutsor ]. -- is actually owned by Royal Bank of Canada. So, we've got a really strong blue chip, very solvent client list, which we're very happy about. And it still is donated by financial services, whether that's premium credit card businesses, the top end of retail banking, like a kind of premier type offering, private banks [indiscernible] be a good example here in the U.K. or wealth managers like St. James's Place or Schroders and some of the other Nomura in Japan, for instance. And they pay us to look after our members. That is 88% of our revenue. And why they pay us? Because the more that our members use our service, the more attached they are, the more well retained they are by the bank. -- the more likely the bank is to get new customers who are valuable to them joining the bank and the more likely that the individuals are to increase assets under management, spend on card, all of the other things that make a customer more profitable. So that is very much -- some of that's happening in market is corporate clients are paying us more because they're seeing return on investment that they get. So, it's a huge market opportunity. We're the established market leader in Concierge and we've got this growth engine that we've talked about before at the heart of our business model. How are we doing overall? Well, we are still winning new contracts, and we've got a stronger pipeline than ever, and we've retained all material contracts. The growth engine will touch on some of that later on, but we are becoming more efficient. We're becoming better in terms of service quality. We're becoming more engaged with our members, and we're getting more money from our corporate clients back in that we can then invest back into improving our proposition in tech and improving our profitability. There's something else in terms of the market opportunity. Historically, we've said today, we are the market leader in a relatively small market of lifestyle concierge but tomorrow because we'll be the best place for high net worth and mass afloat organize travel tickets, dining and retail, that will be a vast opportunity. There's another way of thinking about the markets that we're addressing. And that's the thing about the market for financial services loyalty. And the market for financial services loyalty is between GBP 3 billion and GBP 4 billion globally. That's what's spent by financial services companies on loyalty. And we are today, a fraction of a fraction of that. So, we're 0.2% of spend on customer loyalty in the financial service sector. Now we wouldn't expect to win a huge chunk of that market. So, because some of that is spent on the mass market, some of it's spent on products that we're not attached to. But a lot of the spend is whether mass affluent, the high net worth and the ultra-high net worth and people that have got money with wealth managers. And today, we are only 0.2% of the total market. So, it's kind of interim way of thinking about a total addressable market for us. We put this up at the last time that we presented as well. But I think it's important to say that one reason why we're able to become more profitable at the moment is because quite quickly more profitable is because we are doing more of the same. We're not having to invent new wheels as it were. So we've got a large member base. We're growing that member base sure. But actually, we could double our business and double it again just from our current membership base. We are clearly expecting to win new contracts as well. We don't need to develop our service outside of travel dining, live entertainment and premium retail. So, we don't need to move and we're not expecting to move into any other major categories. So, it's doing stuff that we already do better and it's selling into financial services better is all that we need to do to double our business and double it again. Now we are also experimenting and testing the waters in various other markets, too. But financial services is the banker gave the plan for our market opportunity. And then finally, now that we are profitable on a PBT basis, we are targeting cash generation, the ultimate measure of profitability in this current second half of the year, so the period from March to 1 through to the end of August. And as we then become more profitable, we can invest some of that back into having a stronger balance sheet, more cash on the balance sheet and some of it will go back into growth and improving the business into that growth engine. And it is worth having a look at the growth engine, which is on our website in the Investors section, and we've updated that with the latest data for these results. It's a 7-minute video. I'm not going to play it today because almost all of you have seen it, but it is on our website. And please, please do look at it if you haven't already because it really brings alive how our model works in practice and how we've achieved the results we reported today. And indeed, the great results we reported in November as well. So, shareholders and prospective shareholders that have watched that have given us great feedback on it. Alan, over to you for the financial results.

[Alan Donald, executive]

Thank you, Alex. Just looking at the financial highlights to start with. As Alex said, our net revenue grew by 49%, a little bit of help with current currency as we grew by 39% in constant currency. Within our net revenue, our corporate revenue will get paid by corporates look after their clients was up 49% year-on-year. And our supplier revenue mostly travel related to telcommissions was up 42%. And that meant that our adjusted EBITDA of GBP 5 million was up GBP 4.1 million on the prior year. And that meant that actually, as Art said, we made a profit before tax of $0.4 million, up 3.2% in the prior year, and we ended the period with cash and cash equals at GBP 7.2 million -- as I said, revenue grew by GBP 10 million. And then as activity came back, we did have to increase our costs. That was mostly recruiting more LMs to support the growth. And our operating expenses grew by GBP 6 million, 30% However, that meant our EBITDA margin for the half year came in at 16% against H1 22, 4.3%, so quadrupling of our margin over the period. We continue to invest in our digital capabilities, and I've got a slide later to talk through that, but that's why our math increased to GBP 2.5 million in the half year. And as I said, it was our first maiden PBT since IPO in November '17. This is our normal net revenue chart that we showed where the growth came from. As I said, a lot of help with currency at GBP 2 million. And then as Al said, our net corporate revenue retention rate of 144%, that drove our base copper revenue up GBP 7 million year-on-year. We did win some new contracts in the period, quite small, but they will grow as we embed it into our business. And as I said, supplier revenue has grown by up to $1 million as global travel restrictions were lifted. So, the next slide looks at supply revenue and how it has recovered. So, you can see the impact of COVID, where it went right down through the covered, but we've recovered strongly, and we are now at $3.4 million for the half year, up 40% on the previous half year. That equates about 11% of our net revenue. There is some seasonality in our supply revenue as travel was mostly in the second half of the year. So that will be stronger in the second half. And also within the first half, a lot of the growth was through non-tractor -- so the margin others slightly down 11.4% last year. We split that revenue by region. As you can see, our EMEA region returned to strong growth at 33%, again, driven by our base corporate growth I talked about and supplier revenue coming back. And our largest increase was in our Americas region, that's up 102%, again, driven by base corporate and supplier revenue growth. And if you remember, we had one large contract that we won just prior to Covid, that's new -- didn't really actin at all until post code, and that's come back strongly, and that's helped the growth back in Americas. But APAC is still -- the continuing core restrictions has subdued the growth with 6% growth year-on-year. And if you look at then by adjusted EBITDA by region, our EMA region, which is our most mature region, EBITDA came back up to GBP 4 million and up GBP 2.2 million. And the margin in that region is now 50%, but that's getting back to historic margin levels of between 30% and 3% we make in the EMEA region. In Americas has moved into profit for the first time ever, was approximately $1 million, up 2.2% year-on-year. And that just there was the drag on the group's profit, but now we've got into profitability, and we will see that improve in the second half of this year. APAC, a slight loss in the period. We did have to invest in some resources, especially in Japan, just to uplift the service levels and activity and that reduced profitability slightly. As I said earlier, we continue to invest in our technology investment, and this is the normal graph we showed. This shows our total spend on technology, be it on capitalized but also on the infrastructure and columns. And why do we do that? It creates competitive advantage, we believe we're the only one on a transactional platform that our direct competitors do not have. It also drives efficiencies with our lifestyle managers using 10 made to improve service levels, and that will ultimately drive revenues for us. And lastly and more importantly, operating cash flow, we generated GBP3.5 million in the half year to our profit before tax improving. We do have a little bit help on working capital because one large client was a bit of late client receipt, which we've now received and then we add back on normal noncash items to get to operating cash flow. As I said, still invested in our technology, and we capitalized GBP3.7 million in the half year. And to support the growth in the business and our working capital, we did implement an invoice financing facility just to manage our working capital flows. And also, we got additional loan notes at the start of the half year just to give us that extra buffer. And that mean our net cash grew in the period of GBP 0.6 million to GBP 7.2 million at the half year.

[Alexander Cheatle, executive]

Thank you very much, Alan. So operational update. This we've already talked about. We've retained our corporate clients. We won new ones, and we're growing around the world, and we continue to invest in our tech. So, one thing I wanted to point out is that wealth managers and private banks who form a big chunk of our business, they typically have historically thought that they offer banking services, lending services, investment services and estate planning and an increasing number of them are now offering through us lifestyle services as well as a way that they can engage, retain and acquire customers. And that's really where we come in. Now different banks and financial services organizations you execute our services or we execute our services differently depending on the value of the customer we're looking after. And very roughly, we've got 3 types of customers, very high-value customers, and these are high value to the bank to their financial services company and a very high-value customer might have a load of investments or cash with the private bank, let's say, the wealth manager. A medium value customer might just have a credit card that they're paying for and they put a bit of spend on that generates revenue, but it's way less profit per unit per unit member. And the high-value customers might be people that have got GBP 100,000 in the bank, maybe they've got a few products with the bank, and they've got the banking relationship. Immediate value customer I'd be worth up to GBP 100 a year per eligible member, high value GBP 100 to GBP 1,000, very high value could be worth many, many thousands, sometimes tens of thousands, sometimes at the ultra-high net worth and even hundreds of thousands of pounds every year in profit to the organization. Now clearly, that means they can afford to invest more for the very high-value customers. And so what happens then is they say, please use this concierge service, and you can use it by calling them up or you can use it by using digital, and they will tell them about it a lot. So, we get high penetration as in a high percentage of the eligible members use the service. but relatively low proportion are digital, relatively low. So maybe 25% of use will be digital today for a client like that. On the medium side, they're going to market it less to that member group because they can't afford to have everybody using the service. And to make it more cost effective, we're going to say, here's a digital service, and there'll be a high-touch backup, but it will be very much positioned to the users as a digital first service. And so instead of 25% being digital mix, it might be 75% digital. So that's how they think about that. And we execute differently depending on what their medium, high or very high. We've got a video for you now that brings alive what we've already invested and what we are investing into our 4 propositions to improve those propositions through tech after working better in each of these 4 categories. So, I'll share that with you now. This is a private video. Our proposition is made of 4 lifestyle pillars, dining, entertainment, travel and retail, all are strengthened by TEN's content. Our technology platform and our expert lifestyle managers. Our platform offers priority access and benefits at a growing comprehensive selection of the world's best restaurants. We secure that access because we drive extra profitability for restaurants. One click booking is becoming the default pulled digitally from the restaurants reserved inventory, giving us far better access than the restaurant's own site or open table. -- a dining expert can seamlessly step in when that service is preferred by the member and corporate client. We make different recommendations to suit different members across fashionable places, hidden gems and new openings at home and internationally. And our platform already does this in a semi-automated way that becomes far more efficient and scaled with AI. So, Ten will recommend and book millions of restaurant tables globally. Our platform will be the best way for our members to access the entertainment they enjoy. That's because we collect data on their preferences, age, location and past behavior. That data, combined with our members buying power optimizes profits for the events industry. We sell premium tickets at face value. We don't need to make inside commissions and our members spend more on extras. Plus, our members have all been vetted by us or a bank, so we don't feed the secondary market. And our closed user group means our offers are not visible publicly. So we don't compete with sponsorship or create PR issues. All that makes Ten the industry's most preferred channel and allows us to secure ticket inventory even for sold-out shows. We already manage many sale or return allocations and will manage far more in the future, covering most popular events. In addition, we have allocations today for every event at several top venues, and we are rolling this out globally. 10 becomes the best way to organize entertainment, digitally booking millions of event tickets for our delighted members. Within our travel proposition, we already have a comprehensive hotel offering that is 15% cheaper than the Internet. As TEN scales, we are building direct contracts with a curated range of the world's hotels with even better pricing and value-add benefits, including room upgrades and complementary breakfast. Unlike the incumbent travel industry, we don't rely on commissions, so we can focus on the best overall value, a mix of the best pricing and value adds depending on the members preference. On flights, we will offer the best rates on all premium cabins and on a growing number of specific routes. We already have deals with most leading airlines and all the leading car hire companies and they improve with scale. Luxury holidays create high cash margins for the travel industry. We will match the best high-touch service levels with far lower customer acquisition costs than traditional companies and benefiting from our high spending membership. Simple hotels, car hire and flights will mostly be booked online with travel experts available when appropriate. Unlike an OTA, we offer human experts because of our service fee model. Unlike a commission-dependent luxury travel provider, we offer convenient, well-priced online booking because we are not scared of undermining the higher sales conversion that comes with human contact. Retail is the fourth main pillar of the Ten proposition. Luxury and premium brands already offer our members special access offers, events and pricing. Our platform matches ever more of our high-spending members to the brands they want to buy based on their profile and location. Extra scale means we can offer far more providing additional personalized value and sometimes integrated into seamless open banking or card-linked offers. Brands love that we promote them to a targeted closed user group invisible to the public. Our members love the relevant best-in-market offers and experiences that we serve them. Our proposition benefits from our beautifully written and filmed editorial. Over time, more of our members will travel after reading our destination guides. They will choose where to dine after watching our reviews, and they will look forward to each release of our inspirational [ e-symes ], increasingly personalized to each member. Our 4 pillar categories work together using data expertise, content and tech to create joined-up experiences. When we organize a member's flights and hotels, our platform will also recommend and book their meals out, they're shopping and their personalized experiences. It's the ultimate lifestyle and travel management service. Great. So that was a video that we put together for investors, but also crucially, we're using it with our corporate partners around the world and our prospects around the world to explain what we've already got and what we're building this calendar year. So just as a reminder, this slide is very busy, but we've already built a platform that does extraordinary things. It's got a full online travel agency with all of those benefits already on there. We've got the opportunity to -- for people to buy with installments that live in Latin America or with some banking programs, people can pay with their loyalty points as well as with cash -- there's a lot of personalization, both based on the profile, but also on where you are physically and so on. So, we're very pleased with what we've built over the past few years. But we're also building things, some things we've already built this year, something that were in the middle of building, like an integration with Viator that gives us attractions you can book trips on the Eiffel tower and on the London Eye and the equivalents around the world with benefits not available to the public. We're building entertainment, and we're massively increasing the number of restaurants available on the platform to be booked with inventory, both of tickets and restaurant tables that again, aren't available to the public. And we're working now, we already were holding out chatbot capabilities. But clearly, the recent -- just over the last 6 months, AI has come on so quickly -- we're now working with the new AI and saying how can that influence our chatbot capabilities and also how can we use AI to help make our lifestyle managers a lot more efficient. Very, very straightforward in many areas, in some other areas, really quite sophisticated developing and will continue to develop. Personalization we've already talked about. I will move on from that. And just to say that on the environmental side of things and the kind of good social impact side of things as well, many of our corporate partners, [ Cut ] is actually a great example here in the U.K. They want us to also offer our members, not just flights and restaurants, but to point out which options might be kind to the planet and to facilitate the best in our members instinct. So, for instance, one of the things that we're asking our members where they're interested in is philanthropy. And then when they are, we're putting them in touch with anything that might be useful around philanthropy. We're letting them know at our restaurants that do locally sourced items or hotels that have got green credentials. So, things like that are things that we're putting on to the platform, a minority, but an important minority of our members are really interested in that. And many of our corporate clients love it, so that gives us another opportunity for them to promote our service through to our members. And of course, the more members that use our service, the more that grows our revenues. So, there's a few things about our proposition over to Alan to recap on our business model.

[Alan Donald, executive]

Thanks, Alex. And as Alex said, we do have the growth engine videos, we'll skip that. But please, it has been updated. So, look at it. Just to remind you, on the revenue model, as I say, on a full year basis, 88% of our revenue comes from our corporate clients who pays to look after their members and 12% of our revenue comes from our suppliers, mostly travel and hotel commissions that we earn -- and then a typical contract, we get paid by request, if you touch, if you talk to one of our lifestyle managers or said an e-mail. That will be a higher fee per touch. And then we've got a digital platform, we will have a lower as a seller. And that generates our corporate client revenue. And all of these contracts are long term in nature around 3 years and often most of the agreed guarantee minimums that we work to. We shared this slide at the end of last year, and we just updated it for active members which has grown quite strongly, as you can see. And this goes on to how we've grown our eligible member base on the left-hand side, we have grown our active members. And then within each segment, we've grown it as well year-on-year. And then the next slide, Alex went through before, what will be driving by category or segment where we're driving a different penetration in terms of what the bank can afford to do a different digital mix in terms of where we want to go from our very high, high and medium client. And lastly, this is to look at the average conscious revenue per active member. So super is actually -- those in the very high segment can afford to pay more to us to look after the high value very high bar members more so than high than medium. And that goes with in terms of value of that client today.

[Alexander Cheatle, executive]

Great. Thank you very much, Alan. So, in terms of outlook, we grow our business, the bottom part of this pillar by starting off with just the run rate, how do we do in the last period, and we would hope to have that obviously at a good rate and a good and growing rate. Then we grow the number of active members by telling them about how our services improved, what we've got to offer engaging people to do with where they live, their age, their interests and so on. And then we grow the usage per active member as well by encouraging our corporate clients to allow us to do more and more marketing and engagement. And typically, that's happened, as you can see from the 144% corporate client net revenue retention rate. We also then win new contracts with existing clients. So, there might be a bank that's given us to do one of their customer groups, giving us to another customer group. And then we win new contracts with new clients, and we've never had a healthier pipeline of new clients that we've got today. Outside of that, in financial services, we can then roll out to other financial services people in new geographies. Now most of our growth and most of our pipeline is in markets where we already are, but we do have some opportunities in new markets as well geographically. We can then move into other verticals, which is outside of financial services. So, as I say, we are experimenting in markets from employee where we've got some good programs, but we're not selling very aggressively in that market. We've got some opportunities with luxury brands and luxury car brands as well and also with luxury property. But those are all in play, but we are not selling with much investment into any of those areas. It's financial services that our focus is on. And so, this is taken from the stock market announcement very short and sweet. And just to say that our expectations for the full financial year are unchanged, which means that Peel Hunt, our broker has got an expectation out there that we will do 11.9% EBITDA and we are happy with that. And we've got an expectation out there that we'll do GBP 62 million net revenue, and we're happy with that as well. So that is the end of the formal presentation today, we've rattled through it, but I know we normally get some good questions from this group and hoping we have some today. Remember to take yourself off mute if you've got questions or to use the chat function.

[Operator]

We have a couple of questions coming in on the chat.

[Alexander Cheatle, executive]

I'll let Alan take the one on cash that's in the chat.

[Alan Donald, executive]

Yes. As we've said, we are targeting to be cash chart in this half of the year. And then going forward into next year, we will look to generate cash from our own operating profits. And so, as part of that, the tech investment we will make, we will not see any -- it will probably grow at inflation, but we will not be growing that at the same rate as our net revenue will grow. So, we'll sort of maintain it and probably be plus inflation. So, the target is to generate our own cash as a business and to use some of that to replenish the balance sheet, repay loans, also then reinvest back in the business as we get we continue to generate profits and cash into the new year. And we talk about a certain macro environment, what we've seen to date because of our members and the mass apt and above, we have seen no decline in terms of what they want to do in terms of using our service. And that hasn't -- we haven't seen any sort of issue there from a costing perspective. It doesn't impact our membership base as much as us.

[Alexander Cheatle, executive]

Thank you. Other questions?

[Operator]

Just summarize the question before addressing it. Do I need to?

[Alexander Cheatle, executive]

No, that's good. So, one question in the chat is how is the supplier network evolved over the past 6 months? Who are our closest competitors globally and have we notice on closing the gap. Are we seeing Amex making inroads? And how does AI impact, okay? So, it is -- there's a lot of different questions there. Our closest competition, the people we come up against in corporate tenders are Aspire, who are owned by an international medical assistance business called International SOS, Aspire a big in Asia and North America, and we come across them head-to-head in tenders, typically debt in tenders for their business. And we would -- we also come across John Paul, who are owned by Accor Hotels, and we occasionally still come across Quintessential, although that's far less common than it used to be. Against all competition, we really compete with our digital proposition, which is unmatched in the market and the fact that we've just got more successful case studies around the world and a more consistent data-driven, well-engineered service. And that tends to be why we win the majority of the contracts that we tend to for and retain our existing contracts. We are -- we'll come on to AI in a moment. Are we see Amex make inroads? I mean, yes, AMEX are doing some good stuff in terms of -- they are developing their own digital platform. However, we believe our digital platform is a little ahead. The 2 of the advantages that Amex had over our digital platform was that they had more content available to the public before you logged in, and that's something that we're addressing. And they also had Viator, which I talked about earlier on, which we should have on our platform by the end of the summer. So, there are quite a few areas in which we think our member experience of using the platform is superior. -- the supply network has evolved partly by doing more direct deals with airlines and with hotels. So, we've got 750,000 hotels globally that we've got deals with through intermediaries, and we've got around 5,000 that we've got direct contracts with. That is growing and not just direct contracts, but direct integrations into their inventory, which is there on our platform, which really improves the value proposition on our platform still further. With tickets, we're growing our ability to get tickets for shows, concerts, sporting events globally by growing out our global contact base really there and our global credibility, which is working really well for us, too. And I think in dining as well, just more better relationships with restaurants. And in particular, asking the restaurants to give us guaranteed availability at peak times is what's really driving the business there. AI. So, I mean, AI is going to really help us as a business become more efficient. It should help us actually because we've got a digital platform on which we can leverage AI, it should help our service delivery be able to move more to digital over time as well as make our lifestyle managers more efficient. I think what we have been aware of for 20 years now is that it's not enough for us to do things instead of our members and save them time. We have to do things better than our members could do it themselves, even if they themselves using a different AI toolbox to achieve their results. And that's why it's so important that we have restaurant availability that's not available on the Internet that we've got tickets for music theater and sport that isn't available on the Internet that we've got deals in trial and upgrades and someone that aren't available on the Internet because then our AI gives you better than the Internet and other people's AI just gives you the Internet. It might give you the Internet more efficiently and better, but we should be able to do it more credibly and with assets that you don't have on the Internet. AI will help. I'm not sure it will help our competitors close the gap because they don't currently have a home, a credible home on which they could put AI. Our direct competition aren't really the biggest challenge. It's our -- it's the competitors that today we can't name that we need to be very aware of. And that's something that we're not complacent about our current competition, but we're even less complacent about tomorrow's competition that we need to make sure we continue to invest smart in our tech and in how we embed ourselves with our member base and with our corporate client base as well. A question from Steve Makasmith. Thank you, Steven. Would we anticipate investing more in digital or remember benefits? -- or in reducing cost of the service. So yes, it's a little bit of many of those things. I don't think for the next 5, 4 or 5 years, we'll be returning cash to shareholders in dividends. I think we are more likely to be investing it into growing the business and growing the profitability and success of the business by improving the member proposition with things like benefits and discounts, which will allow us to charge more to our corporate partners. I don't think at the top end amongst the high value and the very high-value customers, we've got a challenge with reducing cost if we're delivering value, the equation works very well for the banks to continue to pay, and we're not under a lot of direct competitive pressure on pricing. However, in the medium value, we need to continue to invest in tech to make more of the proposition digital because that's how we can get a lot more usage in that mass affluent space. A lot more usage. So, it's a lower cost per use of the service that drives customer value in a more cost-effective way for our corporate partners. Alan, anything else you'd like to say on that?

[Alan Donald, executive]

No. I think [ Pooran ] as I said earlier, when we got past chart, we will look to replenish our balance sheet but also reinvest where we can to drive the revenue line. Yes. So again, [indiscernible] expectations out there in the market today are that we will grow our EBITDA this year from 11.9% to I think it only goes up to 12.8%. So not a huge jump next year, but we do want to show the discipline of improving the profitability over time. But because we've got more net revenue, our net revenues will grow or should grow albeit well faster than that. That will allow us to invest some more into the transition to digital. But that will be discretionary spend, and we'll spend it if we've got a good ROI for that.

[Operator]

Question, I think from [indiscernible]

[Unknown Analyst]

Hi Alex, Hi Alan... Good to see you guys as well, and congrats on the numbers. I had a question about just the general macro environment, the cost-of-living issues, trying to think about the end consumer and how -- I know at the very high value and maybe it's less of an impact, but I'm thinking through my own behavior as well. I'm a bit more cautious with the high-end restaurant build than I used to be a year ago. And I'm guessing other than the Prim of the cream, that's probably generally the case. So how are you bracing for what's to come? And maybe we're still kind of eating into savings for a bit. Maybe you haven't seen it through Feb '23 or maybe you have. I just wanted some commentary around that. And then a bit related to -- I guess I'm just reading Mark's question a bit related to that question as well. I guess I won't echo exactly what he said, but I'd be curious what you heard, what you've been hearing in conversations with institutional investors whatever meetings you had throughout the day, I guess since this morning, I would love to get some feedback and key questions that you're getting from them or push back into the investment case.

[Alexander Cheatle, executive]

Yes. So let me deal with the last thing first. So, on the stock market side of things, -- the feedback we're getting is well done on the results. A lot of investors, there's been net outflows from the London stock market every month or, I think, 23, 24 months now. And that's not helped because there's been a lot of money, just not that -- a lot of people just don't have money to invest of the normal fund managers in our kind of market, particularly at the lower end of the market as in sub GBP 200 million. Some of those guys have also been hurt by the [ Wandico ]. I guess we can call that a scandal. That was -- for those of you who don't know, that was a technology business in the U.K. that I don't know if it was fraud or not. It looks a lot like fraud from where I was sitting, it looks like there was a lot of force numbers put out into the marketplace and some people lost a lot of money on that. And some of the people that lost out of money that are the kind of fund managers that would normally invest in a business like us. So, things like that haven't helped. I think that's held back our share price, just the lack of liquidity in the market. But at some point, it's going to have to change because you're quite right, Mark, we're 1x net revenues today. That seems very, very low to everybody. We don't get anybody saying, they think we're overpriced. Nobody says that. Nobody said that as a last set of results, and nobody is saying that today. We are literally valued at 5x EBITDA as well. And again, that is for a business that's growing with a strong competitive position and a good profit progression. That seems really wrong to most of the shareholders that we speak to. I think what people are saying to us is be patient things will change because there will be money coming into the market and companies like ours is the kind of business that people are looking to invest in. I'd also say that we're actually seeing quite a few fund managers who are -- who we've seen many times now. So, we're meeting a lot of people that aren't yet holders. [Technical Difficulty] We've got some people who are holding GBP 0.5 million worth of shares who would normally hold $3 million or $4 million, and they want to build up, but they just don't have the cash available right now. Over the next 6 months and into our full year results, we'll have then had really good results 6 months ago, really good results today, albeit well, really good results at the end of the year as well. That will be of very strong results in 3 reporting periods, we should make a big some advance about that from -- after the summer when we do a trading update all the way through to our full results. And so, we would hope to see, but I get in trouble if I say anything much more than that, but we would hope to see the share price begin to be -- reflect the value of the business a lot more than it does today. help answer that. And your first question, could you remind me of that, again, just the headline fee will come flooding back.

[Unknown Analyst]

Just the cost of Living related just how you're bracing for that, I guess.

[Alexander Cheatle, executive]

So far, we're not seeing that, but I do think that the -- some of our members, you're quite right, aren't feeling the pain and are unlikely to, but some of them will. And we -- one of the things that we haven't really told our membership base about yet, but we're telling them over the next 3, 4, 5 months, depending on the program, is this 15% of hotels proposition. So, our members are still traveling, but those that are very interesting value, that's a really good value proposition. We're also talking about the fact that we can -- many of our banks remember, have actually got more money to spend on customer loyalty. So, when you look at the front page of the FT today, mid-market U.S. banks in all sorts of travel and yet the banks that we deal with tend to be very, very, very solvent, very well rated. And they're making more money than they've made since before Lehman's crashed. -- from cash-rich customers because the -- as you all know, you're getting very little interest in your bank account and yet your bank can lend that money out at much higher rates. So, they're making more money from cash rose customers than they've made in years. And so, they've got more money to spend on acquiring those customers and crucially on retaining them. And so, we' re finding that even if there's a [ dimunition ] of feel good amongst our customer base, we've actually got banks and wealth managers wanting to spend more to retain and engage those customers. And so, we've got more opportunity to go out and speak to people, and that more than mitigates any kind of cost pressures on our customer base. We are finding that in some businesses, like restaurant turns opening up a new restaurant. They're even keener to work with us than they were before because there's just a little bit more nerves out there about whether it's going to be a success. Maybe 3 or 4 years ago, just pre-COVID, if we're pretty happy that if they have been a new restaurant, if they had the right team, it was going to boom. Today, there's slightly more nervousness around that and some of the -- and that's certainly true for hotels. So even though some hotels in some part world that are reporting 100% occupancy is because they've shut 2 floors. So, we've got 100% occupancy of 80% of available beds. And we're finding that we're finding very easy to do deals with hotels around the world, maybe easier than pre-Covid. So, there could be some advantages of the market getting a little bit tighter on the supplier side as well. But it's something we're going to keep aware their eye on for sure. Okay. Mark, did we answer your question -- if you go with that or any follow-up questions, very happy to have them. Thanks, Mark.

[Unknown Analyst]

Sorry, just to confirm. So basically, what you're saying is supply better number of customers goes up, but even so that offsets some of the volume per customer.

[Alexander Cheatle, executive]

Yes. That's right,

[Unknown Analyst]

Risk.

[Alexander Cheatle, executive]

So probably the biggest risk is in that medium value customer base where people might be spending less on their credit cards. Credit cards might have more risk, but we are typically going after the more solvent books. So, we're not working with the guys that make their money from people being late with their credit card payments. We tend to be at a much more stable end of things.

[Unknown Analyst]

Great. Thanks very much.

[Alexander Cheatle, executive]

Thanks for the question. Any other questions or thoughts from anybody? Okay. Very good question. Thank you for asking about our people. I think it's often underreported to shareholders. Our HR recruitment brand. So, it's been a difficult market for recruiting. We're finding that it's an easier market for staff retention today than it was 6 months ago. So, this was staff retention, particularly of our lifestyle managers was a bigger issue for us 6 months ago than it is today. Having said that, we put a lot more effort into growing the concept of lifestyle management as a profession and as a career. So, we don't want it to be a role that people do for 2, 3, 4 years. professionals stay enrolled for a lot longer. And even people that you probably wouldn't think of as a professional, but the kind of travel expert that works at trail finders or orderly, they expect to hang on to their best people for 15, 20 years. And we've learned about that and we've learned about what professionals have done to create many more stages of development for our lifestyle managers. We're investing more in training, and we allow the very best lifestyle managers. If they're still performing to actually earn a lot more, essentially, we double the bonus pot for our best lifestyle managers after they've reached the highest level that you can get to as a low-star-managers so that there is a great earning growth as you get towards the most fulfilled part of being low to manage the most developed part being a lifestyle manager. There's more that we're doing as well. I think we talk a lot about being the magnet for talent in our sector, and we're making that true. We've got loads of examples of that, but we're also getting better at who we hire and growing -- we've also got apprentice program in 2 markets around the world as well, which have both been very successful that we're likely to roll out. Alan, do you want to talk about wage inflation and how we counter that before we come on to I'll then take malicious cyber-attacks.

[Alan Donald, executive]

Yes. So of course, we inflation across the globe is different. So, it's still quite low in Asia, and as you know, high in Europe and the States. So, we did get wage increases to our staff. And we've got a cycle rate increases mostly go through in October, November, but it depends on the region. So, we did have the book wages up to reflect the cost of living. However, what we did do is that to pay for that, we did price up on clients. And that's the first time we've done that as a company for a long time. And so that covered off any wage increase so protected the margin. And we'll continue to look at that going forward, and we have clauses in our contracts now that we do an annual review of CPI depending on the country. So, it is -- we saw wages go up. We've accounted it with pricing up, and we'll look at that going forward.

[Alexander Cheatle, executive]

Thanks Alan and then on the hackers, -- this is a really interesting area. And it's definitely on our risk register. We need to keep our data very secure. Where we are helped is that we are ethically hacked a lot more often than any other business that I can name because not only do the big corporate clients, ethically hackers, that's Visa, Mastercard, HSBC, NatWest Group, gosh, a number of others. They -- for their own corporate governance have to ethically hack us because we hold customer data. So that gives us quite a lot of confidence that our systems are well set up. All of our people are CRB checked. We do background checks going back many, many years to check that we know who they are and that they're kind of good. We've got -- none of our computers can you plug anything into. We've got -- where PCI compliant to the nth degree to the very highest level in every office around the world. So -- and there's a variety of other things that we do as well to keep data safe. However, we're going to keep treating that at a board level issue. We're going to make sure that we continue to get -- have experts inside the business and outside the business and we're going to continue to be very happy that our corporate partners are constantly hacking our system to make sure that it's as bulletproof as it can be. So, we are we're learning about that all the time. We've also got checks in place standard checks in place. And we do multiple choice questionaries of our staff about how they track in circumstances. And we ourselves ethically hack ourselves in a way or send e-mails to Allan's team saying, please make this payment immediately, blah, blah, blah, blah. And if they did, that would be a massive issue. They've got to actually speak with me, ascertain it to me. A voice mail doesn't count anymore in a world where people come mimic, people's voices. We are very, very careful about that. But it stays on our risk register, and it will be on our restate duration. So, thank you, Richard. Good question. Other thoughts from other people or questions at all, [indiscernible] have them. On the macro front, thank you, Thomas. A change of tone in discussion with corporate clients. No, not really, no. We've got a bigger pipeline than we've ever had. And it's interesting why that is. Again, banks so many retail banks are deciding to invest more into trying to get a bigger slice of the pie from their affluent and particularly their high net worth customers. So, they want to get a hold of assets under management. They want to retain those cash reach customers. And that part of the business is more profitable than it's been before. So, we're actually seeing more enthusiasm from people because -- and some -- quite a few people that have never had a concierge program talking to us about wanting one because they need to have programs to attract and retain those high-value corporate clients. So actually, if anything, we're seeing people be more positive than they were pre-covid that could be partly just time in the market as well that's helping us. I think we're seen as being part of the furniture in markets where we used to be new. Latin America, Japan, we used to be new and foreign. Now we've seen as part of the Brazilian banking ecosystem, the Japanese banking and wealth management ecosystem with a really good client base. So, I think that helps things as well. As clients become more cautious, typically, they want to invest more in retaining those clients. So, another thing to remind you of and some of you have been investors in ten long enough to remember this. But in the year after Lehman Brothers collapsed, we grew our business 33%. So now that was at a time when U.K. banks were really in all sorts of trouble, and they were the biggest part of our business back then Barclays, NatWest and [ Kutsor ] our 3 biggest to Barclays and [ Kuter ] 2 bigger sites. But our business overall, including with those 2 clients, grew Why? Because they needed to keep customers that were cash rich. That helped us. So really, we're still -- we've got a lot of programs where we're at 5% penetration, we're only 5% of the eligible customer base have used our service. We're more excited and think-well, our conversations are more with our corporate clients about how we can grow that to 10%, 15%, 20%, then it is -- we've got more clients wanting to grow that than we've got clients. I can't think of a client today that wants us to reduce cost amongst the high-value and very high-value customer groups? So, if anything, it's more positive today. Any other final questions by voice or in the chat we can tale them either way. Well, thank you, everybody, for making it. I see a lot of friendly names, and thank you for being -- many of you long-term holders of 10 shares, a long-term support. Some of you newer welcome as well. And please do feel free to [indiscernible] all the Investor Relations e-mail that goes to [ Kezar ] and then she makes sure that one of us will answer it. We'll be happy to answer anything that we can within the realms of us being a publicly listed business. So sometimes -- or mostly it has to be something that is either only color or something that we've already answered publicly. So -- but thank you again for sharing up tonight. And thank you for being long-term holders, and we hope and expect to see good things happening in the future. So, thanks very much for your ongoing support.

[Alan Donald, executive]

Thank you from me too.