Moonpig Group PLC: Navigating Digital Greetings with Strong Margins and Strategic Growth

In an era where digital transformation reshapes traditional industries, Moonpig Group PLC (FRA:769) has positioned itself as a leader in the evolving digital greeting card and gift market. The company's Full Year 2025 earnings call, released on June 26, 2025, underscored its ability to capitalize on consumer trends while maintaining robust financial discipline. With revenue growth of nearly 9% and EBITDA margins hitting 27.6%, Moonpig's results reflect a strategic playbook centered on subscriptions, AI-driven personalization, and international expansion—all while navigating macroeconomic headwinds. Here's why investors should take note of its potential.

Strategic Positioning: A Digital Greeting Leader

The global digital greeting card market is projected to grow at a CAGR of over 7% through 2030, driven by rising adoption of personalized, on-demand services. Moonpig has seized this opportunity by reinventing its core business to blend tradition with innovation.

1. Subscription-Driven Engagement

Moonpig Plus subscriptions grew by 84% year-on-year, nearing 1 million users, now contributing over 20% of total revenue. This recurring revenue stream not only stabilizes cash flow but also boosts customer lifetime value. The company's 100 million+ occasion reminders—digital triggers for birthdays, anniversaries, and other milestones—drive over 40% of business, underscoring the power of its platform to embed itself in consumers' routines.

2. AI and Personalization at Scale

Moonpig's investment in AI is paying dividends. Features like AI-generated handwriting, audio/video messages, and unique stickers—now used in 1 in 3 cards—enhance user experience and differentiation. The launch of over 4 million AI-created stickers since February . 2025 highlights how technology is fueling creativity and stickiness. Subscribers to Moonpig Plus and Greetz Plus are ordering 20% more frequently than non-subscribers, a testament to the success of this strategy.

3. International Expansion

While the Dutch market (via its Greets division) faces challenges, Moonpig is capitalizing on growth in Ireland, Australia, and the U.S., where revenue rose by 36.1% collectively. These markets, combined with its UK stronghold, are diversifying revenue streams and shielding against regional downturns.

Margin Expansion: Operational Excellence and High-Margin Plays

Moonpig's EBITDA margin of 27.6% in FY25 marks a significant improvement over prior periods, reflecting both strategic and operational discipline.

Operational Efficiency Gains

• Supply Chain Optimization: Insourcing balloon fulfillment reduced costs and improved margins.
• Gift Attach Rate: The rate at which customers add gifts to cards rose by 70 basis points, boosting average order value. Management aims to increase this metric by 1 percentage point annually, targeting a 30% attach rate over time.
• Free Cash Flow: Soaring to £66.1m, it supports shareholder returns (e.g., a £60m buyback plan) and reinvestment in growth.

Product Mix Shifts

High-margin gift experiences and subscription services now comprise a larger share of revenue, driving profitability. The company's £96.8m Adjusted EBITDA (despite a minor margin dip due to one-time charges) signals confidence in maintaining margins within its 25-27% medium-term target.

Risks and Challenges: Navigating Leadership and Cyclical Markets

Moonpig's trajectory isn't without hurdles:

• CEO Transition: Nickyl Raithatha's departure introduces leadership uncertainty, though the company emphasizes a strong bench of managers.
• Dutch Market Struggles: Greets' performance in the Netherlands lags due to macroeconomic pressures, though management is adapting by aligning its tech stack to local preferences.
• Cyclical Experiences Segment: The gift experiences division, while restructured, remains vulnerable to economic swings.

Outlook and Investment Considerations

Moonpig's FY26 guidance calls for mid-single-digit EBITDA growth and 8-12% EPS growth, achievable through:
- Continued subscription momentum and AI-driven engagement.
- International market penetration, particularly in the U.S. and Australia.
- Operational efficiencies, including the 30% gift attach rate target.

Investors should weigh the risks but also recognize Moonpig's resilient cash flow and defensible market position. The $60m buyback signals confidence in undervalued shares, while its subscription flywheel (acquisition → retention → upsell) offers a scalable model.

Final Thoughts: A Buy with a Long-Term Lens

Moonpig's Q2 earnings reflect a company dominating its niche through innovation and operational rigor. While leadership changes and cyclical headwinds demand caution, the secular tailwinds of digital gifting and its robust financial profile make it a compelling long-term hold or buy—especially if shares dip on CEO transition fears. Investors should monitor execution on international markets and the gift attach rate, which could unlock further margin upside.

In a sector ripe for disruption, Moonpig's blend of tradition and tech positions it to thrive. The question isn't whether the digital greeting market will grow—it's whether Moonpig can sustain its lead. Based on FY25 results, the odds look favorable.