Research Update: Likewize UK FY2024
Molly Ringwald would approve...
Key finding: Likewize Services UK reported £187.6m revenue in FY2024 (-21.3% YoY) as the strategic exit from legacy distribution nears completion and whilst gross margin compressed to 4.5%, the new Likewize Device Protection entity validated the insurance administration pivot with 48.9% gross margin and £4.3m operating profit in its inaugural year.
With the news that O2 Recycle relaunched last month with Likewize as their new service provider1, I thought it was about time to take a deeper look at their European operations. Then, as serendipity is my mistress, early one morning last week and unmissably parked in the local supermarket car park was a gloriously pretty in pink Likewize repair van. The driver no doubt grabbing a first coffee before whizzing out to fix phones all over the Thames Valley. What are the chances?
Recap
Like my photography skills, it’s a bit fuzzy, but Likewize in Europe began life as the logistics arm of John Caudwell’s Phones4U empire. When the group was split up and sold in 2006, Phones4U and Lifestyle Services Group (LSG) went to Providence Equity Partners and the logistics arm went to Doughty Hanson, becoming the 20:20 Mobile Group. Then, after Assurant acquired LSG from Providence Equity in 2012, Marcelo Claure’s Brightstar came knocking on Doughty’s door and took 20:20 Mobile off their hands to become Brightstar 20:20. At the time, their focus was squarely on distribution across multiple European markets which plugged a convenient gap in Brightstar’s global network. Somehow, Masayoshi Son was convinced that Softbank should take a majority share in 2013 with Marcelo Claure retaining a 47% stake.
Rod Millar returned to Brightstar as CEO after a stint at Sprint and from 2019, began Brightstar’s transformation from low margin distributor to higher margin service provider with various market exits across the globe thrown in for good measure. In 2020, Brightstar acquired the UK “we come to you” mobile repairer WeFix, setting a new benchmark for claims fulfilment. In the same year, further up the chain, Softbank sold their stake, at a loss2, to private equity company Brightstar Capital Partners formed a few years prior by ex-Brightstar COO, Andrew Weinberg.
The European portfolio grew again in 2021 as the customer experience firm LucidCX was brought on board to bolster technical support capabilities. The brand upgrade came about in 2021 and Likewize came to be, with a mission to “make every tech problem painless”. Genstar Capital came in for a share in 2022 and increased their investment to a majority this time last year3. Millar returned to Brightstar Capital Partners, Ryan O’Hara became CEO in March 20254 and a month later they doubled-down on customer service tech by acquiring Danish firm Speedperform5.
After some entity simplification over the last couple of years, there are still several companies filing accounts that I can access. In the UK there’s Likewize Services UK Limited (08401611); Likewize Device Protection Limited (14134370); the catchily named LWRNPC1 Limited (08100373), which is the old WeFix entity and; the newly formed Likewize Repair Limited (15891694), which used to be named LWRNPC1 and is now replacing the other LWRNPC1. There’s also Likewize Netherlands IHB (62687115), effectively acting as a bank; Likewize Insurance Services B.V. (57476829), seemingly dormant and; a relatively new entity in Germany, Likewize Europe GmbH (DER1608.HRB36101). Key clients include: Apple across Europe as their trade-in provider, VMO2 in the UK, alongside Barclays, Natwest and FirstDirect banks and more recently Samsung in Germany.
Performance
FY2024 Key Metrics (Likewize Services UK):
- Revenue: £187.6m (FY2023: £238.5m, -21.3%)
- Gross Profit: £8.4m at 4.5% margin (FY2023: £13.0m at 5.4%)
- Operating Loss: £1.7m (FY2023: £1.1m loss)
- Net Loss: £1.5m (FY2023: £3.9m loss)
- Employees: 357 (FY2023: 328)
FY2024 Key Metrics Likewize Device Protection (First Full Year):
- Revenue: £19.0m
- Gross Margin: 48.9%
- Operating Profit: £4.3m at 22.6% margin
Source: Likewize Services UK Limited (08401611) and Likewize Device Protection Limited (14134370) filed accounts for year ending 31 December 2024
As management have transitioned the business away from device and accessory distribution, you’d expect revenue to be a bit lumpy and the 5 year analysis period definitely has some ups and downs. The latest filing shows revenue in Likewize Services UK (“LSUK”) fell to £187.6m in FY2024 from £238.5m in FY2023. That’s a significant 21.3% decline but explained by exiting the large legacy distribution business, although revenue should now begin to stabilise. Unfortunately, there is no segmental analysis splitting up the device fulfilment, repair services, and lifecycle management income streams which would have provided some excellent data points.
Additionally in FY2024, Likewize Device Protection (“LDP”) assumed the insurance administration revenue that was previously written through a branch of Likewize Insurance Services B.V. and posted £19.0m in its first full trading period. So, that gives us a total UK income (for these entities) of approximately £206.6m representing a return to FY2020 income levels.
Note there are no filed accounts as yet for Likewize Repair Limited, Likewize Europe GmbH and no turnover noted for Likewize Netherlands IHB. Likewize Insurance Services B.V. has not posted accounts since 2021, at least that I can see.
Continue reading for:
Complete Profitability Analysis including LDP’s insurance administration economics
Balance Sheet & Cashflow Assessment
Strategic Analysis including O2 Recycle, Santander and margin outlook
Also available as a standalone pdf here.