Release Date: July 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Informa PLC (IFJPY, Financial) reported strong underlying revenue growth of 13% driven by robust performance in Asia and North America.
- The company achieved consistent volume growth at existing events and through the launch of new ones.
- Informa Tech saw a strong first half with underlying revenue growth of 15.5%, largely driven by the LEAP franchise in Saudi Arabia.
- Taylor & Francis delivered accelerating growth with underlying revenue growth of 7.5%, boosted by AI partnerships.
- The company reported a small increase in operating profit margin to 27.5% for the first half of 2024.
Negative Points
- The biennial down year in 2024 posed a headwind, impacting reported results due to the absence of larger, higher-margin events.
- Currency fluctuations, particularly the strengthening of sterling, negatively affected reported results.
- The company faces challenges in maintaining growth in Mainland China, which is growing below the group average.
- Integration of recent acquisitions, such as Tarsus and Winsight, may present operational challenges.
- The company is operating at the upper end of its leverage range, which may limit its capacity for further M&A activities in the short term.
Q & A Highlights
Q: Can you talk through the guidance upgrade around EBIT, and it's about GBP35 million since the beginning of the year?
A: The upgrade is driven by strong trading in the first half, additional AI and Taylor & Francis revenues, and favorable currency movements. The EBIT upgrade reflects these factors, with a high drop-through rate from AI deals and reinvestment in the business.
Q: What is the outlook for China given the macro concerns?
A: Growth in Mainland China is slightly below the group average, but we remain confident. Hong Kong is showing better performance, and we expect to maintain our position with potential upside as international markets return.
Q: Can you give us some ideas about how you're thinking about price rises for events into next year?
A: We've put significant effort into pricing strategies, focusing on delivering better customer experiences and additional services. This allows us to have value-based pricing conversations with customers, ensuring sensible price increases.
Q: How confident are you that Ascential won't experience a downward volatile dip in 2025?
A: We have a high degree of confidence in the FinTech and marketing sectors. The diversification of the franchise and our broader portfolio should help mitigate volatility. We believe our ownership will provide stability and growth opportunities.
Q: Can you discuss the integration costs for Ascential and any specific plans?
A: We plan a discovery period post-completion to minimize business disturbance and ensure effective integration. There will be simplification at the PLC and corporate levels, but our focus is on growth and expansion, particularly in the FinTech sector.
Q: Can you provide more details on the AI deals and their impact on revenue?
A: The AI deals cover both backlist and front-list content, with clear rules on usage. The GBP75 million-plus revenue from these deals is expected to continue into 2025, with additional deals in the pipeline.
Q: What is the underlying revenue growth rate at Taylor & Francis, excluding AI licensing deals?
A: The underlying growth rate is around 4%, with AI deals providing additional growth. We aim for a medium-term growth target of 4%-plus.
Q: How do you see the forward bookings for events into fiscal 2025?
A: Forward bookings for Informa Markets are ahead of last year, indicating another strong year of growth. Informa Connect and Tech have shorter booking cycles, so it's too early to provide specific guidance for 2025.
Q: Are you confident that sublicensing your content for AI won't diminish its long-term value?
A: We have negotiated partnerships with clear rules on usage, ensuring our content remains valuable and exclusive. These deals allow us to earn revenue while maintaining control over our assets.
Q: What is the operational drop-through from AI initiatives, and what kind of investments are you making?
A: The drop-through from AI revenue is around 30%-40% after royalties and reinvestment. We are reinvesting profits into accelerating product development in machine learning and AI capabilities.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
