Release Date: July 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Digital yield grew by 32% in Q2, indicating strong performance in digital advertising.
- Data-driven revenues now account for 45% of overall digital revenue, up from 41% last year.
- Operating costs were reduced by 9.3%, reflecting effective cost management strategies.
- Adjusted operating profit increased by GBP8 million to GBP44 million, with an operating profit margin of 17%.
- Cash generation was strong, with a cash conversion rate of 130%, indicating robust financial health.
Negative Points
- Total group revenue declined by 5%, with print revenue falling by 6%.
- Digital revenues were broadly flat, down by 1.3%, indicating challenges in achieving significant growth.
- Headwinds on page views due to changes in search algorithms and tech platform decisions continue to impact performance.
- Print advertising revenue declined by 12%, reflecting ongoing structural challenges in the print segment.
- Net debt stood at GBP12 million, despite strong cash generation, indicating ongoing financial obligations.
Q & A Highlights
Q: The plus 13% on data-driven revenue in Q2 and 9% for the half year is encouraging. Is it realistic to maintain this run rate in the second half?
A: We had a boost from events like the election and the Euros, which shouldn't be seen as indicative for the rest of the year. However, we are comfortable with our full-year plans due to the data-driven run rates.
Q: Can you clarify the portion of page views from Facebook and any effects on volume or yield from changes?
A: We have mitigated the decline in page views from Facebook by creating direct products like WhatsApp. While I won't give specific numbers, our engagement levels from direct products are higher than from Facebook.
Q: Can you discuss the monetization of video content and its current stage?
A: We produced excellent video content during the Euros and the election, which helped drive traffic and provided opportunities for singular sponsorship advertising. This content also serves as evergreen material for ongoing commercial sponsorship.
Q: Are there any hedging plans for newsprint costs into next year?
A: We have locked in pricing for the rest of the year and will start conversations soon to hedge into 2025. Pricing has been good, but there's always a risk it may drift.
Q: What is the impact of Google's decision to delay the removal of cookies on your digital growth strategy?
A: Our strategy to build direct relationships with our audience remains strong. While Google's decision is welcome, it doesn't eliminate the need to mitigate risks and maintain control over our audience.
Q: Can you provide any uplift figures from national campaigns with regional activations?
A: While I can't give specific numbers, campaigns like Boots saw a 20% increase in click-through rates. Tesco has returned year after year, and Volkswagen has seen an uplift, highlighting the importance of our regional business.
Q: What are your thoughts on the rest of the year regarding cost management and profit phasing?
A: We expect the phasing of profit to be more equally weighted between the first and second half of the year. Depreciation will be similar to last year, and we remain confident in the group's outlook for 2024.
Q: Can you elaborate on the strategic progress made in the first half of the year?
A: We have reinforced our confidence in the strengths of our business, particularly in our customer value strategy, which continues to deliver growing digital revenue and valuable engagement with our customers.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
