The Tab and Entertainment Daily publisher Digitalbox has reported a 3% year-on-year drop in gross profits as global adspend continues to struggle.
The publicly-traded company had reported handsome growth in its mid-2022 earnings reports, with the first half of 2022 experiencing 40% growth year on year.
But in Tuesday’s full-year results Digitalbox recorded a 2.4% year-on-year revenue fall, to £3.57m. Pre-tax profit was £45,000, compared with £625,000 in 2021.
Visits, however, increased, rising 7% to 293 million for the year. And while advertising suffered, the company said it had signed up 1,400 monthly subscribers to the premium version of its satire brand, The Daily Mash (paying £2 per month or £20 a year).
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Gross profit in 2021 was £3.14m and £3.04m in 2022.
Adjusted EBITDA also increased, rising 5% to £1.08m. And Adjusted EBITDA margin – the size of EBITDA relative to revenue – rose 2.1 percentage points to 30.2%.
The company’s share price was down 3.2% for the day to £7.50 as of 5pm on Tuesday.
Digitalbox said that “whilst 2021 saw a strong recovery from the pandemic and the markets adjusted to work with the new realities attached to changed consumer behaviour, 2022 was a clear story of two halves…
“With global economies subject to [rising energy and food prices] into H1 2023, the open ad market is a good place to be as it has the ability to adapt in real time. Global commentary points towards the market recovering in the second half of 2023 with a full return forecast for 2024.”
Entertainment Daily generated £2.26m in revenue in 2022, an 8% year-on-year decline. The Tab, which Digitalbox acquired in October 2020, generated £1.1m, an 18% increase. Press Gazette reported in September that The Tab had paid off its entire £750,000 purchase cost within 18 months.
Mashed Productions, the Digitalbox property which produces comedy show The Mash Report, was the only revenue-generating part of the business to record an overall loss, costing the business £58,000 more to run than the £243,000 revenue it brought in.
The company said Entertainment Daily saw visits grow 17% year-on-year, despite Google algorithm changes causing “some challenges” for visits.
Digitalbox stressed in the report that it continued to generate cash: across 2022 it earned £1.42m, a 142% increase on the previous year.
The average number of content-producing employees in 2021 had been 20, a figure that stood at 22 in 2022.
The company said: “Push media skills remain critical and our brands continue to engage consumers at scale through this channel with 91% of our audience across the portfolio visiting on mobile devices.
“With an average of over 24m monthly user visits to our sites, we present truly significant user scale to the market especially when combined with our capacity to engage.”
Digitalbox chief executive James Carter said of the results: “We successfully delivered profitable growth and made significant progress in delivering our strategy of building a leading mobile-focused media business, developing an enlarged portfolio, attracting new audiences, and monetising them effectively.”
Marcus Rich, the business’ chairman, said: “The aftershocks of the global pandemic together with the war in Ukraine had a profound impact on global food and energy prices which have negatively impacted consumer spending power and, in turn, advertising spend…
“With the enlarged portfolio of Entertainment Daily, The Daily Mash, The Tab, The Poke and TVGuide.co.uk, the business will be well placed to deal with the challenges of 2023 and to take advantage of further acquisition opportunities that the trading conditions will likely bring to the fore.”
The company has been active in acquisitions in recent years, buying The Poke in December and TVGuide.co.uk in May. It expects the purchase of the latter to settle before the end of June 2023.
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