Magazine publishing giant Future plc has announced a £25m to £30m investment programme that will see it hire 150 new editorial staff.
But investors today looked alarmed at declining profit and a sluggish outlook in its full-year earnings release, with the company’s share price dropping more than 20% at market open on Thursday.
Profit before tax at the Marie Claire and Tom’s Hardware publisher was £138.1m in the year ending 30 September 2023, down 19% on the year before.
Key points from Future’s financial results for 2023 financial year
Revenues excluding acquisitions made during the year (“organic revenues”) stood at £788.9m, a 10% decline on the previous year. The business suffered its worst performance in the US, where organic revenues declined 19% year-on-year.
Although the company’s US magazine revenue remained flat on 2022, advertising and affiliate revenues each dropped 25%.
Future’s UK organic revenue shrank at a more modest pace, with affiliate revenue flat on 2022 and advertising down 7%. Total UK revenues suffered a 4% organic decline.
The company said in its earnings release: “The stabilisation of trends gives us the confidence to return to organic revenue growth in H2 2024, translating into low single-digit revenue growth in FY 2024.”
Future chief executive Jon Steinberg told Press Gazette he was “very proud of how we finished the year”.
“Adjusted operating profit of 32% margin; 99% free cash flow conversion of £253m… digital revenue per user was up 22%, and this was driven quite a bit by Go Compare, which had strong performance [of] 8% for the full year.
“Last year was certainly tough in terms of audience at the beginning of our financial year. I want to stress that we are viewing ourselves as first to ride the wave of recovery as the macro backdrop improves in H2.”
‘Growth Acceleration Strategy or GAS, like the fuel you put in a car’
Central to Thursday’s earnings statement was the announcement of Future’s “Growth Acceleration Strategy or GAS, like the fuel you put in a car”, as the press release put it.
The company describes GAS as “a two-year £25m-£30m investment programme that will translate into adjusted operating margin in the range of 28-30%, with £20m incremental costs in FY2024”.
Among the investments, Future says it will spend £6.5m “to replicate the UK expertise in the US”. (The company attributed its difficulties in the US in the financial year in part to “being less advanced on the execution of the strategy in comparison to the UK business”.)
But significantly against a backdrop of steep editorial cuts across the news industry, Steinberg told Press Gazette that GAS will see Future hire 200 people, 150 of them in editorial roles, over the next two years.
Asked what sort of editorial roles these will be, Steinberg said “we really want to focus on reviews” and on video, which he called “two big areas where we see opportunity right now… reviews have a very high monetisation rate for our affiliates”.
The company was hiring rather than cutting, he said, “because not many digital media businesses do £800m of revenue and £253m of cash flow.
“This cash flow that we have and the financials of this business are rare. It's what drew me to the company… Now it's time to take those amazing finances and convert them into growth and content and video and a US digital advertising sales force and to reinvest that cash rather than just, you know, doing nothing with it.”
As well as the hires, the company says it will make investments in branded content and social media content monetisation and that it will re-classify its brands into three types: hero brands, halo brands and cash generators.
Each of the categories “will have specific actions and investment levels”, Future said, which will allow “increased focus on return on investment”.
Hero brands are a group of “about twelve brands” that represent half Future’s revenue and will be the priority for future investments. Halo brands, which represent approximately 30% of revenue, “are in growing underlying markets and have stable profitability”, and “add scale to the hero brands”.
Cash generators, which “operate in markets with more limited opportunity and require little investment”, will receive the least.
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