No total advertising revenue reversal in the very short-term

There was no surprise on the trend in the Q1 23. The decrease in total advertising revenue and ITV Studios on constant currency was compared to high comparatives last year. Total digital revenue surged by +29% including strong digital advertising growth (+30%). There is no reversal of total advertising revenue expected in Q2 23 (-12%). The 2023 guidance was confirmed for ITV Studios with mid-single digit revenue growth and an adjusted EBITA margin at the low end of 13-15% of revenue.

Initial Equity Trading Comments - 11 May 2023

Pressure on total advertising, growth for ITV Studios

FY2022 was in line with expectation. Total advertising revenue was down -1% and ITV Studios revenue increased by +19% o/w +14% organically. Digital revenue was up +18%. The lower adjusted EBITA margin (19% of revenue, -5pts) was due to higher content costs (+5%) and infrastructure and overhead costs (+9%) in Media & Entertainment. The start to 2023 has been challenging for total advertising revenue (-11% expected in Q1 23). Revenue growth and margin improvement are expected for ITV Studios in 20

Lower total advertising, growth at ITV Studios

In 9m 22, total advertising revenue decreased by 2% including a weak September 2022 (-14%). ITV Studios performed well with organic revenue up +13% in 9m 22. For 2022, total advertising revenue should decrease by -1/-1.5% given the broadcasting of the Football World Cup in Q4 22 and ITV Studios’ revenue should exceed the 2019 level. ITVX (AVOD/SVOD) is a key driver for digital revenue. The full launch of free content (>10,000 hours) is due on 8 December 2022.

Strong advertising and activities in studios

Q1 22 was strong in each division. Total advertising revenue increased by +16% as expected and digital advertising surged by +27%. ITV Studios revenue grew by +24% at constant currency thanks to strong deliveries of programmes. Total advertising revenue growth is expected to be +5% in H1 22 due to a tough comparative in Q2 22. ITV Studios benefits from the high demand for content and is confident on its performance in 2022. The launch of ITVX is confirmed for Q4 22.

Launch of the platform ITVX and higher content investments going forward

ITV had a strong 2021 year with total advertising revenue growth of +24% and studios revenue growth of +31% organically. The adjusted EBITA margin increased to 24% of revenue (+3pt). The advertising market has been strong since the start of the year 2022 according to ITV (+14% expected in January-April 2022). Conversely, the acceleration of the development of digital revenue (£750m by 2026) with the launch of ITVX implies higher content investments that should weigh on the operating margin in 20

Strong advertising and production activity

ITV had a strong performance in 9m21. It included strong total advertising revenue growth in Q3 21 (+32% vs -7% in Q3 20). The outlook is positive for Q4 21 with advertising revenue growth estimated at +11-13%. ITV Studios revenue growth (+32% in 9m21 vs +26% in H1 21) was driven by the delivery of programmes in the UK and international markets and higher revenue from streaming platforms. Q4 21 should benefit from the strong pipeline of programmes.

Recovery at ITV Studios, positive reversal in advertising in March

Q1 21 was characterised by opposing trends at ITV Studios and advertising. Revenue recovered at ITV Studios (+9%), while advertising decreased (-6%) due to a high comparative last year and continuing COVID-19 restrictions in the UK. Total advertising revenue turned favourably in March 2021 (+8%) and the positive trend was confirmed in April 2021 and until the end of H1 21 (+26% estimated vs -20% in H1 20).

Broadcast better than ITV Studios

In Q4 20, total advertising revenue turned positive (+3%). In 2020, based on a 16% decrease in revenue, the group’s adjusted EBITA (£573m, -21%) was above expectations and represented a margin rate of 21% of revenue (-1pt). ITV benefited from the reduction in programming costs and significant cost savings in both divisions. For 2021, total advertising revenue increased in March after two negative months. ITV Studios should continue to be impacted by COVID-19 restrictions and additional related c

Good in Broadcasting, less good in Production

In Q3 20, the decrease in total advertising revenue slowed significantly (-7% vs -43% in Q2 20, of which -42% in June). For Q4 20, ITV is expecting a slight increase yoy, assuming no prolongation of the containment into December. ITV Studios’ revenue dropped by 19% at constant currency in 9m19 (vs -17% in H1 20). The return to full capacity is challenging due to the second lockdown so that both revenue and the EBITA margin should be impacted in Q4 20.

Hit in advertising and production

Total advertising revenue dropped by 43% in Q2 20 and ITV Studios was affected by the stop in production. The adjusted EBITA margin collapsed to 14% of revenue (-8pts yoy) despite the reduction in the cost of programmes by £77m and overheads cost savings of £51m over £60m targeted in 2020. There is no guidance for Q3 20 and FY2020. The negative trend in advertising was reduced in July 2020 (-23%). ITV Studios restarted production in June 2020.

Q1 20 in line with expectations

In Q1 20, total advertising’s revenue (+2%) was in line with expectations and ITV Studios’ revenue (-10% organically) was impacted by the stopping of production since mid-March 2020. Advertising deteriorated in April 2020 (-42%) due to the lockdown and the cancellation of advertising campaigns. This may be a bottom considering the resumption of economic activity by the end of H1 20. ITV confirms cost savings, the reduction of capex and the cost of programmes.

High risk in TV advertising with the Coronavirus outbreak

In 2019, total advertising was better than expected and decreased by -1.5% (vs guidance of c.-2%). Lower group adjusted EBITA margin was attributable to Broadcasting, which had to support higher investments in the businesses, including the launch of BritBox UK, which were not completely offset by cost savings. The outlook for 2020 is uncertain due to the Coronavirus outbreak. Essentially, there should be a significant negative effect on TV advertising.

Guidance confirmed

The decrease in total advertising revenue slowed in 9 months 19 (-3% vs -5% in H1 19), reflecting a positive trend in Q3 19 (+1%) and corresponding to the high range of guidance (-1/+1%). Online revenue grew significantly (+23% in 9 months 19 vs +18% in H1 19). As expected, ITV Studios benefited from high deliveries of programmes, in particular from ITV America. The 2019 guidance is confirmed and a dividend of at least 8.0p/share was reiterated.

Advertising revenue better than expected

Total advertising revenue decreased at a lower pace than expected in H1 19 (-5%, o/w -7% in Q1 19) and the trend should be -1%/+1% in Q3 19 despite the still uncertain economic and political environment in the UK. The other positive news was additional cost savings identified (£20m) to the initial £35-40m announced in 2018 and the confirmation of a dividend in respect of FY2019 of at least 8.0p/share.

Initial Equity Trading Comments - 15 May 2023

Tremor - Q1 EBITDA +$2.5m ahead, FY23 & FY24 forecasts reiterated

Tremor has reported Q1 net revenue and adjusted EBITDA ahead of consensus, and reiterated the FY23 outlook. Q1 23 net revenue of $66.9m is +0.5% ahead of consensus at $66.5m, with the Programmatic division’s net revenue +6% yoy to $62.5m, including robust net revenue growth in CTV of +34% yoy to $21.3m. Q1 23 adjusted EBITDA of $8.9m is +$2.5m ahead of consensus, as management has focused on controlling cost while integrating the Amobee acquisition and delivering synergies, with the $65m annuali

Morning Note – 30 May 2023

Hybridan Small Cap Feast - 24 May 23

24th May 2023 @HybridanLLP Status of this Note and Disclaimer This document has been issued to you by Hybridan LLP for information purposes only and should not be construed in any circumstances as an offer to sell or solicitation of any offer to buy any security or other financial instrument, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract relating to such action. This document has no regard for the specific investment objectiv

CentralNic (CNIC LN) - Broadening growth drivers

Q1 revenue, Adjusted EBITDA and cash were all in line with the Q1 trading update in April and the outlook indicates its strong start to the year has continued into Q2. We expect growth in the remainder of the year to be boosted by its new partnership with Bing, new margin enhancing products and geographic expansion. We also see margins expanding as revenues continue growing whilst expenses remain steady. We upgrade our revenue forecasts based on a strong Q1 but conservatively keep our Adjusted E

SpaceandPeople (SAL LN) - Focus turns to growth

UK and European consumer demand is weak for well reported reasons, and the outlook for the sector is quite negative.

Q1 Trading Update

S4 Capital has reported Q1 net revenues of £219m, slightly ahead of DCe £209m, with LFL growth of +7% (+8% ex-Mondelez) and has reiterated its FY guidance for 8-12% growth and EBITDA margins of 15-16%.

Hybridan Small Cap Feast - 14 Mar 23

14 March 2023 @HybridanLLP Status of this Note and Disclaimer This document has been issued to you by Hybridan LLP for information purposes only and should not be construed in any circumstances as an offer to sell or solicitation of any offer to buy any security or other financial instrument, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract relating to such action. This document has no regard for the specific investment objectiv

Hybridan Small Cap Feast - 24 Apr 23

24th April 2023 @HybridanLLP Status of this Note and Disclaimer This document has been issued to you by Hybridan LLP for information purposes only and should not be construed in any circumstances as an offer to sell or solicitation of any offer to buy any security or other financial instrument, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract relating to such action. This document has no regard for the specific investment object

Software and Services Sector Quarterly review - May 2023

Deep Dive - Market reactions to SaaS transitions Our Deep Dive analysis indicates that the UK market is cautious on companies transitioning to SaaS business models. Investors have punished share prices of companies reporting declines in revenue growth and margins even though the declines are temporary and explained by the transition to SaaS. However, after the completion of SaaS transitions, companies are typically rewarded with high multiples for high recurring revenues and margins.

Growth Companies - Share & share alike Sell in May?

Support Group - finnCap Business Services quarterly sector note

Topic of the quarter: The Order Book Myth. Business Services has a range of companies with significant order books that should provide valuable visibility in these uncertain times. However, orders can be delayed or cancelled, definitions vary and delivering them profitably is an obvious challenge. We have screened the companies we keep an eye on in the wider sector for size of order book relative to sales, and then looked at their historic ability to deliver EPS at least in line with expectation

Hybridan Small Cap Feast 16/11/22

Dish of the day Joiners: BWP REIT joins the Wholesale Segment of the International Property Securities Exchange (IPSX). BWP REIT is a newly formed single asset company and has raised £35m by issuing 35m new ordinary shares at 100 pence per share to acquire Bridgewater Place, an office-led mixed use property in central Leeds and valued at £63m. The property is one of the tallest buildings in Yorkshire, comprising 234,000 sq. ft of office space, and is close to 90% let to EY, as well as multinatio

Hybridan Small Cap Feast - 18 Jan 23

18 January 2023 @HybridanLLP Status of this Note and Disclaimer This document has been issued to you by Hybridan LLP for information purposes only and should not be construed in any circumstances as an offer to sell or solicitation of any offer to buy any security or other financial instrument, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract relating to such action. This document has no regard for the specific investment object

SHORE CAPITAL - Share & share alike