Headwinds persist, yet green-shoots emerge

Headline trading to 23rd April was in-line with expectations and highlights continuation of existing trends, with weak industry-wide digital advertising spend partially offset by resilient performance in Print. Group revenues fell 6% y/y, with Digital down -15%. In Digital, alongside the weaker advertising spend backdrop, a shift by Facebook towards short-form video/ reels and away from digital news has impacted traffic referrals to Reach we continue to see some muted structural risk to traffic

FY'22: Controlling the controllable

Reachs prelims are consistent with the January update, with revenues of £601m (-2% y/y) and AOP of £106m (-27% y/y). Positive underlying progress was offset by programmatic headwinds in 2022; a trend reflected across global ad leaders where growth decelerated by 15-40pps y/y. This, coupled with anomalous energy/Print material costs and wage inflation put pressure on the content industry as a whole. In this context, a stable top-line and profit margins of 18% (FY21: 24%; FY18: 20%) look resilient

Circulation grows but advertising headwinds persist

Reach plc provides an update for FY22e which flags the persistence of advertising headwinds which have masked the positive underlying progress made during the year. Group revenues declined 2.3% y/y in-line with SCMe (-2.2% y/y), yet revenues were more weighted towards lower-margin Print circulation, leading to soft AOP margins (calculated guidance range: 17.3%-18.3%; SCMe: 18.8%). Management execution remains strong, yet whilst operational KPIs in Digital show continued positive underlying momen

Q3: Underlying performance improves

Reach’s update reveals encouraging underlying performance, with Q3 sales decline of -2% y/y decelerating from Q2 (-3%) even inclusive of a advertising blackout in September. Underlying growth was in-line with SCMe forecasts, as Digital revenue growth accelerated to +6% y/y (Q2: +0%) reflecting: 1) user engagement initiatives and returns on focused editorial investment driving traffic (Digital page views: +6% y/y); and 2) stabilised Digital yields as a greater share of inventory was allocated to

H1'22: Revenues resilient on challenging backdrop

Strong management progress on Reach’s Customer Value Strategy continues, although underlying progress has been obscured by elements beyond management’s control. Sales were broadly stable (-2% y/y to £297.4m; SCMe: £299.3m), as Digital revenues continued to grow (+5% y/y) despite a severe deterioration in wider market OMP yields (down up to 40% at peak). Inflationary headwinds in Print have also persisted, with aggregate opex up +7% y/y to £241.7m (SCMe: £237.3m) - AOP consequently fell 32% y/y t

In line H1 outturn; Encouraging H2 outlook

React’s H1 results were well flagged in the 12th May update. Revenue more than doubled to £5.1m (H1’21: £2.5m), though adj. EBITDA reduced to £162k (H1’21: £369k), reflecting a shift in mix towards Contract Maintenance (lower GM but recurring) and the additional acquired operating costs from Fidelis. Contract Maintenance represented 63.8% of H1 revenue and has been further scaled up by the acquisition of LaddersFree post period end. H2 has started well, with Contract Maintenance continuing to re

AGM TU: Resilient performance

Reach’s YTD update shows further resilient performance against a challenging backdrop. Group revenue declined 0.9% y/y in the 4-months to April (in-line) as growth trends normalised and tougher, post-lockdown comparables are lapped. Within the mix, Print positively surprised, posting modest -4% y/y decline (SCMe FY’22e: -6%) – cover price increase acceptance helps demonstrate the relative pricing inelasticity of RCH’s loyal audience base. Digital revenue momentum remains positive (YTD +9% y/y; Q

FY'21: Positive inflection occurring

FY’21 saw organic revenue growth for the first time in over a decade. Group revenues rose +3% y/y to £616m, with AOP margins rising +140bps y/y to 23.7% supported by mix shift towards Digital. Digital sales (24%/group) grew +25% y/y with key milestones reached: 1) unique registrations hit 10m (a year ahead of plan); 2) >200 campaigns were run using Plus+ products (launched Q2); and 3) ARPUs grew +25% y/y to £3.55/unique visitor. Reach enters FY’22 with both rising audience engagement and improvi

The Big Book 2022 - Extended Coverage & Best Ideas

The Big Book 2022 includes our highest conviction Best Ideas for 2022. In 2021 our Best ideas outperformed by 24%, extending our track record (>10% outperformance on average over the past decade). We have again divided our coverage into six distinct themes to create our Matrix. We have added two new categories this year: ESG and Pricing Power, both of which will be fundamental investment themes for 2022. We look forward to discussing our ideas with you.

H2'21: Positive momentum, further upgrades

Reach has provided a strong update highlighting H2 revenues up +1% y/y to date (SCM H2e: - 3%), with Digital revenues growing +17% y/y. Unique user registrations continue to rise (>8m; July’21: 6.7m) providing a highly attractive source of first-party data for digital advertisers, which combined with further traction supporting advertisers’ digital campaigns using Reach’s ‘PLUS’ products, paves the way for sustainable ongoing improvement in yields. Ongoing recovery in Print advertising yields re

Interims: Customer value strategy working

Reach’s interims were strongly ahead of SCM estimates for H1 sales and EBITDA, by 5% and 4% respectively. Digital sales (23%/revs) grew 43% y/y to £69m supported by 150% y/y growth in unique registrations to 6.7m, whilst underlying Print decline decelerated to just -5% y/y (H2’20: -18%; H1’20: 20%) as weaker comparatives were lapped. The Group has posted positive sales growth for the first time in a number of years, rising +3% y/y (like-for-like) to £302.3m, and delivering AOP of £68.9m (Margins

Q1'21: Digital delivering

Reach continues to successfully execute on its enhanced Customer Value Strategy, driving strong top-line momentum in Digital. Digital sales (c.20%/revs) rose +25% y/y in Q1 supported by further growth in registered users (6.2m; Dec: 5.0m), whilst high demand for the Group’s ‘plus’ product portfolio is attracting strong advertiser interest, creating an attractive opportunity pipeline via enhanced monetisation of the Group’s growing first-party consumer interest data pool. In Print revenue decline

Brave Bison - Growth Stampede Continues at Brave Bison

Brave Bison has released its FY23A results which are in-line with the upgraded expectations at the recent trading update. The acquisition of SocialChain has transformed The Group’s offering in the fast-growing social and influencer segment of the market leaving it well-positioned for the expected pick-up in marketing spend in 2024. Management have continued to drive operational efficiencies in The Group, for example rolling out an advanced resource planning tool, which has contributed to Adj EPS

Morning Note – 22 April 2024

LBG Media (LBG LN) - Strong momentum into FY24

Resilient growth in core markets: Revenue of £67.5m is +7.5% YOY (FY22: £62.8m) and +0.7% vs. Zeus estimate of £67.0m, with growth across Direct and Indirect divisions benefitting from increased activity with new and existing clients.

LIBERUM: The Liberum Leisure Digest: NLW increase - pricing power is key

Hybridan Small Cap Feast - 22 April 2024

22nd April 2024 * A corporate client of Hybridan LLP ** Arranged by type of listing and date of announcement *** Alphabetically arranged **** Potential means Intention to Float (ITF) has been announced Dish of the day Admissions: Delistings: What’s baking in the oven? ** Potential**** Initial Public Offerings: Reverse Takeovers: 16 April 2024: Electric Guitar (ELEG.L) Concurrent with its Admission to trading on AIM, Electric Guitar is proposing to acquire the entire issued share capital of 3radi

Next 15 Group PLC

While 2.5% revenue growth and 6.1% EBIT growth is relatively pedestrian by Next 15’s historic track record, we see the last year as one of the most impressive reported by Next 15. Revenue growth and margin expansion has been delivered in the face of a significant slowdown in demand from the group’s historic core technology sector clients. We believe a number of factors are in play here, not least the growing diversity of Next 15’s client and business mix as a result of M&A over the last th

S4 Capital - Extension of recovery horizon

S4 Capital had a difficult FY23, as flagged, with reduced client confidence and spend, particularly from those clients in the tech sector, and on larger transformation projects. Management is cautious in the short term, with no substantive changes likely in H124, but sees conditions likely to improve in H224 as economic pressures ease. The group’s longer-term prospects should be buoyed by its positioning across data and digital marketing and, in particular, in incorporating AI into hyper-persona

LIBERUM: Time Out: Expanding the Markets pipeline

Team Internet Group - Growth and returns, acquisition bolsters outlook

Team Internet’s FY23 results exceeded our forecasts and consensus on revenue and EBITDA. Online Marketing was driven by increased consumer engagement, reflecting investment in delivering more targeted ads across a wider array of channels. The group’s latest acquisition, Shinez, strengthens Online Marketing via diversification of publishers and is earnings accretive with scope for further synergies. Online Presence returned to strong revenue growth, driven by demand for exotic domains, pricing op

Next 15 Group - Baked in AI opportunities

Next 15 Group's net revenues grew 2.5% in the year to January, despite difficult markets. Adjusted operating margin rose from 20.2% to 21.0%, helped by head office cost savings. In common with much of the sector, spending by tech clients was soft, down 17% like-for-like. The group did well, though, in growing spend from non-tech clients, up 11%, making for a strong overall performance in a market beset by ongoing macro uncertainty. Next 15 has been building its AI capabilities for some time and

STV Group+ (STVG, House Stock at 235p) - Recent news extends positive momentum

Team Internet Group (TIG LN) - Record results

Team Internet’s FY23 results confirmed another strong year of trading from its Online Marketing and Online Presence businesses. Both revenue and EBITDA growth remained in double digits, margins on net revenue continued to improve, and cash conversion remained strong. We continue to believe that the Group has substantial long-term growth opportunities including international expansion, new partner development, and vertical integration. In our view, Team Internet’s strong track record, cash genera

Brave Bison - Underlying Performance Reassuringly In-line

Brave Bison has released its interim results for the period ending June 2023. The update shows the SocialChain integration has been materially completed, with synergies mostly realised and new client wins taking place as a combined business. Gross revenue increased 15% YoY to £16.9m and net revenue increased 23% to £10m, both driven primarily by the new contribution from SocialChain. Adj EBITDA increased by 20% to £1.9m and Adj PBT increased 16% to £1.5m, both in-line with expectations. We have

Eagle Eye+ (EYE, House Stock at 570p) - All I Do Is Win. Capitalising on a dynamic market.

Data Driven Marketing

Jaywing is a UK marketing services company with a clearly differentiated market position in data science. Core, is the delivery of behavioural insights and algorithms to enhance the roi of clients marketing and customer experience programmes and, in a highly personalised way. The acquisition of search marketing specialist Epiphany in March 2014 was strategically transformative, giving Jaywing a profitable growth platform as well as consolidating its leading position in digital data and online m