News

STRONG FIRST HALF FINANCIAL PERFORMANCE AND MEANINGFUL PROGRESS TOWARDS £200M OF REVENUE

LBG Media, the global digital entertainment business with a focus on young adults, is pleased to announce its results for the half year ended 30 June 2024 (“HY24” or “the period”).

Key Highlights

• Record audience of 494m globally, of which 141m is US, highlighting our unparalleled engagement and extensive reach with young adult audiences.¹
• Strong revenue momentum with organic growth of 29% driving operational leverage and a significant increase in profitability.²
• Proven business model driving progress towards £200m of revenue with significant strategic and operational developments across growth lenses of Direct, Indirect and US expansion.
• Strong momentum in the period to date and the Board is confident in delivering on market expectations for the 12 months to 31 December 2024.³

Financial Highlights

• Total Group revenue up 55% on a reported basis, with organic growth of 29%, which is faster than the overall market as our proposition continues to be increasingly compelling for advertisers.
• The strength of our diversified revenue model continues to improve with Direct accounting for more than 50% of total Group revenue for the first time since inception, alongside progression of our Web operations which now account for 45% of total Indirect revenue in HY24.
• Adjusted EBITDA of £10.2m (HY23: £3.0m) up 240% and benefitting from revenue growth, improvements delivered from the ANZ operating model changes and the accretive impact of Betches. Organic growth in adjusted EBITDA in the period was 190%.
• Strong adjusted cash conversion of 152% resulted in cash and cash equivalents of £26.6m at the period end (31 December 2023: £15.8m).⁵

Strategic and Operational Highlights

Direct:

• Continuing to build deeper relationships with blue-chip brands with HY24 brief conversion of 33% and repeat client revenue of 75%.⁶
• Uber Eats sponsored Euros-themed editions of the hugely popular original series “Snack Wars”, launched in June, demonstrates expanding capabilities and success in delivering brand sponsored content in a native format with viewing figures for these episodes surpassing viewership of the Euros final on the BBC.
• Notable wins for the Group in the half-year include Costa Coffee, Wilkinson Sword and GetYourGuide.

Indirect:

• Global audience has grown by 20% year-on-year, to 494m, with a US audience of 141m.
• Web yields, which reflect the level of demand for our Web advertising inventory, are up approximately 90%, benefitting from a focus on high quality content, web platform enhancements as well as strong partner demand for our inventory and reach with young adult audiences.
• Facebook’s new commercial model launched at the end of H1 emphasises engaging and high-quality content – both of which align to our strengths. Whilst this has created some initial volatility, revenues remain resilient and, as we have demonstrated with previous platform changes, our scale and data-driven expertise means we are better placed than anyone to adapt quickly to these changes.

US Expansion:

• Continued to build market share in the US, presenting partners with a ‘one stop shop’ when wanting to connect with the young adult audience.
• Significant wins including Boston Beer Co., NYX and White Castle highlight good momentum and complementary nature of the businesses.
• US operations consolidated into Betches HQ, with a reorganisation of sales teams to better encourage cross portfolio selling and enable growth.
  

Outlook

With strong financial performance and positive momentum across our growth lenses of Direct, Indirect and US expansion, management remains confident in the size of the opportunity ahead and the line of sight to £200m of revenue. Given the progress in the period to date the Board is confident in delivering on market expectations for the 12 months to 31 December 2024.³

As announced on 24 July 2024, the Group has changed its accounting reference date and financial year end so that, going forward, interim and annual accounts will be prepared and published for the six months ended 31 March and 12 months ended 30 September. The decision to change the year end was taken to better guide business planning and investment pacing and improve visibility over market dynamics, providing transparency for stakeholders by bringing the calendar Q4 spend into the first half of the financial year. As a result, our audited FY24 results, which in the first instance will be for the nine-month period ending 30 September, are expected to be announced in January 2025. 

A further update on current trading will be provided at our full year results in January, alongside expanded proforma disclosures for the Annual Report and FY24 results presentation.

CEO, Solly Solomou commented:

"Our strong first-half performance demonstrates excellent progress along our line of sight to £200m of revenue and showcases our team’s success in diversifying income and strengthening our operating model. Key sporting event activations and rising audience numbers confirm our position as the number one digital entertainment brand for young adults, a highly sought-after but challenging demographic for marketers.

"I am more excited than ever by the opportunity that lies ahead, particularly in the US, where we are going from strength to strength and where the complementary nature of our combined businesses is already demonstrating success. Our thoughtful and engaging campaigns, which frequently deploy messages of social responsibility, remain central to our mission.

"In the complex digital media landscape, the detailed understanding we have of our audience and our propensity to be agile in such a dynamic market provide a strong foundation for long-term growth and the delivery of shareholder value."

Analyst Presentation

LBG Media plc will be hosting an analyst presentation on 18 September 2024. Attendance is by invitation only. A recording of the presentation will be available on the LBG Media plc website at www.lbgmedia.co.uk/results-reports-presentations/results-and-presentations following the event.

Notes

¹ Audience numbers reflect social followers, unique podcast listeners and average monthly website users in the 6 months to the end of June 2024.

² Organic growth excludes the impact of the Betches acquisition.

³ External market consensus for year ending 31 December 2024: Revenue £86.0m and Adjusted EBITDA £23.5m.

⁴ Adjusted EBITDA – earnings before interest, tax, depreciation, and amortisation adjusted for share based payments (including employers NIC as appropriate) and adjusting items. Adjusted EBITDA margin is adjusted EBITDA divided by Group Revenue represented as a percentage.

⁵ Cash conversion is calculated as operating cash flow divided by adjusted EBITDA.

⁶ Repeat client revenue represents percentage of HY24 Direct revenue from clients that ran campaigns with us in 2022 and 2023.

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Notes to editors 

LBG Media is a global digital entertainment business with a focus on young adults and a leading disrupter in the digital media and social publishing sectors. The Group produces and distributes digital content across a range of media including video, editorial, image, audio, and experience (virtual and augmented reality). Since its inception in 2012, the Group has curated a diverse collection of specialist brands using social media platforms (primarily Facebook, Instagram, Snapchat, X, YouTube and TikTok) and has built multiple websites to reach new audiences and drive engagement. Each brand is dedicated to a distinct popular interest point (e.g. sport, gaming etc.), which is designed to achieve broader engagement, increase relevance and ultimately build a loyal community of followers.

The Group operates two core routes to market: Direct revenue, which is principally generated from the provision of content marketing services to corporates, brand owners, marketing agencies and other entities such as government bodies and where the relationship with the client is held directly by LBG Media; and Indirect revenue, which is generated via a third-party, such as a social media platform or via a programmatic advertising exchange / online marketplace, which holds the relationship with the brand owner or agency.

BUSINESS OVERVIEW

It has been a strong start to the year for the Group with strong financial performance matched by significant strategic and operational steps designed to position the business for future success. The Company continues to progress along its line of sight to £200m of revenue and, as outlined as part of our FY23 results in April, is doing so by focusing on our three growth lenses of Direct, Indirect and US expansion.

Direct

In HY24, Direct revenue was up 92% to £22.0m (HY23: £11.4m), or by 33% organically. For the first time since the Groups inception, Direct now accounts for more than 50% of total Group revenue.

This growth is fuelled not only by the expansion of our client base but also by the deepening of relationships with existing partners, such as Lloyds and Uber Eats. The strengthening of these partnerships reflects our ability to drive even greater value for our clients, cementing our role as a trusted and integral partner. Additionally, we have secured important new partnerships during the period, including with Costa Coffee, Wilkinson Sword and GetYourGuide, as well as a number of high-profile clients in the US, such as Boston Beer Co., NYX and White Castle.

Our direct brief conversion stood at 33% at HY24. This rate of conversion is a direct result of the deeper relationships we are building with brands, our highly engaged and growing young adult audience, as well as our ability to provide partners real time analytics and ROI insights that demonstrate the value and success of their advertising investment. Underscoring this improving conversion are high levels of repeat client revenue as brands keep coming back to work with us. This metric stood at 75%, meaning that 75% of clients that worked with us in HY24 also worked with us in the two previous years, demonstrating the confidence and trust our clients have in us.

Indirect

Indirect revenue grew by 28% to £19.7m (HY23: £15.3m), or by 27% on an organic basis. Our audience and reach continued to expand, with global audience growing by 20% year-on-year, to 494m. Our US audience now stands at 141m.

Indirect revenue is split between income from social platforms and income from web programmatic streams from our owned and operated websites. Diversification of our indirect channel and the ability to drive revenues from our audience, reach and content via our social platforms and owned and operated webpages provides stability and multiple levers to deliver growth.

Web accounted for 45% of total indirect revenue in HY24 and the acceleration of our Web programmatic offering reflects targeted investment in people and technology as we have driven higher quality sessions and higher yields through HY24. Web sessions are up year-on-year and our yield per session is up approximately 90%. Google’s announcement that it is reversing its decision to deprecate third-party cookies can also be taken as positive for the Group, though it will mostly serve to prevent any immediate volatility in revenues.

As indicated as part of our trading update in July, the change in Facebook’s commercial model has created some initial volatility in Social revenues. Despite this volatility, revenues have remained resilient as the new model emphasises engaging and high-quality content – both of which align to our strengths. As we have demonstrated with previous platform changes, our scale and data driven expertise means we are extremely well-placed to adapt quickly.

US Expansion

Expanding our operations in the world’s largest advertising market presents a huge opportunity from both a Direct and Indirect perspective. Integration between the two businesses has progressed at pace over the last six-months, with US operations now consolidated into Betches HQ and sales teams reorganised to focus on category specialisation. This operational shift, which has seen a reorganisation of sales teams into key sectors such as entertainment, alcohol and spirits and consumer goods, is an enabler for future growth as it helps foster deeper client relationships.

This refined approach is already yielding results, with new high-profile partnerships and a very encouraging pipeline. Betches accounted for £7.1m of revenue and £1.5m of adjusted EBITDA in HY24 and post period-end in H2, the first earnout payment of $4m was made.

We are increasingly excited by the opportunity that lies ahead in the US market, with significant launches such as Betches Sports in H2, a subsector in which we already have significant experience through SPORTbible, a Group brand. Our refined sales approach seeks to build deeper client relationships and an offering that presents brands with a ‘one stop shop’ to access our young adult audience.

Events & Awards

Recognising the opportunity UEFA Euro 2024 presented for the Group, and as part of our ongoing programme to build out relationships with new and existing clients, we hosted two events in February which sought to showcase our sporting expertise and ability to place brands at the heart of the action. An intimate client lunch, followed by an agency showcase featuring a Q&A with ex-England footballer Joe Cole, were both a success in kickstarting conversations and securing partnerships with a number of brands as the UEFA Euro 2024 countdown began.

In April, we held our annual client conference which gave brands and agencies the chance to learn more about our commercial capabilities. The event involved a series of tailored presentations shining a light on building cultural relevance through our original programming, transforming news and culture for the social generation and how we found success with The AA on a campaign that helped inject cultural capital into the brand. Feedback was very positive, with partners commenting on the deeper understanding of our commercial capabilities they had obtained as part of the event.

During the first half of the year, we were proud to have been shortlisted for 13 awards recognising the quality of work we produce. Our campaigns with The AA, Jacamo and McDonald's won in the Campaign Media Awards, ensuring we retained our position as the 'most awarded media owner' for the second year in a row, whilst our VISA campaign also won a silver award at the Drum Marketing Awards in the Finance category. Our Studios team’s LADbible TV, which recently hit three million subscribers, was nominated for Best Factual Channel and Channel of the Year at the Broadcast Digital Awards.

Purpose Driven Work

LBG Media has a powerful global platform to pursue socially responsible agendas, and we continue to recognise the importance of using our platform as a force for good having run several awareness campaigns in the period. Most recently, we launched our ‘You’re On Mute’ campaign, designed to inspire young people across the country to vote in the general election. We partnered with creators Grime Gran, Star Holroyd and Aydan Alsaad to spread the message to vote and boost election awareness among young adults with the campaign beginning with an out-of-home creative that appeared at sites around Glastonbury festival.

This year we also worked with the charity Stamp Out Spiking to launch our ‘End Spiking, Now’ campaign, which sought to raise awareness of the severity of the drink spiking problem in the UK, and exert pressure on the UK government to enact legislation changes. The campaign utilised the Group’s consumer youth panel, LADnation, and involved an original four-part mini-series titled ‘Survivors of Spiking: Our Stories’. This was supported by work with Capital XTRA radio host Jourdan, additional social content and the launch of out-of-home advertising in Manchester, all designed to raise campaign awareness. On 17 July 2024, the UK government announced that drink spiking is to be made a specific offence.

Finally, LBG Media was selected as The Prince’s Trust’s first ever official social partner for its annual awards that celebrate the achievements of young people who have overcome barriers. We delivered content activation in the build-up to the awards and were present on the red carpet to interview and showcase those in attendance.

FINANCIAL REVIEW

¹ Adjusted EBITDA, which is defined as profit before net finance costs, tax, depreciation, amortisation, share based payment charge and adjusting items is a non-GAAP metric used by management and is not an IFRS disclosure.

² Adjusted EBITDA % is Adjusted EBITDA divided by Group Revenue represented as a percentage.

Key performance indicators (‘KPIs’)

The Board monitors progress of the Group by reference to the following KPIs:

¹ Cash conversion is calculated as operating cash flow divided by adjusted EBITDA.

² Global Audience reflects social followers, unique podcast listeners and average monthly website users in the 6 months to June 2024.

³ Daily web sessions reflect unique individual interactions with our website.

Revenue

Total Group revenue reached £42.3m (HY23: £27.2m), marking a substantial 55% increase despite the expected seasonal variation between H1 and H2. The 55% growth included 29% from organic growth, with the remaining portion attributed to the acquisition of Betches.

Direct revenues increased by 92% to £22.0m (HY23: £11.4m), with 33% organic growth being achieved, driven from the Group’s growing reputation, quality of work and depth of relationships with global brands. The Group benefited from a number of successful campaign activations across the UEFA Euro 2024 tournament, including Euros-themed editions of the hugely popular original series of “Snack Wars”, sponsored by Uber Eats. Significant joint-wins in the US highlight the complementary nature of Betches and LADbible US, enabling the Group to continue to build market share within the territory. A high brief conversion rate is being maintained and is tracking 4ppts higher than the prior period.

Indirect revenue increased by 28% to £19.7m (HY23: £15.3m). Organic growth accounted for 27% of this increase, with improving web yields (up 90%) supporting the Group’s strategy of driving specialist content to our audiences that provides contextual relevancy for our advertising partners, enhancing broader revenue diversification.

Net operating expenses

Net operating expenses increased by 23% to £35.0m (HY23: £28.5m) driven by the acquisition of Betches. Excluding Betches, net operating expenses increased by 1% (£0.2m). 

Share based payment costs were by £1.6m lower at £0.6m (HY23: £2.2m) due primarily to the Non-Executive Director scheme vesting fully in the prior year. The reduction in share-based payment costs were offset by a 32% (£1.6m) increase in media and production costs correlating to the organic direct revenue growth of 33% achieved within the period. Staff costs excluding Betches remained consistent year on year.

Amortisation of £1.2m (HY23: £0.5m) was up by 135%. The increase is mainly a result of the amortisation arising on intangible assets acquired through the Betches acquisition in October 2023, including brand and relationships.

Depreciation of £1.2m (HY23: £0.9m) was up by 33%, mainly driven by new property lease agreements in the UK and Dublin.

Adjusting items were £nil (HY23: £0.7m). The prior period adjusting items included costs associated with business reorganisations, a one-off retention payment and acquisition related fees.

Adjusted EBITDA

Adjusted EBITDA was £10.2m (HY23: £3.0m) representing a 240% increase in comparison to the prior year, driven by operational leverage, the Betches acquisition and a more efficient ANZ operating model that is delivering benefits as planned. On an organic basis adjusted EBITDA has increased by 190%. Adjusted EBITDA margin increased to 24% (HY23: 11%).

Betches contributed £7.1m of revenue and £1.5m of adjusted EBITDA in HY24 as integration continues to progress well.

Adjusted EBITDA is used for internal performance analysis to assess the execution of our strategies. Management believe that this adjusted measure is an appropriate metric to understand the underlying performance of the Group.

More information on Alternative Performance Measures (APMs) can be found on page 20.

Net finance costs

Net finance costs of £0.6m (HY23: £0.0m) were incurred during the year, mainly due to the unwinding of discount on contingent consideration liability in relation to the acquisition of Betches.

Share of JV

Share in joint ventures was £0.4m profit (HY23: £0.1m) representing our percentage share in the results of Pubity Group Ltd.

Profit/(loss) before tax

Profit before tax was £7.1m (HY23: loss of £1.2m) representing a significant improvement in comparison to the prior year.

Taxation

The tax charge for the period was £2.2m (HY23: £0.6m). The effective tax rate for the period is 32% as a result of permanent and temporary differences.

Cash flow and cash position

Cash and cash equivalents at the period end amounted to £26.6m (FY23: £15.8m, HY23: £32.7m). 

The increase in cash of £10.8m in comparison to the year-end includes net cash generated from operating activities of £12.8m, and outflows relating to investing and financing activities of £2.0m.

More information on the cash flow can be found on page 12.

UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

¹ Adjusted EBITDA, which is defined as profit before net finance costs, tax, depreciation, amortisation, share based payment charge and adjusting items is a non-GAAP metric used by management and is not an IFRS disclosure.

All results derive from continuing operations. 

UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS