Media intelligence firm's FY19 report shows a net profit after tax of a loss of $34.3 million
Embattled media intelligence company, Isentia (ASX: ISD), has reported another loss.
Its FY19 report shows a net profit after tax of a loss of $34.3 million. Revenue was down $10.1 million (7.6 per cent), operating expenses rose $1.6 million, with EBITDA (earnings before income tax, depreciation and amortisation) down $10 million, or 30.2 per cent.
However, net debt reduced to $28.3 million from $43.1 million at 30 June 2018, the lowest level since 2015.
The NPAT loss of $34.3 million was put down to a $41 million non-cash write-down of previously recognised intangible assets.
The results follows a 7.1 per cent loss in revenue for the same period last year, off the back of an unsettled year in the A/NZ markets. The company also reported a 30.3 per cent loss in EBITDA for the same period.
In the media intelligence firm's financial report, the company said its SaaS offering was once again the culprit, losing $10 million, with its A/NZ business losing $5.8 million. The dip was attributed to SaaS revenue continuing to be impacted by a challenging competitive landscape in Australia.
Isentia has spent the past 18 months working to restructure the business. Steps taken include the appointment of former Yahoo7 local chief and advertising and media veteran, Ed Harrison, as CEO last year. At the time, Harrison said he recognised the challenges Isentia has been facing in the wider media landscape.
Total A/NZ revenue reached $87.6 million, while in South East Asia, revenue increased by 17 per cent as demand for media intelligence in these markets continued to grow.
Despite a challenging competitive environment, Harrison said he was pleased to deliver an underlying operating profit result of $23.1 million, $10 million less than the previous year, which was in line with the earnings guidance provided to the market in August 2018.
“In FY19, we pointed the company in a different direction with the appointment of a new leadership team and the launch of a new strategy. We realised significant operational efficiencies across the organisation through increased automation and the use of our Asia-Pacific network to optimise resource allocation,” he said. “This ongoing shift from investment in operations to investment in technology continues to improve productivity, reduce costs and, most importantly, deliver higher quality services to our clients.
“Moving the focus of our development pipeline to one of continuous, incremental product delivery has de-risked our investments and generated good results. The number of product and feature releases more than tripled to 66 in FY19."
Major product launches during the year included Live Alerts, a large suite of on-platform analytics tools and a new mobile app, currently in beta testing with clients.
“In Asia, we established regional product and tech teams, as well as new multi-market sales capabilities," Harrison continued. “While the Australian market remains competitive, we have restructured our account management function and established a dedicated business development team that is focused on new sales and competitive win-backs.
“We have also refreshed our go-to-market plan which includes a new website, new packages and rate card. This has resulted in growth in new clients and we continue to renew the majority of our contracts.”
Harrison claimed Isentia's competitive position was enhanced in April when the Australian Copyright Tribunal issued orders for an interim licence, which applies from 1 December 2018. The decision is important because it goes some way towards achieving equity in copyright pricing and it introduces a variable component into what had been a fixed cost.
Action in the Copyright Tribunal is ongoing and a final hearing date has been set down for late 2020. Copyright costs are the largest non-labour cost for Isentia, and the company reported inconsistencies in the application of copyright charges across media intelligence providers in Australia. Isentia said it's committed to adoption of an industry-wide copyright scheme.
“Looking ahead, we will be using the foundation set in FY19 as the base for our transformation of the company,” Harrison concluded.
Isentia's new strategy aims to provide a roadmap for transforming the business over the next three years. It includes establishing an efficient operating model underpinned by a single platform, product innovation and regional scale and strengthening leadership.
Insentia expects the rate of revenue decline to slow in FY20 and said it will be making significant operating and capital investments in building new product and technology. FY20 EBITDA is expected to be in the range of $20-23 million.
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