Isentia announces half-year loss following King Content debacle
- 23 August, 2018 10:25
Isentia has announced a 7.1 per cent loss in revenue, reporting a $5.1 million loss for the first half of 2018 compared to 2017, off the back of a unsettled year in the Australia and New Zealand markets.
The company also reported a 30.3 per cent loss in EBITDA (earnings before income tax, depreciation and amortisation) for the same period, after what has been a tumultuous time for the media intelligence and data provider.
A/NZ was the major contributor to the loss, with revenue down 11 per cent in this sector ($6.2 million loss), which Isentia attributed to pricing pressure, reduced traditional media volumes and churn. The SaaS – media intelligence A/NZ product was the worst performer, losing $4.1 million or 9.3 per cent of revenue. A/NZ statutory revenue was $100.4 million, and media intelligence revenue was $97.7 million.
Isentia has been struggling over the past year with both growth and its operating model. Having acquired fast-growing content marketing firm, King Content, the group closed the division last year after experiencing declining revenues and profits. The group reported an $11.9 million after-loss loss as a result. Shortly after, the company lost both its chief product officer and CMO, Richard Spencer.
It then instituted a brand refresh and restructure last year in a bid to focus on integrated media intelligence, research insights and strategy content.
Former Yahoo7 local chief and advertising and media veteran, Ed Harrison, was appointed as the new CEO of ASX-listed market intelligence firm last month. Commenting on his appointment, Harrison recognised the challenges Isentia has been facing in the wider media landscape and said he was looking forward to being part of the company and building its Asia-Pacific success.
“Like many organisations, Isentia is facing a number of challenges associated with the rapidly changing media landscape. I look forward to working with the team to drive an innovation, digital and product-focused growth agenda,” he said at the time.
The less than stellar results for 2018’s first half is hardly a surprise, given the company’s challenges.
Isentia reports statutory revenue of $137.1 million, media intelligence revenue of $132.6m, EBITDA of $28.6m, media intelligence EBITDA of $33.1 million, operating cash flow of $28.4 million, and net debt of $43.1 million, down from $51.7 million at 30 June 2017. The King Content marketing exit was completed during FY18 with a loss of $4.5 million.
Isentia chairman, Doug Snedden, described FY18 as an important year as the group put in place a restructuring agenda which, it believes, will deliver improvements in operating performance over the medium term.
“Our focus is on stabilising the competitive situation in A/NZ and growing our business in Asia. With 79 per cent of revenue recurring, the cashflow generation of our subscription model and conservative balance sheet remain key strengths as we move forward.”
In the latest financials, Harrison said he was looking forward to contributing to the next stage of Isentia’s journey as it adapts to an evolving marketplace.
“Isentia has a strong brand, premium products and an enviable customer base and these factors are a great starting point for transformation. Since joining Isentia, I have been impressed by the appetite for change and recognition of the challenges within the business,” Harrison said.
Harrison noted a number of strategic initiatives that will enable the company to respond quickly to market changes and prepare for a long-term transformation that will drive future performance. These include restructuring sales and account management teams to drive productivity and build closer relationships with customers and delivering annualised gross cost savings of almost $11m which have been identified and will be actioned by end FY2020.
The business is also commencing proceedings in the Copyright Tribunal to obtain an industry-based licensing agreement to ensure a level playing field for all participants; rolling out Mediaportal across Asia so that the platform is available for the first time in all markets; and strengthening product development and innovation to meet market demand for differentiated customer services.
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.