Research: TMT
With H124 revenue of £136.7m (+11% y-o-y), Bloomsbury is on track to meet FY24 expectations, with a particularly good H1 from Consumer and within that, from the children’s list, where sales of Sarah J Maas titles were up by 79% y-o-y. Momentum appears likely to be sustained in H2 as her next book is set for publication in January. Non-consumer growth was more muted, against tough comparatives. It is here that Bloomsbury stands to benefit most from the shift to digital, notably in the US school and college markets, albeit these have had some short-term funding hiccups. Management has focused on the most important fundamental – building an extensive resource of high-quality content in readily accessible formats. This is driving the subscription revenues and high retention rates that underpin its growth plans. Cash resources of £39.1m at end August should enable further content acquisition to drive the top line.
Bloomsbury Publishing |
Quality content driving demand
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Media |
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27 October 2023 |
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With H124 revenue of £136.7m (+11% y-o-y), Bloomsbury is on track to meet FY24 expectations, with a particularly good H1 from Consumer and within that, from the children's list, where sales of Sarah J Maas titles were up by 79% y-o-y. Momentum appears likely to be sustained in H2 as her next book is set for publication in January. Non-consumer growth was more muted, against tough comparatives. It is here that Bloomsbury stands to benefit most from the shift to digital, notably in the US school and college markets, albeit these have had some short-term funding hiccups. Management has focused on the most important fundamental – building an extensive resource of high-quality content in readily accessible formats. This is driving the subscription revenues and high retention rates that underpin its growth plans. Cash resources of £39.1m at end August should enable further content acquisition to drive the top line.
Consumer leads the charge
Within Consumer (65% of H124 revenues), both Adult and Children’s trade lists had a strong H124 performance, with the former growing revenues 8% and the latter up an exceptional 22%. The sales mix favoured the backlist to the advantage of pre-tax margin, up from 12% to 13%. Non-consumer revenues of £47.3m were up 2%, with Academic & Professional revenues flat on demanding comparatives, notably at Bloomsbury Digital Resources (H123: +69%). Here the quality of earnings continues to improve, with subscriptions now nearly half of the revenue base and renewals running at over 90%. A 16% pre-tax margin for Academic & Professional was flat on FY23, after FX headwinds and investment in additional staff.
Cash to invest in content organically and via M&A
Bloomsbury ended the half year with net cash of £39.1m post some working capital absorption (including author advances, underpinning future revenues). The H1 dividend is up 162%, but this is a rebalancing exercise, given that the group is now much less dependent on Christmas as its revenues have broadened. Continuing investment in high-quality content is key (and supplies the higher-margin backlist sales for the future). Bloomsbury continues to evaluate acquisitions that add to its resource, particularly specialist content that will benefit from its digital leverage.
Valuation: Trading below its long-term average rating
Bloomsbury’s share price is down 9% year to date, which belies its own financial performance. The valuation as at end September was running at 21% below its own long-term average EV/EBITDA. We would suggest that this discount does not reflect its growing recurring revenue streams and the breadth of its markets.
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Consensus estimates
Source: Refinitiv (priced at 25 October 2023) |
EDISON QUICKVIEWS ARE NORMALLY ONE-OFF PUBLICATIONS WITH NO COMMITMENT TO WRITING ANY FOLLOW UP. QUICKVIEW NOTES USE CONSENSUS EARNINGS ESTIMATES.
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Research: Financials
In its Q224 update, Record reported core inflows of US$1.5bn that were more than offset by US$3.4bn of negative market and FX movements. Consequently, Record experienced a 2% net decline in assets under management equivalent (AUME) of US$1.9bn versus Q124. Record also earned performance fees of £1m in Q224 as the group continued to benefit from interest rate differentials. Management stated that the higher-margin asset management product rollout continues to progress, albeit at a slower pace than initially planned. Due to the shift in timing, we have scaled back our FY24 and FY25 PBT forecasts by 9% and 22%, respectively. Record will give further details on its growth initiatives at its H124 results on 17 November.