Ascential plc (LON:ASCL), the specialist information, analytics, events and eCommerce optimisation company, has announced results for the six-month period to 30 June 2023.
Highlights
● Strong organic revenue growth in all segments, led by Events (up 25%).
● Organic revenue growth of 16% with Adjusted EBITDA growing 17% – in line with expectations.
● Strategic actions to maximise shareholder value and position each business within the portfolio for long-term success are well advanced. Market update expected before the end of the year.
Operational highlights
● Events (comprising the Marketing and Retail & Financial Services segments) revenue up 25%.
○ Marketing segment up 28%.
■ Lions’ revenue up 30%.
■ Continued double-digit growth from WARC’s subscription business up 12%.
○ Retail & Financial Services segment up 17%.
■ Money20/20 Europe continued to grow very strongly (up 19%).
● Digital Commerce segment revenue up 10%.
○ Strong revenue growth, outpacing a market impacted by the continuing challenging retail environment, with continued key client wins in the first half.
○ H1 investments in technology and marketing delivering and enabling:
■ September launch of Flywheel Commerce Cloud, the integrated go-to-market operating platform which brings together our best-in-class solutions and products.
■ Implementation of integration synergies now underway in H2 to drive stronger second half and full year margins.
■ October launch of unitary, single-brand, Digital Commerce organisation structure.
● Product Design segment revenue up 8%.
○ Subscription billings up 7% with continued strong retention.
○ Non-fashion products driving growth (up 13%) and now account for just under 50% of subscriptions.
○ Fashion product growth continues at 2%.
Financial highlights
● Group revenues of £307.4m (H122: £260.7m).
○ Reported revenue growth of £46.7m or 18% (organic: 16%, proforma: 16%).
● Adjusted EBITDA of £78.6m (H122: £67.2m). Margin of 25.6% (H122: 25.8%).
○ Reported growth of £11.4m or 17% (organic: 17%, proforma: 18%).
○ Events Adjusted EBITDA up 26% to £64.6m.
○ Digital Commerce Adjusted EBITDA at break-even for the half – prior to the H2 reorganisation synergies enabled by the launch of Flywheel Commerce Cloud under a single go-to-market brand.
○ Product Design Adjusted EBITDA up 8% to £27.4m.
● Reported Operating profit of £0.7m (H122: loss of £35.1m) stated after charging Adjusting items of £63.5m (H122: £89.7m) reflecting:
○ Amortisation and impairment of acquired intangibles of £29.0m (H122: £48.9m).
○ Non-trading items of £25.7m (H122: £33.2m).
○ Share-based payments of £8.8m (H122: £7.6m).
● Adjusted diluted EPS of 7.7p (H122: 8.0p) and total EPS loss of 3.8p (H122: EPS loss of 8.7p).
● The Group continues to deliver strong operational cash flows with operating cash flow conversion of 99% (H1 2022: 128%) and free cash flow conversion after tax and capex of 72% (H1 2022: 107%). Closing net debt at £205.6m was a leverage ratio of 1.6x EBITDA (December 2022: £216.7m and 1.9x EBITDA).
Duncan Painter, Ascential Chief Executive Officer, commented:
“Our businesses have continued to trade strongly in the first half of 2023. In particular, both Cannes Lions and Money20/20 enjoyed extremely successful editions in June and have progressed even further ahead of their pre-pandemic benchmarks. Digital Commerce has once again outperformed the underlying retail market it serves and action taken in the first half to create an integrated enterprise customer product and organisation have set the Digital Commerce business up to deliver sustainable margins and operating leverage going forward. Product Design continues to drive growth by extending its world-class trend forecasting expertise to a wider range of products and end markets.
The strategic actions to maximise shareholder value and position each business within the portfolio for long-term success are well advanced and we will look to update the market again by the end of the year.
After our seasonally stronger first half, we have had a solid start to the second half. Despite continued macro uncertainty impacting the industries we serve and currency headwinds, our businesses remain well set for the year, supported by multiple growth levers. The structural long-term growth in our end markets, and the success of our marquee events, underpins the Board’s confidence in the prospects of our businesses for the future.”
OPERATING REVIEW
The first half of 2023 has seen continued strong performance from all four business segments, following the record levels of revenue achieved in 2022. Overall revenue grew by 16%, with EBITDA growing by 17%, (both on an organic basis). After adjusting items, we recorded an operating profit of £0.7m (H122 £35.1m loss)
The Events business enjoyed an excellent half, with the two principal events in the period, the Cannes Lions Festival and Money20/20 Europe, both growing strongly. This was especially pleasing as the products had already exceeded their pre-Covid levels of performance in the prior year. Overall, Events revenue grew 25%, with EBITDA growing by 26%. Within Marketing, Lions grew by 30%, led by further record levels of strong sponsorship engagement, supported by growth from awards, delegates and subscription revenue streams. For Retail & Financial Services, Money20/20 delivered strongly, with revenue growth of 19% and attendee numbers now reaching in excess of 8,500. Customer engagement with the US show (in October 2023) remains good and preparations for the launch of the Asian event in Bangkok (in April 2024) continue to progress well.
The Digital Commerce segment delivered a strong revenue performance in the first half of 2023 against a backdrop of continuing challenges in the global retail sector due to sustained high inflation and the continuing volatility in consumer activity that impacts our clients. Revenue grew by 10% on an organic basis driven by the performance of our Enterprise customers. In the same period, for example, the sales growth of Flywheel’s customers outstripped that of Amazon vendors overall by a factor of 5 highlighting the competitive edge that our services deliver for brands trading on the major marketplaces. The strong progress of the integration has enabled us to start to deliver material cost synergies after the half year end that will drive higher margins in H2 and in 2024.
Product Design delivered a strong performance in the period. Revenue grew by 8%, while billings from subscription products grew at 7%, driven by continuing high levels of retention. Growth continues to be driven by non-fashion products, such as Insight, which collectively accounted for almost half of the billings in the period, growing at 13%, while Fashion also grew 2% in-line with expectations, driven in part by the 2022 launch of our advanced, AI-driven, trend forecasting service, TrendCurve+.
Finally, as previously announced, we were pleased that our significant minority investment in Hudson MX, was strengthened by fresh investment capital from a new majority investor to help the Hudson business advance closer to sustainable success. Hudson made good progress deploying its technology and with key customers in the first half 2023.
Operating Responsibly
This year we have published a standalone Sustainability Report for the first time, containing our key ESG information, enabling stakeholders to understand our approach and commitments in this area.
Carbon Emissions data capture and reporting has been a core focus this half. We are embedding emissions measurements across the business to be able to report on scope 3 emissions in our value chain for 2023, along with the scope 1 and 2 emissions we already report. Measuring the emissions associated with our events has also been a focus. We have appointed Isla, a non-profit organisation founded by event professionals and industry leaders focusing on a sustainable future for events, to measure the carbon footprint of our event operations. From this baseline will work to set reduction targets and develop a sustainability charter that sets the standard for sustainable event operations across all of our events.
Internally, our focus remains to attract, retain, develop and engage a diverse workforce. Our Employee Networks are key to that focus and this year have organised education and engagement activities for colleagues globally around International Women’s Day, Pride and Juneteenth. Externally, the partnerships our Brands continue to build are key to the impact we have in this area. These include Lion’s partnership with the Black Executive CMO Alliance, which supported a group of young Black marketers to attend Cannes Lions in June, and Flywheel Digital’s partnership with Next One Up, a long-term mentoring non-profit that transforms the lives of young men in Baltimore city.
Progress against our 2023 Priorities
We have made good progress on the priorities we set for 2023 – which can be summarised as follows:
Engage with our shareholders on the proposals resulting from the strategic review and, subject to their approval, implement them.
The preparations for the separation of the three businesses of Ascential have progressed well and include branding, tax and legal structuring, preparation of standalone cost bases and initial SEC filings. We have engaged with shareholders throughout the period since our announcement in January 2023 and have a good understanding of their feedback and priorities. As it implements its plans, the Board remains agile and focused on its primary objective of maximising shareholder value and positioning each business within the Group for long-term success.
Digital Commerce: Creation of an integrated operating platform, bringing together our digital products, aligning them with our customer base.
The Flywheel Commerce Cloud, our integrated operating platform, initially for Enterprise customers has been developed and launched with key early-stage customers already migrating. This is a key enabler to release the economic and operational benefits of the integration of the Digital Commerce business.
Product Design: Continue to drive growth in non-fashion horizontal offerings, underpin fashion’s growth and accelerate our high value advisory services.
Non fashion products grew by 13% overall in the half, now accounting for just under half of billings with Fashion products up 2% supported by the new TrendCurve+ product. Our smaller and more economically sensitive Advisory services declined marginally in the half.
Events: Double down on the successful return of live events including preparations for Money20/20 Asia, growing digital revenues, with targeted M&A delivering an enhanced offer for customers.
Both Lions and Money20/20 grew very strongly in the half and non-event dependent revenues, including digital, were up by 16%. The post period acquisition of Contagious brings expertise in creative trends insights to the Marketing segment.
Outlook
After a strong first half for the Group, our second half operational focus is to build upon this performance. In terms of Events, we look forward to delivering a successful edition of Money20/20 USA and preparing for the launch of Money20/20 Asia in 2024. In WGSN we will continue to drive growth through our non-Fashion products and, in Digital Commerce, complete the launch and roll out of Flywheel Commerce Cloud, accompanied by integration synergies to drive margins. As our results in H1 have demonstrated, our business-facing teams remain fully focused on delivering for customers.
After our seasonally stronger first half, we have had a solid start to the second half. Despite continued macro uncertainty impacting the industries we serve and currency headwinds, our businesses remain well set for the year, supported by multiple growth levers. The structural long-term growth in our end markets, and the success of our marquee events, underpins the Board’s confidence in the prospects of our businesses for the future.”
SEGMENTAL REVIEW
Events
This division comprises the Marketing and Retail & Financial Services segments and the combined performance for the half year was as follows:
| Six months ended 30 June (£’m) | Growth (%) | ||||
| 2023 | 2022 | Reported | Organic | Proforma | |
| Revenue | 136.1 | 114.4 | 19% | 25% | 25% |
| Adjusted EBITDA | 64.6 | 52.0 | 24% | 26% | 26% |
| Adjusted EBITDA Margin | 47% | 45% | |||
In the six months ended 30 June 2023, the Events business held two of its three main annual events: the Cannes Lions Festival and Money20/20 Europe. Both of these events grew very strongly compared to their editions in 2022. This performance, combined with continued strong growth from WARC’s subscription driven business, delivered overall organic revenue growth of 25% and improved margins compared to the six months ended June 2022 demonstrating the strength of these market-leading products and the important role they play for their customers.
Marketing
The Marketing segment comprises Lions and WARC. Lions, through its awards and festival, as well as its subscription and advisory products, is the global benchmark for creativity in the branded communications industry, while WARC is the global authority on marketing effectiveness for brands, agencies and media platforms. Shortly after the half year end, in August 2023, we acquired Contagious, a provider of creative trends insights to brands and agencies.
| Six months ended 30 June (£’m) | Growth (%) | ||||
| 2023 | 2022 | Reported | Organic | Proforma | |
| Revenue | 104.8 | 80.8 | 30% | 28% | 28% |
| Adjusted EBITDA | 55.7 | 43.2 | 29% | 28% | 28% |
| Adjusted EBITDA Margin | 53% | 54% | |||
The Marketing segment performed very strongly in the first six months of 2023. Its year over year organic growth of 28% in both revenue and Adjusted EBITDA was especially pleasing considering that Lions had already returned to pre-COVID levels of revenue in the previous half year.
Lions provides opportunities to network, learn and do business at the Cannes Lions International Festival of Creativity. The festival celebrated its 70th edition in Cannes in June 2023, with Lions growing by 30% on the prior year (or by 40% on pre-COVID levels in 2019). The event enjoyed record levels of customer engagement, through physical sponsorship activations, while revenue from delegate participation was up 17% and award entries revenue also grew well, up 11%.
In terms of Events revenues, attendees at Cannes Lions also saw good growth, with a total of c.12,000 representing growth of 9% on the 2022 event. Attendees from Asia Pacific saw growth of over 30%, with delegates now able to travel outside their countries due to the lifting of pandemic restrictions. In addition, sponsorship revenue grew by 66%, as demand for onsite activations, particularly with major media and technology partners, grew strongly even compared to 2022’s record levels.
In terms of the Lions benchmark awards, entry volumes of just under 27,000 were received, up 6% on prior year. This included an 18% increase in submissions directly from brand customers, with strong engagement in categories representing emerging channels such as B2B, Gaming, Commerce and Businesses Transformation. This year saw the launch of the Entertainment Lion for Gaming, where strong participation highlighted the increased collaboration between brands and this growing industry. Lions’ regional awards (Dubai Lynx and Spikes) also saw growth in award entries, demonstrating the importance of the Middle East and Asian markets within the industry.
Lions also provides year-round intelligence and consulting services through its subscription and advisory products and this now accounts for 10% of the last twelve months’ revenues. Subscription revenues from Lions membership and The Work, continued to grow well, up 8%, with annual renewal rates for The Work remaining strong, at over 90%. Advisory, which provides insights using Lions’ awards intelligence and respected creative excellence training programmes, more than doubled vs H122, with projects for major brands such as Colgate, Pepsi and Heineken.
Further expanding Marketing’s digital subscription base, WARC saw strong revenue growth of 12%, with renewal rates continuing to exceed 95%, building on the launch of the Marketing Effectiveness Platform last year. June also saw the launch, at the Lions Festival, of the Lions & WARC Creative Impact track, a joint content stream, examining what it takes to drive business performance through commercial creativity in 2023.
Acquired in August, Contagious, a multi-format creative insights business, brings to the Marketing segment deep expertise in the analysis of creative trends. The business, which provides forward-looking creative inspiration and trend analysis for agency and brand customers, is highly complementary to the offerings of Lions and WARC and further strengthens our product set across the industry.
Retail & Financial Services
Money20/20 is the world’s leading platform where the global fintech communities come together to do business. The Retail and Financial Services segment also comprises Acuity Pricing, our Retail Price & Promotion data provider.
| Six months ended 30 June (£’m) | Growth (%) | ||||
| 2023 | 2022* | Reported | Organic | Proforma | |
| Revenue | 31.3 | 33.6 | (7%) | 17% | 17% |
| Adjusted EBITDA | 8.9 | 8.8 | 1% | 15% | 15% |
| Adjusted EBITDA Margin | 28% | 26% | |||
*Prior year results include £5.6m of revenue and £0.8m of Adjusted EBITDA from Retail Week World Retail Congress which was sold in December 2022.
The Retail & Financial Services segment performed very strongly in the first six months of 2023. Its year over year organic growth of 17% in revenue and 15% in Adjusted EBITDA was especially pleasing considering that Money20/20 Europe had already returned to significantly higher than pre-COVID levels of revenue in the previous half year.
Money20/20 is the leading platform for the global fintech community, driving progress, growth and success for customers, by creating connections, enabling deals and generating fresh insights. The brand’s European event, held in Amsterdam in June 2023, delivered growth of 19% compared to the 2022 edition (and over 50% compared to 2019), driven by increases in both attendees (now over 8,500), where revenue grew 11% and sponsorship business where revenue grew 23%. The event saw attendees from over 2,300 companies attend, representing over 100 countries, with over 18,000 customer meetings booked via the Money20/20 app (an increase of over 20%). An increase in the Net Promoter Score illustrates continued strong customer engagement.
Customer engagement ahead of the flagship US show, to be held in Las Vegas, in October remains good. After delivering an exceptional result in the prior year 2022 edition (where revenue was up 64% on pre-pandemic levels), and in light of disruption to the funding environment for the early-stage financial technology sector, in particular payments, we are expecting 2023 revenues to be flat to slightly down on a constant currency basis (noting that we also expect a 14% US Dollar currency headwind compared to 2022).
Preparations for the launch of the Asian show, in Bangkok in April 2024 are progressing well, with strong early engagement from key regional players and an excellent regional line up of content.
The Retail Price & Promotion business saw a slight decline in revenue, although billings grew modestly, supported by product enhancements and renewed marketing efforts including a re-brand in H1 to “Acuity Pricing”.
The fintech end market and the broader payments ecosystem which Money20/20 serves remained robust throughout the pandemic underlining that it continues to represent a long-term global growth sector. Despite recent significant reductions in funding and valuations of companies in certain sub-segments of the customer base from their 2021 highs, the long-term trend is expected to be positive.
Digital Commerce
Our Digital Commerce segment operates a leading cloud-based platform enabling brand manufacturer customers to optimise their sales, share, and profit across the world’s major digital commerce marketplaces.
Execution products (81% of revenue): Flywheel Digital, OneSpace, WhyteSpyder, DZ, and Intrepid provide managed execution services to global enterprise brands across the world’s leading marketplaces. Perpetua and 4K Miles provide self-service execution to challenger brands, while ASR provides content optimisation services.
Measurement & Benchmarking products (19% of revenue): Edge and Yimian primarily offer market share insight, with digital shelf optimisation, across the key global marketplaces, while Intellibrand specialises in digital shelf services in the Latam region.
| Six months ended 30 June (£’m) | Growth (%) | ||||
| 2023 | 2022 | Reported | Organic | Proforma | |
| Revenue | 114.1 | 95.1 | 20% | 10% | 11% |
| Adjusted EBITDA | – | 1.8 | n.m. | 0% | 6% |
| Adjusted EBITDA Margin | – | 2% | |||
Digital Commerce delivered a strong performance in the first half of 2023 against a backdrop of continuing widespread economic challenges. In the six months ended 30 June 2023, revenue grew by 10% on an organic basis (11% on a proforma basis). We were pleased to see H1 growth ahead of that of the leading marketplace.
This growth was led by expansion of the Enterprise customer offering, where revenue grew by 11% on an organic basis (13% on a proforma basis) with our Challenger customer division growing at 10% on an organic basis (6% on a proforma basis). Growth in China was subdued at 2% as the region recovers from the pandemic disruption in the first quarter of the year. Our performance was once again led by the growth of our Execution products which grew by 14% proforma while Measurement & Benchmarking products declined slightly.
This robust underlying revenue performance continues to be driven by a mix of gross new customer additions and net revenue retention*. We added over 1,150 new customers in H123 (over 150 Enterprise customers and over 1,000 Challenger customers) and delivered net revenue retention for the last 6 months of over 100%.
Revenue continued to be weighted to the US with 62% of revenue from the US, 23% from Asia and 15% from Europe and other. Revenue from Digital Subscriptions and Platforms continued to make up the vast majority of revenue with approximately 50% paid on a fixed retainer or subscription and 50% variable with customer sales or media spend.
As previously reported, we planned for our margins to be weighted towards the second half of the year. Overall Adjusted EBITDA margin for the half was breakeven (H122: 2%), including £3.3m of losses from businesses newly acquired in 2022. We are now approaching the completion of our multi-year investment programme to reorganise and integrate the business and products, including the launch of Flywheel Commerce Cloud. This enables us to realise synergies from H2 2023 as part of the benefits of this programme and we are targeting a high single digit margin in 2023 and a mid-teens margin in 2024.
Flywheel Commerce Cloud was a critical focus for the business in the first half, enabling us to move to a unitary business structure, with key clients already commencing migration to the new integrated platform. This brings together the capabilities of our Flywheel, OneSpace, WhyteSpyder and Edge products into a single experience, all leveraging the same, aggregated, cross-marketplace data. This integrated platform fully enables our Enterprise clients to manage their end-to-end execution in real time across the world’s leading marketplaces utilising AI automation programmes as well as new real-time retail optimisation utilities.
In addition to this critical launch of the first fully integrated platform for Digital Commerce at this scale, we have also been aggressively rolling out new capabilities with our marketplace partners to maximise our ability to optimise our clients’ eCommerce trading on a real time basis. We have successfully launched products leveraging Amazon Market Cloud, Amazon Stream, Amazon DSP services, Walmart Quality Content Programme as well as Target, Instacart, and Uber.
The creation of Flywheel Commerce Cloud has also enabled us to create a unitary organisation structure with all elements of the operation migrating to a single brand “Flywheel” in October. As clients experience a fully integrated global platform, they will also have a simplified engagement experience with us under a single team.
* We calculate our net revenue retention rate on a constant currency basis as of the end of a period by using (i) the revenue from our clients during the twelve-month period ending one year prior to such period as the denominator; and (ii) the revenue from those same clients during the twelve months ending as of the end of such period as the numerator.
Product Design
WGSN, a leading global supplier of trend forecasts, market intelligence and consumer insight, helps customers understand the future demands of consumers. Information is delivered principally through digital subscriptions to over 6,500 customers in more than 90 countries. The Product Design segment also includes trend products for SMEs in the fashion market (WGSN Start) and the innovative colour system Coloro.
| Six months ended 30 June (£’m) | Growth (%) | ||||
| 2023 | 2022 | Reported | Organic | Proforma | |
| Revenue | 57.2 | 51.2 | 12% | 8% | 8% |
| Adjusted EBITDA | 27.4 | 24.4 | 13% | 8% | 8% |
| Adjusted EBITDA Margin | 48% | 48% | |||
The WGSN Group delivered a good performance in the first half of 2023. In the six months ended 30 June 2023, revenue grew organically by 8% compared to the six months ended 30 June 2022, while billings from subscription products grew at 7%, driven by continuing strong levels of retention, which continues to be at rates of over 95%. Growth continues to be driven by non-fashion products, such as Insight, which collectively accounted for almost half of the billings in the period and grew at 13%. Fashion grew at 2% with good take up of our advanced, AI-driven, data-rich trend forecasting service, TrendCurve+, launched in 2022. This product combines inputs from WGSN’s unique proprietary data sources, applying deep machine-learning algorithms to generate trend projections across thousands of key items, silhouettes and colours, and is now being utilised by leading brands and retailers across the globe to inform their buying decisions.
In the smaller, non-subscriptions part of the business, the more economically sensitive Mindset advisory revenue declined by 13% in H1, while there was an offsetting strong performance from the Coloro business, which was up 60% compared to H122.
Signature white papers released this year include Future Consumer 2025, which has already been downloaded more than 13,000 times and presented at key events such as Vidcon São Paulo, Outdoor Retailer and Cannes Lions. WGSN’s strategic use of AI to enhance its products continued, with the launch of machine-translated versions of its Food & Drink platform into Spanish and Japanese, with future releases due later in 2023 of WGSN Fashion in German and French.
WGSN’s ongoing roadmap of innovation and platform upgrades delivered an important update this July, addressing a key customer need, with the WGSN interface now serving up personalised forecast recommendations depending on a user’s job role, industry and brand. Finally, the business has also continued to maintain outstanding levels of NPS in the last 2 years, underlining the value of the information delivered to customers and the strength of its brand.
Ascential delivers specialist information, analytics, events, and eCommerce optimisation to the world’s leading consumer brands and their ecosystems.
