Half-Year Report: Future Starting to See Growth Once Again

Future PLC, the UK-based publisher, announced its half-year 2024 financial results on May 16th, with the financials “in line with expectations.” Specifically, Future generated:

• £391.5m in revenue, down 3% year-over-year, but Q2 revenue was up 3% year-over-year.
• £105.8m in adjusted operating profit, down 19% from last year
• 27% AOP margin, down 5% YoY.

“Our half-year results are in line with expectations and importantly, the group has returned to organic growth in Q2,” CEO Jon Steinberg said on the earnings call, expressing optimism about the rest of the year.

The optimism is driven by the reorganization that split the company into three divisions: B2C, Go.Compare, and B2B. Steinberg explained, “This reorganization drives accountability while recognizing that there is an element of shared central resources. I am very pleased with the focus and energy this reorganization has brought about.”

In terms of revenue, Go.Compare and B2B drove growth, while the B2C portfolio saw a 13% year-over-year revenue contraction.

B2C’s pullback is due to “challenging market conditions in digital advertising and affiliate products.” Also, there’s a secular decline in its magazine portfolio, which accounts for 49% of this division’s revenue. Despite weakness in its magazines, subscription revenue accounts for 49% of that revenue.

The graph provides a holistic understanding of how the B2C portfolio generates revenue.

Go.Compare was a winner for the company. Future acquired it in early 2021 for £594 million. It is an insurance comparison site, allowing UK residents to get auto and home insurance quotes directly. It generated a direct profit margin of nearly 49%, higher than B2C and B2B at 37% and 33%. This is a major part of the company’s long-term upside.

On the B2B side, things have turned a corner, though the division only accounts for 8% of the company’s revenue. Outgoing CFO Penny Ladkin-Brand subtly referred to the rumors of Future’s desire to sell the B2B portfolio by saying, “importantly, following the B2B strategic options analysis, is being reorganized and unified under a strong leadership team. The aim of this new structure is to be faster and more agile.”

Most of the revenue is driven by advertising and demand generation, with small contributions from magazines and other sources.

What makes this important is that 83% of the revenue comes from the US, compared to the B2C portfolio, which is 56% UK-based.

Ladkin-Brand commented on the US business, stating, “the US declined by 11% on an organic basis as the majority of our US business is media revenue… we’re seeing quarterly improvements in US media, so we’re pleased with the early progress on what is one of our single biggest revenue opportunities.” The UK saw 3% growth in revenue.

Audience stability

The theme of audience stability came up a couple of times on the call. In a chart shared on the earnings call, the team discussed the traffic beginning to slowly increase in the last 12 months.

The impact of Google’s algorithm changes on Future business was also discussed. Steinberg said:

We tended to benefit quite well from that most recent algorithmic change. Why do I think that is? We’ve been investing in the content quality; we’ve been improving our buying guides; we’ve added the 30 editorial heads. There is no gaming Google in my view. There is making excellent content that is expert, authoritative, and trustworthy and having Google respond to that quality of content. I believe that is what we are seeing come through. That is why in April we have audience growth; that is why we are seeing stabilization in audience growth.

Whether that continues remains to be seen, especially with the strong fluctuations in Google’s SERPs over the last month or so.

Future seems to have improved. With Q2 revenue up 3% year-over-year, the team is feeling more optimistic. And with the recent reorgs, the company can operate more efficiently with the goal of a FY 28% profit margin.