Future plc

Good morning, all. Thank you for being here. So I'm delighted to be here, my first time as CEO. I will start with some brief opening remarks before handing over to Sharjil, who will cover the financials for the half. I will then come back to introduce myself, although many of you know me already. Then we will move on to covering why I'm excited to have become the new CEO. why we have the tools and the track records to succeed and the progress we have made to date. And then we'll open up for Q&A. Now turning to page four, it's truly an honor to be standing here in front of you today. I joined Future 20 years ago as a programmer, freshly arrived from the beautiful island of Mauritius. 20 years ago. The company I worked for was acquired by Future, and the rest is history. During my time here, I experienced a vast amount of change, big and small, in the company as well as in my roles. I was chief technology officer for the group for eight years, and I have spent 10 years on the leadership team. And most recently, I was the executive vice president of our largest division, B2C. So many things makes Future a great company, from the amazing brands to its unique and proven tech stack, which remains close to my heart today, down to the talented 3,000 people working here. And taking them in in detail, As I said, Future has amazing brands, from Go Compare to TechRadar, and stopping by Who What Wear and The Week Junior, to which my children are subscribers of. And the reasons why these brands are fantastic is because of our customer proposition, including our well-known editorial content quality. We know our audience. we have created an affinity engendering trust in our products and in our expertise. That is the backbone of our philosophy. Future has an amazing and proven tech stack, a true enabler, unique, proprietary, and integrated. And these are fundamental characteristics to drive operating leverage as demonstrated over the last decade. Importantly, over the years, we have enriched it to drive growth through innovative products and to remain relevant in a dynamic market. With agility, we achieved all of that with very limited capital expenditure. This is how we do things. And that is not all. With audience and products, we get valuable, rich, first-party data, and critically, it is for us to capitalise on it going forwards. Additionally, and importantly, these assets are matched by superb financial characteristics, meaning high margin and strong cash generation, which, Sharjil said, We'll cover more on that later. So what I want you to get from today is a sense of continuity. The roadmap might be different, but the destination is the same. Focusing on audience and monetization to deliver growth. And this is timeless. Now turning to the next slide, What I want you to get also is that I'm committed to delivering on our strategy and remaining focused on shareholder value creation. We are doing this by reaching and attracting valuable audience and monetizing it effectively and efficiently. And we are executing on a very clear path of actions. On creating shareholder value, we have returned over 43 million pounds to shareholders in the half alone. And we have announced this morning a new share buyback programme. Our investment is driving returns as the Q1 organic growth, revenue growth of 2% testifies. And we remain cost disciplined and only invest when it truly drives returns, notably in period of macro uncertainty. I firmly believe that our assets and our agility will continue to serve us very well. When it comes to what we do today, we can do more with less. Focus resources on innovation and extend our track record of disrupting the industry further to capitalize boldly on the next wave of growth. And before handing over to Sharjeel, I would like to spend a bit of time going through some of the growth initiatives we delivered in the first half. On the next slide, please. Now, in my previous role as the Executive Vice President of B2C, I have driven many growth initiatives alongside with the team. Regardless of the macro, it is important to remain focused on the items we can control to drive growth, marginal gains time and time again. Doing the basics well is also crucial, so we have put even more focus on collaboration between editorial, audience, product, and tech teams, continually optimizing ourselves, and we are getting stronger and more generative as a result, starting with audience engagement. In the half, we have deployed AI-enhanced recirculation, It provides our audience with suggestions of what to read next within future. Using AI to surface existing content. This is driving substantial brand engagement by increasing the length of time spent on the site and therefore the ads volume served. And this is done with no incremental costs. We have also enabled commenting on our sites. Some would say basics. but capturing the value from it is much harder. The reason why this is valuable to us is twofold. First, it contributes to brand loyalty, creating a sense of passionate community and purpose. Second, it brings valuable behavioral first-party data that feeds into Aperture, which is our audience segmentation and targeting platform. And we have also recently launched T3 Germany on April 30th, using AI and limited editorial human expertise and input as overlay. This means reusing our vast array of published editorial content, again at no incremental costs, and creating additional revenue monetized programmatically. We hope that this is the first of many. The platform effect is ready to deliver yet again through more brands and more languages. And on this slide, you can also see this in action with the Trust Me, Buy This, Who, What, Where newsletter. The ad product has since been playbooked, creating new ad products and therefore scale using that same platform effect. And finally, what I also wanted to share with you, the career podcast Second Life has seen Cartier as the key sponsor. Podcasts are a great brand marketing moment, offering a high-quality platform for luxury advertisers, and importantly, are platform agnostic. Now, turning to slide seven on monetization, our second strategic objective is Product and innovation are vital. We need to serve the products that work for our customers. We need to be relevant. During the half, we have launched a shoppable ads format as demonstrated on this slide where the audience can interact with and purchase through the ads. Furthermore, as mentioned at the four-year results last year in December, reviewing the UK sales organisation was paramount to drive momentum, further product innovation, leveraging the learnings from the US commercials that are transferable to the UK and vice versa. The review is well progressed. We've continued improvement in trading expected throughout the rest of the year. And now on to magazines. We have successfully slowed the rate of decline, leading to stellar magazines performance in H1. And Sharjil will give you much more detail on this on the financial side. It is also worth noting that this performance in magazine is not through luck or market tailwinds. This is the results of 18 months of deep dive leaving no stone unturned, using data to make informed decisions. But also, investment in key brands for better acquisitions and retention of customers, resulting in reducing the rate of decline by at least 50%. And additionally, in the half, the Rolex book, which I would recommend to everyone, has contributed to the strong performance also. And then B2B, despite challenging market backdrop, is focusing on driving initiatives, entering new verticals through a unified product portfolio. I hope what you get from those two slides is that we are creating our own momentum and we're continuing to execute our plans of action at pace. The strategy is simple. We are focused on rigorous execution and delivery, and there is more work to be done. It is about building the business for tomorrow whilst delivering on today, which is a perfect segue for Sharjah to cover the financials for the half. Sharjah, over to you.

Thank you, Kevin. I'm delighted to open the innings with you for the very first time. Starting with the financial highlights. We are pleased to deliver financial results which highlight that we are executing against our strategy and we are concentrating on what is in our control. We have invested in the business with discipline in the past two years. These investments drove good growth in the second half of FY24, and we saw that momentum continue into future's first quarter of FY25. While the decline in organic growth across the first half of FY25 is a bit disappointing, it is important to note that future was in organic growth until the end of February. But in March, we were impacted by uncertainty, mainly across our US digital advertising clients. I will break this down when I talk about B2C in more detail later. That said, I wanted to note right up front that the US digital advertising market has stabilised in our Q3. More on this when I go through the outlook. Revenue of £378.4 million was down 3% year-on-year on a reported basis. Within this reported figure, our organic performance was down 1%. Our adjusted operating profit of £100.7 million reflects the expected half-year AOP margin of 27%. The margin is flat year-on-year and this testifies our disciplined approach to costs. The stable margin combined with reduced interest costs and the benefit of our share buyback programs has translated into an adjusted EPS growth of 4%. The group continued to generate strong cash flows with a robust cash generation at 111% of adjusted operating profit. And the balance sheet remained strong with net debt at 1.1 after having returned over 43 million to shareholders in this period alone. And in line with our capital allocation policy, a further 55 million shared buyback programme has been announced this morning. So to summarise these results, despite a challenging macro in the latter part of Q2, we are focusing on what we can control, relentlessly executing against our strategy, tightly managing our investment and costs, rigorously applying a capital allocation framework, focusing on creating value for our shareholders. As mentioned at our four-year results in December, we changed our reporting segments to reflect how the business is now managed on a day-to-day basis. Overall, the group's organic revenue declined by 1% during the first half, with good growth in Q1 of plus 2, being more than offset by the uncertainty in the latter part of Q2, which was down 5%. Overall, B2C was flat, which is a good result given the short-term uncertainty we faced. Go.compare was down 1%. This is in line with our expectations given the stellar performance last year. The expected decline in car being offset by the strong growth in home and other segments. In B2B, as mentioned in our four-year results, the tech enterprise market remains very difficult. However, other verticals like financial services and education have shown good growth. Right, let's get down to some detail by each division, always enjoying the detail. Right, starting with B2C. As a quick reminder, this represents two-thirds of the group. B2C itself is made up of 50% from magazines, 33% from digital ads and other media, and the remainder from e-commerce affiliates. Overall, B2C was flat year on year, after being in good growth during Q1, and now taking each area in turn. In the first half of the year, our audience sessions were down 4%. It is worth highlighting that the underlying trend in sessions is better than that headline stat. There was a temporary reduction in sessions, specifically in Google Discover traffic due to image displays issues, which we have now fixed. Without that temporary reduction, our audience's performance would have been approximately two percentage points better. And while sessions remain the key audience performance, it is worth noting that total advertising impressions, i.e. the inventory we sell, are up. benefiting for more time on each page as a result of the quality of the content, as well as the initiatives that Kevin highlighted, such as recirculation and commenting. Within our verticals, technology continues to do well, and following editorial investments, we have seen a rebound in women in luxury as well as entertainment. The gaming cycle has been weak. However, in H2 we have just seen Oblivion remastered to generate good traffic. And of course, Nintendo Switch 2 will launch on the 5th of June, which I am personally looking forward to as well. In digital advertising, it has been about puts and takes across geographies and quarters. I will cover the quarterly movement in the next slide. In the US, March saw a number of pullouts, delays and an overall reduction in spend. This resulted in our US digital advertising revenues being down for the half, despite good progress in the sales strategy and moving inventory from open auction into direct. In the UK, the challenges experienced in 2024 continued. However, the work on the UK sales organisation is starting to bear fruit. and we are seeing a slower rate of decline, and this is set to continue for the rest of the year. Turning to e-commerce affiliates. As mentioned in our February trading update, peak trading was good, with Q1 growing by 19%, with the basket size flat year on year. Performance in products has slowed in Q2, but this has been partially offset by strong growth in vouchers. We expect the growth in vouchers to moderate as we anniversary strong comparators. Last but not least, magazines. Magazines have performed strongly with 1% organic growth in the half against an overall market which is in secular decline. This is a combination of two factors. First, we have produced a premium book for Rolex, and if you're into watches, I highly recommend it. Second, as Kevin highlighted earlier, there has been an underlying improvement in subscription as a result of key initiatives, notably around acquisition and retention, leading to an improvement in our net subscriber metric, which has been positive in the recent months. So overall, a mixed performance for B2C, which started the year very well, but experienced the impact of US softness in the latter part of Q2. This particularly comes to light when looking at slide 13. As you can see in the two red boxes at the top of slide 13, we experienced significant swings in US digital ads between Q1 and then Q2. The delta is even more stark when you look at direct advertising, which went from up 7 in Q1 to minus 10 in Q2. A couple of examples will help give some context. We had a client who produces in China, assembles in Mexico, and sells into the US, who pulled spend. Similarly, we had luxury and technology customers moving spend into the latter part of the year, where they would have more clarity. The other item I would like to point out on this slide is the improvement in the UK, which is set to continue into H2. More on Q3 in the Outlook section. Turning to slide 14, I wanted to highlight a B2C bolt-on we recently completed, Quizly. While it is relatively modest in size, I wanted to give a bit of colour on Quizly to help show some of our thinking around bolt-ons. It provides audience engagement tools, including quizzes, games and polls embedded into websites. The bolt-on would improve audience attraction and retention as we roll it out to prioritised sites. increasing dwell time and therefore improving monetization. Further, we will gain more data from user registration and marketing permissions, which in turn can be monetized at a higher rate. Just a small example of how bolt-ons can help attract and reach valuable audiences and grow monetization. Moving on to Go.compare. At 95 million, Go.compare represents a quarter of the group's revenues. Go.compare revenue declined 1% in the period, which is a solid outcome given the 30% revenue growth we experienced in the first half of 2024. Worth highlighting that Go.compare has grown revenue at a 10% CAGR between 2022 and 2025. Car insurance revenue, as expected, was down in the period, reflecting declines in overall quote volumes. However, this was partially offset by improved conversion when it came for users coming onto the site. Other revenue grew 10.5%. A key strategic initiative to drive diversified revenue in Godot Compare. This is a very pleasing result to have moved four points of revenue into non-car insurance. And non-car insurance is now 38% of the business. As mentioned at the full year results in December, we said we would leverage the REAP platforming to improve user experience and drive audience engagement. And this year has been packed with initiatives. We have launched quick quotes to drive cross-selling opportunities. For example, if you have car insurance quotes, we will provide you with a home insurance quote with the data you have already provided us. We are looking to launch this for other products as well. Additionally, Rather than emailing you, it's time to renew your car insurance, we will proactively send you a renewal price to simplify your renewal journey. We continue on simplifying the login journey as well, as this drives user stickiness and engagement. And we continue to leverage futures expertise to drive SEO improvements for Go.Compare. And these organic actions have been complemented with the recent acquisition of Renewal, which brings me nicely to slide 16. We bought Renewal in March. Renewal is an insurance wallet app, meaning that it stores all insurance-related documents in one place, making it easy for you to renew, claim or even check any questions you might have about your policy, such as, can I drive in Europe? Whilst these are early days, we are progressing with technical integration, and we are excited about the potential it can untap. Renewal is extremely rich on first-party data, and in time we will be able to capitalise on this. To be clear, Renewal is available to everyone and will continue to be so, whether you got your insurance directly or whether you got your insurance through a price comparison competitor. However, we are looking to scale the app actively by offering it to all Go.Compare customers, with the view that our customers will then stay within this ecosystem, which will help with renewals but also in time help sell other products. And the last thing to say is that renewal does not have to stop at renewals for insurance. Our medium-term thinking is wider. Turning to B2B on slide 17. B2B represents 7% of the group with £27 million of revenue. The performance in B2B continues to be challenged by the enterprise tech market. However, I wanted to note that the other verticals in B2B delivered growth in the period, like financial services and education, as well as retail and AV technology. A further point to note is that while B2B declined in Q2, it was an improvement on Q1, and Q3 looks better than Q2. Within B2B, our smart brief newsletter platform remains a key asset, underpinned by highly engaged first-party audience and a proprietary tech stack that consistently delivers strong email advertising performance for our clients. Going forward, and in response to the market challenges, we are actively integrating across the B2B group to unlock cross-brand opportunities. We are also embedding AI tools within our proprietary tech stack to improve campaign performance as well as streamline workflows for efficiency and for scale. Right, turning to slide 19, which highlights our P&L, let's time to get into some financials. Right, the group's gross margin of 73% was up one percentage point. This accretion reflects the change in revenue mix during the first half of the year, with less revenue from Go.compare, which is dilutive at a gross margin level, but accretive at a net margin level. During the first half, sales, marketing and editorial costs increased by 2%. This reflects the planned investments, such as more spend on editorial and sales capability, combined with general inflation and the annual pay increase. Within this line, we also had increased marketing costs in Godot Compare. This is timing related between the two halves. Admin costs and other overheads saw a 10% decrease, reflecting the benefit of an R&D tax credit as well as lower medical benefit rates in the US. There was an increase in depreciation and amortization year on year as a result of CapEx investment in prior years. Overall, this meant the group's adjusted operating profit was $100.7 million, and the margin has remained stable at 27%, which is a good outcome given the revenue decline. Whilst we have continued to invest for growth, we remain disciplined during the current volatility, ensuring that each pound or dollar invested drives good returns. Further, we are remaining focused on any additional headcount as well as all external overheads. And in certain areas, such as B2B, we have taken measures to right-size the business. As a result, we remain confident on reaching 28% for the full year. In the medium term, we expect to be in our stated range of 28% to 30%. As ever, and as Kevin said, future remains a strong margin business. Moving on to the net debt bridge on slide 21. As I said back in December, cash is my personal favorite topic. And it is good to see that future continued its strong cash performance. In the first half, cash conversion was 111% of adjusted operating profit, which generated 119 million of cash inflows. After capex, tax, interest, and exceptionals, Future had a net cash generation of around 65 million. We applied our capital allocation framework thoughtfully to utilize this cash. We spent $3 million to buy renewal for our Go.Compare business, and we returned $43 million to our shareholders through dividend and share buybacks. And even after those uses of cash, the group still reduced its net debt to $241 million and maintained its leverage at 1.1. With cash conversion expected to remain strong, this highlights the group's solid financial position, which is a good segue to the capital allocation slide. I wanted to highlight a few specific points regarding the framework. First, our allocation continues to be organic investment. Second, bolt-ons, which are actionable and are a great accelerant to our strategy. Our focus on bolt-ons is across three main areas. First, they can help reinforce our leadership position in a particular digital vertical, be that in technology or women and luxury, for example. Secondly, we can bring in interesting technology or products. quicker than building it and with less risk, such as renewal. Or lastly, it can give future a skill or capability in the new area, like Quizly. These bolt-ons will help future to further attract and retain audiences and improve monetization. We have a good pipeline of small bolt-ons, but I can assure you that each will be diligently reviewed in terms of having a clear contribution to our strategy, and we have a strong set of financial criteria when reviewing potential returns. Three, strategic M&A. This remains greyed out at the moment. It is not currently a priority, but as we have said before, we will continuously review and we will remain opportunistic. Four, we retain our progressive ordinary dividend, which the Board will review each year. And lastly, if we have excess cash, we will return it to shareholders such that the group maintains a floor leverage of one times, as shown by this morning's announcement of a new share buyback programme of 55 million. This will start as soon as the current one completes, ensuring there is no gap between programmes. As ever, our focus is on driving across our businesses and to create value for shareholders by optimising our use of our strong balance sheet. Turning to slide 24. Before we move to the outlook, I wanted to share a new slide. I intend on having it at each set of results, and over time it will show progress across each of our capital allocation engines. Over the past eight years, you can see where the cash has been allocated. Most recently, the shape has changed, reflecting the move from acquisition into shareholder returns in the form of buybacks. At all times, the focus is on value creation, be it investing it to drive organic growth, or in M&A, or returning it to shareholders. We will continue to apply our capital allocation framework with discipline and remain agile. Finally, turning to the outlook on slide 26. Whilst we are confident in continuing to drive growth initiatives, we remain mindful of the macro volatility. For now, the US advertising softness in March seems to have been a specific period of heightened uncertainty. Specifically in the US, we saw growth in direct ads in April, and this is set to continue for the rest of Q3. And we are also seeing an improvement in open auction yields. So as I said at the top, US is now more stable. In terms of outlook, the group remains cautious for the second half of the year and expects full-year organic revenue to decline by low single digits. Now, if trends were to change again, and things have changed a few times over the last couple of months and even this week, this could impact the outlook in either direction. Given this backdrop, we will give a trading update in July on how Q3 has traded and give an update on the full year. In terms of margin, we are confident in achieving 28% for the year through a disciplined approach to all costs. And as always, the group will continue to generate strong cash flow at around 95% plus of adjusted operating profit. And we will wisely use this cash while maintaining financial discipline. And with that, we'll change ends. Over to Kevin. Thank you.

Thank you, Sharjeel. Turning on to the next slide, please. I want to remind you that whilst the strategy is unchanged, we are evolving our operating model through innovative products and first-party data, thus leveraging our fundamental characteristics. And I often ask myself, what drives success? And can it be repeated over and over again to create scale? Future has demonstrated that it can, and this is down to three factors firmly embedded into our DNA, the future DNA. First, it is a growth mindset. You need to believe that you can grow, not necessarily in the same way that you have grown in the past. And along the way, you have to reimagine your ways of working, your value proposition to both customers and clients. All of that was moving at pace. This, when coupled with innovation, on this slide, drove futures past successes. We were the first in the 90s to have Covermount on the magazines, offering a true and unique customer proposition, giving us permission to review our pricing, for example. We were revolutionary in bringing our brands on a single platform in the 2010s. We monetize our affiliate recommendation through our own e-commerce tech platform, which is first in class. Alongside our ad tech platform, building revenue lines from zero to millions, thus leveraging our product and tech expertise. And onto the next slide. In order to innovate, going forward, you need to have permission to think outside of the box, thinking differently. You need to take calculated risks. You need to perfect products through iteration. And sometimes, you need to fail. This is how great ideas and improved products come to market and become successful. Hence, this last key success factor. is fundamental, as without it, the first two are pointless. You need to be agile, giving us the ability to pivot quickly in areas of opportunity and have a rigorous focus on execution and delivery, again, at pace. With them, we will be able to deliver sustained and scaled growth. Through this approach, we are building the business for tomorrow whilst delivering on today. which nicely takes me to the next slide. Now, some of you here would recognize some of the blocks. On this slide, I just wanted to recap. Simply put, it is about the audience and it is about effective monetization. First, reaching valuable audience. At the core, our valuable audience have intent. Whether you are looking to renew your home insurance on GoCompare, looking at the latest Oblivion game on PC Gamer, down to the latest eye cream on Marie Claire, or even the perfect shade of paint on Homes and Gardens, this means... that through the power of brands, we are connecting our valuable audience and clients, whether they're advertisers, retailers, and marketeers, they can reach who they want. Critically and importantly, we're also agnostic in how we deliver our customer proposition, whether through an email, a website, on social, or whatever comes next. We are where our audiences are, recognizing the generational shifts and continuous changes in the landscape. Second, monetisation. The way we make money today won't be the same way we make money in three to five years' time. So in order to monetise our valuable audience, we need continued focus, rigour and again pace to evolve that proposition offering our customer proposition through innovation. We can do this at scale, driving again operating leverage because of that integrated tech stack. We do it once and apply it to the whole ecosystem. I'm hoping what you got from this slide is that at its core, The strategy remains. It is all about the product innovation and first-party data, brand proposition and cachet, and our unique expert quality content to drive future growth whilst maintaining our current operating margin. So, to close. As I said before, we are building the future for tomorrow and delivering on today. Thank you for listening. I will now open the floor to Q&A. Sharjah and I will be here.