Future plc

Good morning and thank you for joining us. I will start with some opening remarks, then hand over to Sharjil who will cover the half year results, and then I will update you on our strategic progress. So, let's start with opening remarks. The search ecosystem is changing. We have been very open about it. However, this is only 16% of our total revenue. Focusing on the things that are in our control, Our growth initiatives, only launched seven months ago, are yielding new growing revenue geared to offset the decline in the 16%. This momentum is paving the way for organic growth. Finally, core to our strategy, we are evolving our business model at pace, streamlining our business, making decisions faster, including killing projects that are not delivering. Of course, we also double down on the ones that are. We do this to reflect the changing market dynamics, whilst preserving our unique capability to drive effective monetization to deliver sustainable profit and, most importantly, cash. And with that, let me hand it over to Shajil.

Thanks, Kevin. Good morning, everyone. Let's get straight into the numbers. Revenue at $349 million was down 8% year-on-year on a reported basis, with organic performance down 6% as previously communicated. Our EBITDA of $83 million at a 24% margin reflects the change in revenue mix that we highlighted in the pre-closed trading update. Adjusted EPS is lower, in line with that reduction in profits, with the benefit of our share buybacks offset by the expected higher depreciation and financing costs. the group continued to generate good cash conversion at 109% of EBITDA, and the balance sheet remains in good shape, with leverage at 1.6 times, after having returned 53 million to shareholders in this half and acquired sheer luck in the period as well. On to revenue. Overall, the group's organic revenue declined by 6% during the half year, with similar declines across different divisions. As I mentioned at the pre-close, Overall revenues in half year were in line with expectations, but the revenue mix within B2C has been different to what we planned for, with decline in higher margin revenues offset by lower margin ones. There is a lot going on, so let's get into the detail of each division. Starting with B2C. Note that the full B2C revenue breakdown is in the appendix. I know many of you enjoy the detail, so it's there for reference. Firstly, website sessions. which impacts around 16% of the group's revenue. These were down 15% during the first half, mainly due to the year-on-year increase in AI overviews, which was anticipated, and these are now more stable at around 65% of our keywords. Changes on Google Search, with organic results now appearing much further down the page, and the recent Algo updates, for example, the first ever Discover Algo in Sepri. These trends had a direct impact on programmatic ads and e-commerce. Programmatic was minus 17, so about the same decline in sessions. However, there was good demand on direct advertising side. Direct grew at plus 8% during the half with a very strong Q2, both in the US and the UK, growing double-digit. This is where we see the benefits of our strategic focus across brands, monetizations, and innovation coming through. Our branded content deals are performing well with solid commercial execution across a range of clients. And we are winning clients. Our wider audiences and distinctive products such as FutureOptic and Helix are opening new doors. Remember, Direct is twice the size of Programmatic and comes with higher pricing. And when you add them together, total advertising declined 3%. Moving on to e-commerce. In H1, we saw e-commerce decline 24%, which is similar to the decrease we saw in H2. This was driven by lower sessions impacting the number of unique pay views, especially on our high-value technology reviews and buying guides, which is where most of our revenues come from. Basket size has remained flat year on year, with inflation offset by less high-value purchases. We have been actioning a number of growth initiatives in this area, and Kevin will give more colour. Last, but not least, magazines. Magazines have performed better than expectations at minus 4 overall. It is worth highlighting that subscriptions were flat in the first half of the year. Our initiatives in this area around subscriber acquisition and retention are now coming through in the financials. News trade remains negative as we continue to see changes on the high street. Worth noting that excluding Rolex books, the magazines were overall down just 1% in the first half. This resilient performance demonstrates the strength and value of our premium and specialist brands and we see this improvement as being sustainable. Moving on to Go.Compare. At circa $90 million, this represents a quarter of the group's revenues. Car insurance revenue was down minus 5% in the period, reflecting declines in the total quote volumes in switching as insurance premiums came down. However, this was partially offset by improved conversion when users catered the site. And in March, we saw the car market return to growth. And this helped Q2 for cars to be flat in the period, a sign that the trends over the past 12 months are now starting to reverse. Home insurance declined in this period and has remained challenging. However, Holmes is around six to nine months behind the car market in terms of behavior, so we anticipate this revenue trend to change in the coming months. Renewal was launched in February to good reviews. Our aim with renewal is to increase yearly retention rates and therefore reduce our customer acquisition costs going forward. It is still very early days, and we will be using our Go.Compare database to drive more users, as well as developing new features and incentives on the app. This is only one of the growth initiatives underway in price comparison. Again, more on this from Kevin later. Turning to B2B on slide 10. This represents 7% of the group, with $24 million of revenue. At the full year, I noted the improving trends in B2B as a result of our strategic progress, and we can see that in our Q2 performance. There are different trends across end-market verticals, with clients in tech, food and infrastructure spending more. However, other verticals have been less active, such as education, which has seen changes in US government funding. Despite those market segment movements, the business has benefited from progress on a number of strategic areas. We have unified our data, and this is helping us launch innovative commercial products that help solve our client problems. We now have unified go-to-market approach with the commercial team selling combined packages driving operating leverage. We are reaching more audiences that make our key decisions for our clients' products. We are also winning in AI with the commercial team selling future optic to our B2B clients. I wanted to highlight that Q2 was down minus 2% with the business growing in March and the exit rate remains positive. Turning to slide 11, which highlights our P&L. I've already covered the main drivers on revenue and margins, but let me bring these together with a P&L. The group's gross margin of 71% is down two percentage points. The reduction reflects our change in revenue mix. In B2C, programmatic and e-commerce revenues are high margin and have minimal cost impact either way. Direct revenues grew strongly, but these have cost of sales to deliver the creative that is attached to those deals. Magazines did better than expected, but again are at a lower margin. In Go.Compare, we saw an increase in our PPC costs, driven by two things. Firstly, double-digit inflation from the Google auction, but we also had relatively more volume of paid clicks as compared to organic search clicks, with Google using more space to monetize shopping and sponsored links. Combined sales, marketing and editorial, and other costs, were flat. higher as a result of annual pay increase and general inflation, offset by efficiency savings across the group. On the topic of efficiencies, we will deliver our 5 million target for the year, with savings coming across the group. We are focused on shaping the business differently and also using technology to automate our processes. We are on track to achieve 20 million by FY28. Right, on to cash. As I said when I joined, and every result since, cash is my favorite topic. Future continued its strong cash performance, and we generated $91 million in adjusted free cash flow after CapEx. And including tax, interest, exceptionals, Future had a net cash generation of around $55 million in the first half. We applied our capital allocation framework, spending $40 million to acquire a fast-growing and platform-agnostic brand in Shellux, and we returned 53 million to shareholders through the dividend and share buybacks. After these, the group saw an increase in net debt to 314 million, representing a leverage of 1.6 times. Our cash generation is always strong in the second half, and we will use it to pay a top-up on the ShareLax acquisition due to its outperformance, finish our current fifth share buyback, and reduce our overall net debt position. Going forward, Cash conversion is expected to remain strong. Remember, a large part of the group is not impacted by the changes in the search ecosystem. These businesses, such as direct advertising, subscription and news trade magazines, go.compare and B2B, all generate high levels of cash. And we will use that cash generation to de-lever down to the one-time floor. The group has committed facilities in place till 2029 and 2030, and we have plenty of liquidity to execute our strategy, which is a good segue to capital allocation. Our capital allocation is unchanged, a balanced allocation that will invest in and drive organic revenue growth, have room for bolt-ons to accelerate the strategy, a more consistent return for shareholders through our annual dividend, and return excess cash to shareholders via buybacks. All of these engines were in operational in the first half of the year. We will continue with this balanced allocation while maintaining a conservative and prudent approach to leverage. One final point before I move to the outlook. As the board highlighted, our group is fundamentally undervalued. We are actively progressing options to realize value for shareholders from brands or assets that do not drive our strategy. I wanted to note that we are very focused on creating value and I look forward to updating you when I share more specific information. Finally, turning to the outlook slides. Our outlook for the year remains the same as the pre-closed update. We expect FY26 organic revenues to be mid-single digit decline. Declines in programmatic and e-commerce will be offset by good growth from our initiatives across the business. particularly in direct advertising. In terms of margins, we are looking at 25% to 27% in EBITDA terms. As always, the group will continue to generate strong cash flows with the EBITDA conversion to around 90%. That cash will lower our overall net debt position at the year end with leverage to be in line with consensus at around 1.6 to 1.7 times. Leverage will then start to reduce to the one-time floor. In the medium term, we are confident in achieving our ambition of sustainable revenue growth and cash generation. I will hand over to Kevin, who will take you through our strategy and the momentum we are building to achieve that. Thank you.

Thank you, Sir Jill. Before I dive into the strategic progress, I just want to spend a few minutes with a brief reminder of our strategy. I know that future can seem like a complex business. However, At the core it is very simple. It all starts with brands and their content which drives valuable audiences that we monetize effectively through existing and new products. This operating model applies to all of our brands and we create the platform effect by leveraging products and data across those brands. Now this is unique to us and our scalability is hard to replicate. Starting with brand and content, we are very clear where our value resides. We have market-leading brands across many verticals. Our human-originated content is valuable for our audiences wherever they are. We know that they can exist and be monetized successfully on multiple platforms and we have this today already in our portfolio. We have been and continue to be immensely successful at monetizing our content. As you are all aware, some of our existing monetization paths, 16% of our revenue, are being disrupted by changes to the search market. We are therefore building new monetization routes to be equally successful in this new era. To do this, we need to continue to innovate, bring new products to market, leverage AI to create new revenue streams. And we are. and accelerate our pace of change. It is in our DNA. The value of our rich first-party data is invaluable also, and we are far from leveraging its full potential. Our third strategic pillar is efficiency, and Shajil has mentioned our focus on driving it throughout the business. Again, this is in our DNA. Now, taking a step back, on brands and content. AI is transforming the way people are engaging with content. We know that. However, this is so critical to understand. In a world flooded with information, trust and expertise in content and brands are more important than ever. This is where we play and where we've always played. AI slop does not make money. Our content is human-originated, meaning it is authentic, unique and curated, and something that AI cannot replicate, demonstrating taste and opinion. Our right to win lies with the expertise of our editorial and creative teams in generating this type of content, and with the trust our brand commands. If you read the review on Tom's Guide, you know editors have properly and thoroughly tested the product and that they are giving you their independent expert view. Next, it is about being channel agnostic. We are moving at pace to get our brands to reach where people are. Why? Simply, the way people consume content is changing and so our distribution channels are evolving too. It is a must. We are no longer just a magazine publisher. We are no longer just a website owners. Our legacy model, which is still highly valuable, was largely about audiences being pushed to us by being excellent at SEO. Today, it is about audiences coming to us on different mediums through the power of our market-leading brands. And you can see on the right-hand side of this slide, we are everywhere from social to apps AI LLMs down to podcasts. And we would expect this wheel to expand as new channels emerge. Our second pillar is monetization. Our track record is one of effective monetization where we playbook a revenue stream and apply it to our entire portfolio. This mindset is unchanged. You can see the multiple revenue streams we have today. I just wanted to highlight two of them. In advertising, we are excellent at monetizing on our sites programmatically and directly. However, there are areas of digital advertising where we don't play at scale, such as video and the creator economy, and these are growing fast. This is a clear opportunity and we have initiatives already underway. Not only are we pivoting into higher growth markets, but we are also looking to outperform them. In print, we have now established a consistent track record of outperforming the magazine markets by focusing on brands, effective pricing, and central to all of this, the customer value proposition. And whilst I will not go into detail on this today, I wanted to remind you how valuable repeatable revenue streams that can pass through inflation are. This is what we have in subscriptions. This wheel is not static. It will continue to evolve, especially as we are about to add data products as a revenue line, and more on this later. So, operating in high growth markets combined with outperforming in declining markets drives an overall attractive growth prospect for the group. Now, bringing it all together is our execution roadmap to deliver on our strategy following our three pillars of brands and content, monetization and efficiency. As you can see, since we launched last September, which is seven months ago, we have made significant progress. These strategic initiatives that are now ramping up. There is momentum and it is contributing to our P&L already. Starting with brands and content. Brand transformation is critical to our future success and we continue to drive these strategic initiatives forward at pace. As I highlighted earlier, our objective is for our brands to thrive across multiple channels well beyond just print or text-based websites. We segment our brands to ensure we focus resources by prioritizing the brands where it drives results at scale and more quickly. Give teams clarity and focus on how their brands are managed. Transform at pace by building a transferable brand playbook that we refine at each transformation. We have segmented our portfolio into four categories. In the half, we have already seen brands moving from category to another, so this is already happening and we are seeing fraction. Let's take them each in turn. Destination brands. These are growth brands whose content exists and is found by audiences across multiple channels. The majority of their revenue is driven by direct, high-value advertising and e-commerce. We then have brands in transition. These are brands that are well advanced in their transformation demonstrating green shoots. We then have non-diversified brands. The majority of their audience and revenue are tied to Google or to print. These brands require a pivot to a channel agnostic approach, moving them to the categories above in stages. And finally, portfolio brands. Simply put, these profitable brands run for cash to fund growth elsewhere. They are run extremely well, some outperforming their own market. Now, this is not a static category. We have the example of Decanter. A former portfolio brand has now new roots for both profitable growth by driving world leading events and subscription. This is art, not science. Whilst we have a playbook, each brand is different and has a different audience make-up and therefore transition time will vary from one to another. Our North Star is to make our brands destination brands. Period. Let me give you some proof points. Starting with non-diversified brands, taking the example of the tech vertical, and noting that not all tech brands are at the same level of transition. However, stepping back from this, and at its core, this category of brands has tremendous value, as exemplified by Tom's guide, which is reaching over 30 million sessions a month. And more broadly, our tech brands are trusted, with significant reach and scale providing expert content. Technology is central to our lives. It is no longer just for the geeks, reinforcing the purpose of their content. Now it is about bringing new content formats to Tom's Guide and monetizing them effectively. Turning to brands in transition, using the example of Kiplinger, which I talked about at our results in December, it has been transforming in the past 12 months and is firmly on its way to becoming a destination brand. A big driver of the change is a revised proposition aligned with how consumers access content as well as diversifying its audience targets. This has resulted in the production of multi-channel content such as driving Apple News as a channel, bringing 800,000 users through Colab, and finally leveraging the Quizly acquisition to drive engagement through quizzes and puzzles. And this repositioning is paying off. Kiplinger is in growth overall, despite being print-heavy. It grew email revenue by 33% in the half, and this brand is largely non-Google, with almost 90% of its audience coming directly on multiple channels. And finally, taking the example of WhoWhatWhere, which reaches 27 million valuable users a month, is a digital its social reach by 3%, adding another 3% in the half. How Who What Where monetizes is the epitome of a destination brand with over 90% of its ads and e-commerce revenue coming directly to us. And this is where the magic happens. As advertisers buy brands, this allows us to justify a premium pricing. Most importantly, destination brands operate in highly attractive markets with social advertising growing at about 30% and the creator economy spend at about 25%. And for avoidance of doubt, Sheerlux, which we bought earlier this year, is a destination brand. We are learning from Sheerlux, which is powering our playbook to transition other brands and reinforce our leadership in fashion and beauty. Now turning next to the second pillar of our strategy, monetization. As I mentioned earlier, our monetization wheel is effective, but we need to diversify how we earn revenue today, given the headwinds in programmatic and e-commerce revenue. It is about becoming a destination for advertisers through 360 sales, including making money from AI, driving e-commerce across channels, and driving revenue from data products. Not all of these are at the same level of maturity. This allows us to deliver today whilst also building for tomorrow, making our business sustainable. You might remember Future Optic from our 4-year results in December. To recap, the problem we are trying to solve here is a shift in the audience. Our brands and our customers are looking for visibility in large language models or LLMs. What we are doing here is making our content as visible to LLMs as it is in conventional search. The fact that we are leaders in SEO combined with the trust and authority of our brands gives us a competitive advantage. We are leaders in visibility at scale and we are not just choosing the metrics that suit us External data is saying it. Not only are we relevant at scale, we are the second largest publisher across AI platforms. And number one in ChatGPT. We are extremely relevant in our high intent categories. For example, Who What Wear is the most visible fashion and beauty brands in AI according to SimilarWeb. And just like ranking is important in SEO, visibility is important in LLMs. Not only are we visible, as a reminder, we are leaders and that visibility is monetizable. We transform this knowledge into a bespoke advertising package for our clients, which is renewable because they need to remain visible in this new ecosystem. Since last December, this pipeline has grown and generated £2 million in the half, with more booked in H2, and we are on track to deliver £10 million for the full year. This is contributing to our growth in direct advertising. Catching up to this competitive advantage can be hard, and combined with our tech stack, first-to-market position, brand trust and authority, we are creating emote. Now, Future Optic is not the only digital advertising innovation we are bringing to the table. Our first data product, Helix, was launched in March this year and is already being sold. Designed to transform billions of intent data signals into well-defined, well-known audiences that advertisers would pay a premium to reach and advertise to. Simply put, it is a high-yield precision ad targeting solution helping our advertising clients solve their ROI problems. Its performance has been more than satisfactory since launch in March this year. We see a 21% increase in click-through rates compared to non-Helix advertising ad impressions and this is quite exciting. Secondly, we are also thinking differently. We're now combining Helix and Optic into an advertising bundle solution becoming a go-to destination for advertisers to reach a high intent consumer base across channels. And finally, I would like to briefly cover a nascent key initiative. We are driving data products. These are early days. This is high growth, high margin revenue streams, geared towards solving client problems, whether they are retailers or platform businesses. This allows us to expand our addressable markets, creating an attractive growth opportunity. We're not leveraging our data to its full potential today, limiting it to advertising clients. So watch this space. More to come. Next, we have been open about the challenges in e-commerce, but we are not standing still. We are driving initiatives to pivot this revenue stream. Future has been immensely successful at monetizing buying guides on web pages. We continue to optimize this revenue stream, but this is not enough. We are adding new channels to drive e-commerce revenue. So we are reimagining our e-commerce model by building new audiences and disrupting the new purchase journeys. Just like we want our content to be channel agnostic, we want our e-commerce proposition to be channel agnostic too. We have many initiatives live. So let me cover one initiative here. AI shopping with Who What Wear Chat GPT app to facilitate fashion and beauty shopping. I told you our strategy is about being where audiences are. Consumers increasingly turn to AI LLMs for recommendation, but not any recommendation. They're trusted, unbiased, opinion, and we are there. These are the first of many, and in true future fashion, we are building a playbook, becoming sharper and more effective at each iteration, deploying them where they drive outcomes. So far, I have been focusing on the B2C brands. So let me spend a bit of time on one of our biggest brands, good or compared. I want to showcase how we are driving growth and transforming it into a brand destination. Let me remind you of the value of the brand through its barriers to entry and why we think AI is not the threat that you may think it is. First, it is an FCA regulated entity abiding by consumer duty. Second, to compare insurance policies, you need relationships. with insurers to act as a go-between for consumers and insurers, relationship we have built over 20 years. Third, we are very transparent and hold to very strict standards when it comes to consumer data and this drives brand trust. Now, these are not easily replicable, reinforcing the good of CompareMote. Now, you might recognize the consumer funnel on the left-hand side of this slide. The name of the game, as mentioned before, is to drive efficient acquisition, conversion, and retention. Any initiative we drive is to improve one of these metrics. On the right-hand side of the slide, you can see the pipeline of activities, from relaunching Renewal to launching our first strategy PT app, and also launching Signal on Go.Compare website. We continuously leverage our technology to drive innovation with the clear intent and purpose of becoming a winner in agentic AI further down the line. The first version of our ChatGPT Go.Compare app has now launched. We view this as a new potential acquisition channel. It is important to acknowledge two things here. First, we will not compromise on regulation. This is a motor insurance and one that is crucial to protecting consumers. Two, our aim is to lay strong foundation, to deliver continuous innovation at pace, and to do that, we need to build a strong AI infrastructure that talks to AI. Now we are excited about what we have brewing here. Finally, I wanted to showcase today what we are doing to drive new revenue by adding a spoke to the good compare monetization wheel. Consumers are increasingly looking for savings given the current backdrop. This is why they come to good or compare in the first place. Given the cost of customer acquisition, we are looking to increase the return on this by adding a secondary revenue stream leveraging Signal one of our strategic initiatives, with our product reviews from our B2C brands and our AI capabilities to offer consumers an easy product price comparison on Good or Compare. Finally, to wrap up, we have a clear plan and we are focused on executing it. We are driving our brand and content strategy through our brand transformation to reach audiences wherever they are. We are driving our monetization strategy adding new and evolving existing revenue streams. And we are doing so in an efficient and financially disciplined way. Momentum is building and we are creating our path back to organic growth. Thank you for listening.