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.

We will now open the call for question. Operator.

Please signal by pressing star 1. If you wish to cancel your request, please press star 2. And please make sure the mute function on your phone is switched off to allow your signal to reach our equipment. Again, it is star 1 to ask a question. Our first question is from Nick Dempsey from Barclays. Please go ahead.

Yeah, good morning, guys. I just got one question. Good morning. You showed us back at the full year results that Google Discover was a really important source of your traffic. You referred to the algorithm change for that. It kind of makes sense to me that Google Discover should be a place where your content is served as well. because people are interested in cycling, your content, you dominate cycling, your cycling content should turn up in Google Discover. In your discussions with them, what have you learned about why Google Discover seems to be impacting your traffic and other people's traffic as a result of the algorithm? And is there hope that that can change so that we can get a benefit from that coming months?

Thank you. Nick, for your question, and good to have you on the call. When it goes to Google Discover, it's, as Sergio mentioned, right, we've had the Google Discover first time, our Google update, back in February, in true future traditional fashion. We are reactive to it. We optimize and understand what works, what doesn't actually work, and then refine from there going forward. One. Number two is it is worth reminding that our performance in Google Discover is down to what the consumers need and wants to fulfill their purpose and their passion. And in those brands that you highlighted, they meet that requirement.

Nick, so there was a very first algo update in Google Discover. And like all other algorithm updates, even the core search, you learn what's changed and you adapt. Just as Kevin just said, right? Things have been noticed this time. There was more links to YouTube and X in this particular one. There's now a bit of advertising on Discover. That's a new feature as well. When you scroll down, you'll see advertising in there as well. Overall, it still performs very well for us. And while it is a bit more volatile and we saw some loss in February after the algorithm updates, It remains a good one. And in terms of percentages, you know, the pie I showed last time, that's pretty much still the same as it was previously.

Okay. Thanks, guys.

Thank you. Our next question is from Jessica Pop from Peel Hands. Please go ahead.

Hi. Good morning. Can you hear me okay?

Good morning. We can hear you.

Yeah. Great. Thank you. I've got three, please. The first one is just on the brands in transition. I mean, can you give us an idea of, you know, within this bunch, how much of the revenues are generated from direct now? And I guess when you look at the transition, how quickly do you think these brands can transition and go into the kind of upper tier? And then the second one is just on the non-diversified brands. I know you're kind of looking at that and, you know, plan long term. But, you know, for this set of titles or assets, can we expect that there's probably more than one route for it, i.e., you know, could they move down to just the cash generators and, you know, over the longer term? If you see opportunity, could they be sold off? Even if they kind of fail further, could they be disposed or closed? And then the final one is just on data as a product. Can you just give us a glimpse or an example as to, you know, how this would work? I mean, what kind of data would you provide to, for example, a retailer? Thank you.

Thank you. Thank you, Jessica, for your question. Good having you on the call. First thing on brand transition, right? It's worth reminding, as I said in my presentation, that we are moving at pace to move them up, right? Number one. And number two is every brand is different. Why? Because A, their audience is different. Two, B, their market is different. And then three, the clients can also be different. So as I said, it is an art, not a science. However, our focus, Churchill and I and the rest of the company, is to focus on execution and delivery, moving at pace, ensuring that we take learnings as we go, and over time, we shall be moving that up. And if you look at the slides that I presented, it is that we have made more than suitable progress since FY25 in shifting across these brands up. With regards to the non-diversified brands, first of all, I must be clear in that not every brand needs to move up. Two, some are, as you said, cash generators, but it is worth reminding ourselves that every brand is profitable. Three is that, as I mentioned in my presentation today, is that where brands that have new revenue streams or new revenue routes through a change in their proposition towards the customer and offering a new value proposition like decanter and wallpaper as examples, we will move them out and then grow them. And finally, on data products. The simple answer here is we use data, segment them, analyze them, package them to achieve three goals. The first one is to increase the yield of our existing products. The second goal is to actually help other partners, that be retailers and all platform businesses, to enrich their own products monetization strategy with our data. And three is also helping us drive better and more diversified advertising.

Just to add, Jessica, just to part some numbers and there's some clues in the deck which will help you. You know, when you look at destination brands, if you go to slide 23, you can see who, what, where, 92% direct revenue. And if you look at Sherlock's, that's even higher, right, close to 100. And then on brands in transition, again, keeping on the same slide, you know, we've picked out Kiplinger, and that's 86% non-Google. There will be a range, right? Some will be in that range, some will be lower than that. And then to your point around non-diversified, well, we've pulled out Tom's Guide, and that's 68% of its revenue from website sessions, right? So most of that was not direct. And that's the exciting part, and that's the job, right? We've got to transition a lot of these brands from non-diversified up the chain. And as Kevin said in the presentation, we have a clear playbook. We know how to do this, and we are very strongly on driving those up the chain, especially in the tech vertical.

Okay, thank you.

Thank you, Jessica. Our next question, please. Our next question is from William from . Please go ahead.

Morning, guys. Thank you for the presentation. Just three, please. Firstly, on your expectations of sort of gross contribution margins over the next one to two years would be helpful. Secondly, sort of just in terms of trends in programmatic and e-commerce that you're seeing in April. I know it's April and May. That would be helpful. And then finally, just in terms of the savings that you talk about, the $5 million savings, how much of that benefit is going to be expected in H2? Thanks.

Thank you for your question, Sergio.

I think all three of mine are there. All right, I'll take them all. In terms of expectations on gross margin, it's too early for me to start predicting next year, year after. We normally do that with our four-year results. I think for now we'll, you know, if you take where we are at about 70, 71%, I think that's about right for now. And I'll update the market once we start, you know, getting through our budget cycle and I get some visibility into next year. And we'll see the momentum start to come through for all the things that Ken Wright has spoken about. In terms of e-commerce and programmatic, what have I seen and on audience as well? Look, April was relatively more stable. The Google call algorithm update in end of March, early April was relatively neutral for future. That said, audiences remain volatile. We had a couple of good weeks. Then you have a slightly weaker week. So, you know, it remains volatile. And that's what makes it difficult to call, right? I'd like to stand here and tell you the future of future. But actually, it remains volatile. But what's not happening is it's not accelerating, right? We're seeing... the decline year on year, but it's becoming more stable. And that's not me saying it, you will have heard other people say something similar as well. But rather than fixate just on audiences on e-commerce, can I point you to the thing that Kevin talks about, right? Go dot compare living, in terms of adding another channel. You've got things like the Do What Wear ChatGPT app, which we'll go over in the next two right here, in terms of, again, attracting more audience. And that product and signal allows you to be in different places going forward. I see that. In terms of the savings, the vast majority of that will come in the second half of the year. Our headcount has reduced substantially in the first half of the year. We've added, obviously, Sheila sometimes with her. We've added more tech and engineers building the products. But under the core, we've reduced our headcount across teams, whether it's in sales, marketing, editorial, finance, legal, all of the teams across the piece.

and that should start coming in the second half of the year. That's what I would do.

Thank you. We will now move to our next question from Alistair Reed from Investec. Please go ahead.

Yeah, morning, guys. Thanks very much for the interesting presentation. So three from me. Firstly, can you just sort of update us on the kind of success and usage of renewal within GoCompare, sort of any more color there? And then secondly, on GoCompare, you sort of mentioned your sort of relationships with the insurers. Can you perhaps talk about the importance of those relationships in insurers choosing to use you as a source of customers rather than potentially them interacting directly with an LLM? And then lastly, I think you sort of said that AI overviews were up to about 65% of queries. How do you think about the trajectory of that? Do you think that's starting to plateau now? Thanks very much.

Sorry, could you repeat your last question, please?

I think, Todd, you mentioned that AI overviews were now up to about 65% of queries. I'm just wondering your thoughts on the trajectory, whether that might be starting to plateau now.

Okay, thanks for your questions. I'll take the first one. In terms of the success in renewal, right, as I mentioned, we launched it in March. And thus far, we have migrated existing Google customers successfully onto the renewal, and we're taking the learnings very fast. We are implementing, sorry, do the learnings in order to refine the proposition. We are on track for the FY end in terms of our objective, which is to actually migrate hundreds and thousands of our good customers onto it. And as Sharjil mentioned, we will continue to innovate and grow good from there. And within Renew, all of our leadership, at this moment in time, and developing new initiatives in order for us to deliver the right value position to really watch this space. We will give you a very firm and concrete update at your end.

Shall I go to the other soon?

Please.

So in terms of insurers, I think the key thing to say there, look it's a symbiotic relationship. GCSE is very much on my mind with the biology exam yesterday. So you know it's important that we work with insurers and they work with us, right, we provide them a good channel to reach customers. So I see that carrying on. We've made some really interesting points on LLM visibility and this is a key stroke for us. Guess who has the LLM visibility? In Churchill, BT, in Gemini, Perfectity, Ford, all these. That's future. And we've been working on Go.Compare ourselves, right? The Futurotic product that we've got, we've applied it to Go.Compare. So Go.Compare in itself has really strong visibility. So it plays to our strength. And we look forward to keeping those relationships healthy with the insurers as well. On AI overview, so 65% of our keywords have an AI overview. When it has an AI overview, the page dynamics, obviously organic results go down, and the typical rate is lower. That's been relatively more stable again. The rate has increased over the last two, three months. It's fairly stable. It's actually gone down over the last several weeks. But it's relatively stable. It is not growing at the same pace as it was growing previously. You know, it went from 0 to 60 very quickly, and it's remained relatively more stable over the last couple of months.

And just to build on what Shardil has just said, it is worth reminding that we are leaders in citation within AI and in the verticals in which we operate. Thank you.

Thank you.

We'll now move to our next question from Wanglum Ku from Jefferies. Please go ahead.

Morning, everyone. Two, if I may, please. So firstly, one of the slides on who, what, where, I think it was 3% growth in social media followers. I appreciate it's not the same metrics, but some of your peers are reporting high double-digit, even triple-digit growth in engagement on their social platforms. I was wondering if you could give a little bit more color there in terms of are you – underperforming appears or is there anything that you could highlight in terms of these other engagement metrics? Second question will be e-commerce affiliates. I appreciate the color on why it's down 20% year on year. Is that just the case of the consumer buying less earphones or are they just buying earphones on ChatGPT or just going direct to Apple to buy said earphones? Is there anything, any color they could share on why e-commerce affiliate revenue is down 20% when some of your peers who are perhaps more geared to fashion beauty are growing. So is that, again, another example of why you guys are down 20%? Thank you.

Thank you for your question. I'll take the first one. In terms of the who, what, where, and the engagement question that you've got, so great question. I think it's worth taking two steps back and looking at what future and how we operate. There is one thing which is about, let's say, visibility. There's another thing which is about growth in engagement. But our future, right, our operating model is about doing both increasing loads, but also critically, though, is monetization, right? We are very clear where we stand. There is no point for us to grow engagement that we can't monetize. Right. And therefore, whilst we look at the market and take starting learnings, our focus is to grow engagement that we can monetize. And our focus is to grow AI visibility, let's say, using Twitter or TikTok, that we can monetize successfully. So I think there's monetization and audience work hand in hand. And that's my answer to you.

I'll take the e-commerce one. So this is a key focus of ours, as you can imagine, with our openings being down around 24%. The thing to remember here is it all starts at the top of the funnel. How many unique page views do you get? And what we've seen is, especially in our tech vertical, we've seen a significant drop on the number of people coming at the top of the funnel, so coming to our websites. And that results in the main decline. What's really interesting is actually, you know, as other people have increased, we have also increased in fashion use here at home. So I can see, for example, clothing is up. I can see music and photography is up. So it's around the mix and equal. Part of it are growing. Music is growing. Photography is growing. Fashion is growing. But where we've seen the steeper decline is around the technology piece, where there's less people coming to our website. And this is why it is critical that we use the platform and signal to move away from being just a website-based e-commerce company to be much more platform, very channel agnostic around apps, around chat GPT, around social. So that work on technology is a specific focus on myself, Kevin, and the team here. In terms of order value, it's been relatively stable. People are buying slightly less expensive kits, but actually when you look at the average order value, it's relatively stable, as I said. So it's a very mixed issue for us rather than one, people buying more on elephant. I don't necessarily see that. I think it's more having people come to the farm.

Very helpful. Thank you so much.

Thank you. Our next question is from Jonathan Barrett from . Please go ahead.

Good morning, chaps. Good morning. A few questions. I guess first one to Kevin and then to Shajil. First one, just wanted to get your views on how the limits on fair use are emerging in the legal environment and how you might see the big publisher case that's been taken out against Meta. You know, is that relevant to you do you think? Could it help you? Would you get involved? I'd like to understand your feelings about that. And then on to the two sort of financial questions. Can you just talk us through your thoughts on how the EBITDA margin of GoCo will evolve this year, next year, and sort of medium term given the PPC pressure issue there that doesn't look like it's going to go away?

and the second financial question um just on the deleveraging um plan um does that mean that we should assume that there are no further buybacks all other things being equal at this point thank you for your questions i think the first one look we like with everything we watch and uh we we take stock of what's happening uh in other markets and um the foot of that right and uh we are not uh we don't have any position to say that so we wouldn't join the thing that i wanted to remind you and everyone all is that you know critical for us is focusing our control Jonathan which is you know um We're making good progress on this, as we showcased today, and in part we have greener and greener shoes, which is promising, and therefore that's what we're here for, and need this business to work back.

Thank you. Right, Oliver, two questions. PPC and Go.com have mediums for guidance. I'll go down to the people I said earlier. too early to give a view on what next year and see what the years after look like. In terms of the margin this year I see that the range it is at the moment maybe a little bit better than actually it's stale thereabouts. Remember it's a very operating leverage business so actually if the car market continues to return the home market starts to turn around that margin will start to pick up naturally as well. But in terms of how we think about it again it's about attracting people, we've launched new marketing items, across TV, across YouTube, across radio. We are still within our discounting sponsorship. We've launched renewals to improve long-term retention. So lots going on there. Yeah, lots going on there. I think for now, I'll keep my mouth dry and say, look, we're focused on delivering this year, and then we're updating our margins going forward. In terms of the Dino emerging, we're still doing the buyback, but it's more than we're doing the buyback. We've still got 20 million from the 1st of April to do. of the $13 million fifth share buyback. Once that's complete, the board will have another look. The focus for me at the moment is deleveraging back down to that one-time score. We're at 1.6 a half year. We'll generate another $45 million, what I call free free cash. You've got share buyback to finish, that'll take 20 million. Net net will come down a bit in terms of the total amount. The EBITDR a day is a bit lower this year compared to last year, so it will remain at about 1.6 for the full year. And then, you know, with the strength of our cash across direct, B2B, GoCo, the magazines, we'll have another solid cash generation year next year and we'll do that and down to that one times four. And as the board looks ahead, and we are deleveraging, we're being prudent with our policy, we will make another decision on a buyback in the future.

Can I just ask you a follow-up question on that, please? Yes. With regards to mapping your leverage position going forward, Are you assuming that the improvement in working capital and H1, which is obviously, you know, very strong, is sustainable, that improvement, so that, in other words, you know, you would expect that to be even lower than where probably, well, certainly where I am and perhaps our consensus is. Is that a reasonable assumption?

It's very important, 90% of the year. We had a very strong first half of the year. We managed to work the capital very strongly. I think for the full year you should plan at about 90% conversion. The first half we have about 55 million of free cash after all, you know, capex, interest, tax, exceptional. In the second half I think that's close to about 45. We'll have a higher EBITDA, but the cash conversion will even out across the year in about 90% across the year.

I see that 90, 95% as ongoing stable.

Okay. working capital point in isolation is quite a big factor. I mean is that sustainable that gain?

90% yeah so of our cash 90% will convert as a profit yes that is the same.

Okay I'll pick up on that later thanks.

I'll give you a call afterwards I was looking through that we've had a positive you know it's 109 of this half but I'm saying it's a full year it'll be about 90 and I see that as our I did have a fourth question if I can be cheeky.

Just a more vanilla cyclical question. Are you concerned about the inflation in consumer technology products impacting demand and therefore impacting volumes in e-commerce? So maybe that's already affecting you. Maybe you've already seen that, but just wondered about your thoughts on that.

Well, look, I think the way I would describe it is, inflation is, GDP actually was a slightly higher this morning than I understand. So these things will ebb and flow. And you've got people who bought a lot of kit in 2021, that's coming up for a refresh as well. People are using kit very differently, cycles are different. So I think all of those, when you add it in the mix, I think, you know, it'll go down a little bit tomorrow.

And to actually build on what Shanti was saying, is that from a strategic point of view, we're managing e-commerce, which is making and ensuring that our e-commerce proposition is multi-channel. It's worth reminding that, yes, there are new emerging purchase journeys, and we are gearing ourselves, right, to ensuring that we are partaking in those new emerging purchase journeys. And also look forward to struggling them like we did on websites using Hawk. This time we're going to do that with Signal. That's my point number one. The point number two is brand and content strategy, that pillar, which is transforming our brands to becoming brand destination. At the core, as what we said, is the value proposition. What a value proposition means for the customers is that what are they getting in return that they can't get anywhere else, right? And good. On Tom's Guide, one of our flagship brands, right, we just launched Tom's Guide Saving Up, right, which is a focused project which is focusing on firm value exchange, taking into consideration the market dynamics, the economic climate, and the volatility of the world, if I may say so, right? So, therefore, we are thinking customers and clients, and therefore, deeming to creating the right moments in our e-commerce in order to help them. I won't ask you that bit.

Well, certainly, Sheldon can ask a quick question. No, it's okay. Can I look at Global Compare Living? What does that do? Helps people be savvy on TVs, laptops and phones. So there's different ways to attract people. Let's move on. Thank you very much. Jonathan, give me a call, yeah?

Thank you. Thank you, Jonathan.

Thank you. We'll now take our next question from Andy Renton from Canadish. Please go ahead.

Good morning, both. Thanks for the presentation. So a couple left from me. So given the pace of change of AI, are there any new efficiencies you've recently identified on the cost-based side? And more broadly, have your assumptions around what AI will be able to do changed at all? And then just given online uncertainty around the top line trajectory, are there any discussions around reducing that one times net debt floor?

Thanks. Thank you very much for the question.

I'll take the first one. uh with ai is phenomenal right as a reminder future is any operating model is geared towards is armed with flexibility pragmatism and agility right and we have embraced ai not just the pawn shop by leveraging ai to make new products increase field advertising but also monetizing ai to us all in chat GPT. But I'll ask you a question. What are we doing with AI? The back office, right? As Sajil said, 5 million who are on track for this financial year includes utilization of AI. But let me give you a bit of color in terms of how we're doing it. It's not just pronging AI in and there you get the sales. It is reimagining our operating model understanding what our processes are today, how the processes should evolve over time, and what is therefore the role of AI, these processes, end-to-end process. And dare I say, we started the utilization in our finance department, and reassuringly we're making due progress, and it is worth it for us. And of course, we're expanding that

boss of the function in our organization and again the isa at pace um let me clarify the question you mean producing the floor then having let's say by going down to 0.5 yeah yeah below the one time yeah just given this it was top line you know if offline does sort of trend lower for a year or so you see whatever just the impact that's going to have on that on that ratio and whether it's better to try and target a lower Then one time.

Okay. Well, let me take it back a step and then I'll come back to your specific question. The beauty of future, and again, I said this when I joined, is its immense cash generation. The bit that's impacting us, the one you referenced to in terms of lower revenue, is about 16% of the business today. The rest of the business, you know, it has lots of downs, and you can see that in our results. But it generates tremendous cash that we know is coming. Magazines and subscriptions, minus one, relatively flat. We've got direct business growing at 8%, double digits in the second quarter. Exit rate, positive on each of these. Go.compare, car market turning around, home market hopefully will follow soon. These engines give us strong cash generation. So I'm going to be focused on getting down to the one times floor by using the remainder of this year and into next year's cash generation. We don't have a DB scheme, we have a dividend which is at 15, 16 million pounds. That cash generation starts to deliver very quickly as we go into next year. And as we go into next year and we have visibility on our performance, the momentum on the strategic initiatives, how the economic outlook is looking for the world and geopolitics, all can then take an informed decision on the levered position. But also, as John said earlier, a question about future buybacks. But my focus at the moment is to be prudent and conservative and go towards that one time's floor.

And as we get there, we can make a decision. Great. Thank you, Baker.

Thank you. Thank you. We'll now take our last question today from Lara Simpson from JP Morgan. Please go ahead.

So maybe just to come back and push a little bit more on the profitability and margins, you've obviously reiterated the guidance for 25 to 27 on a full year basis, which leaves quite a wide range on H2. So I suppose why the need for such a wide range or why? such low visibility in the second half. And Saz, we'll maybe just walk us through some of your key assumptions and the building blocks that aid profitability. I know we've got the $5 million annualized savings coming through, but what are some of the key puts and takes there? And then maybe just coming back on capital allocation, you've clearly given quite a strong message on portfolio optimization and reviewing brands and assets across the portfolio. So we'll wait for an update on that. But if something was to crystallize, how would you be thinking about capital allocation in that scenario? Would the focus still be on deleveraging for one time, or would you potentially look to be opportunistic on a position? Do you feel the business is ready to pursue another deal, similarly to CLX, or would it very much be deleveraging and potentially fair returns, given where the stock is trading and how business operations are?

I'm thinking about making both of those ones on behalf.

Okay, so here we go. The range 25 to 27. Look, things remain volatile on the OEM side. We talked about the Scalar algo, we talked about the Google Core algo, you know, we have a couple of good weeks, one week a week, so things remain relatively volatile. What's on the good side and the volatile side, you know, FutureOrchid is doing very well, we've got a strong book. number for that. Helix has just launched. Go.compare is starting to return to growth. Exit rate on B2B has been positive in March, April and May. So there's a lot of moving factors here and that's why the range is in that 25 to 27 percent. And as we progress through the year we'll know more and then again we'll update you in the trading update in September. We are focused on delivering the diners we've issued, we're confident in delivering the diners we have issued and we want to transition those brands up the chain, we want to monetize in a 360 way and we want to carry on innovating because that's what's helping us win. At the moment it's 25 to 27 percent diners and as we go into next year I'll update everyone about that in the future. On the portfolio, look, I don't want to count the cash before we have it, right? We are, you know, actively progressing options on brands and assets. When I can talk more about it, or we have something specific, I'll let you know. But the great thing is, in the meantime, I'm going to generate a ton of cash. And secondly, whether we use it to pay the RTF down, whether we do something more interesting on Shared or I don't know. The focus is let's progress with those value unlocks for my shareholders. The point is that our share price is fundamentally undervalued and we are going to do something about it. And when I can talk about it, I'll tell you what it is and I'll tell you what I'm going to do with the money.

Right.

Thank you very much, everyone, for joining this call.

I hope you found our presentation useful, clear, and acceptable to all. And also thank you on behalf of myself and Shantil for all of your questions and found the answers satisfactory. Thank you. Thanks, everyone. Thank you. Please conclude today's conference.