fy16 h1 results - isentia.com · ∙ use social media insights to drive communications strategy and...

JOHN CROLL CHIEF EXECUTIVE OFFICERNIMESH SHAH CHIEF FINANCIAL OFFICER23 FEBRUARY 2016

FY16 H1RESULTS

AGENDAOVERVIEW OF FY16 H1 RESULTS- JOHN CROLL

GROWTH STRATEGY- JOHN CROLL

FY16 H1 FINANCIAL PERFORMANCE- NIMESH SHAH

FY16 OUTLOOK- JOHN CROLL

Q&A- JOHN CROLL & NIMESH SHAH

FY16 H1 RESULTS PRESENTATION - 23 FEBRUARY 2016 2

FY16 H1 RESULTSOVERVIEW


Isentia Strategy Delivering Strong Growth

Isentia declares interim dividend of 3.7c per share

∙ 22% YoY revenue growth to $76m

∙ 9% organic revenue growth

∙ 22% YoY Asia revenue growth

∙ 6% ANZ revenue growth

∙ Content marketing revenue contribution of $8m

22% REVENUE GROWTH 19% EBITDA GROWTH 22% NPATA GROWTH

∙ 19% YoY EBITDA growth to $24m

∙ 13% organic EBITDA growth

∙ EBITDA margin in excess of 30%

∙ Asia EBITDA margin increased to 23% from 21%

∙ Continued strong earnings contribution from ANZ

∙ 22% YoY growth in underlying NPATA to $15m

∙ 5% YoY growth in reported NPATA to $14m


Strong Revenue Growth From Asia and VAS

$ MILLION FY16 H1 FY15 H1 VARIANCE $M VARIANCE %

Revenue 75.8 62.2 13.6 22%

SaaS 51.2 49.0 2.2 4%

VAS 16.3 13.1 3.2 24%

Content Marketing 8.4 - 8.4 n/a

ANZ 53.3 50.5 2.8 6%

Asia 14.2 11.6 2.6 22%

Content Marketing* 8.4 - 8.4 n/a

Expenses (52.4) (42.5) (9.9) (23%)

EBITDA 23.5 19.7 3.8 19%

EBITDA margin 31% 32%

NPATA 13.7 13.0 0.7 5%

Underlying NPATA** 14.9 12.2 2.7 22%

* Content marketing included from 21 August 2015. Revenue of $8.4m amounted to $5.1m in ANZ and $3.3m in Asia and Rest of World** Underlying NPATA excludes the impact of non-recurring items of ($1.2m) in FY16 H1 and $0.8m in FY15 H1


GROWTH STRATEGY


ANZ

ASIA

Strategic Priorities

∙ Leverage the opportunities arising from increasing media complexity to provide value added services with real time insights

∙ Protect high barriers to entry in the ANZ market through comprehensive content, investment in the Mediaportal platform and excellent client service, currently delivering an NPS score > 30

∙ Adapt our product and pricing to reflect changes in content consumption

∙ Invest in cloud infrastructure to build scalable data products and platforms

∙ Use social media insights to drive communications strategy and execution

∙ Marketing of King Content product with ANZ clients has commenced

∙ Leverage the rollout of Mediaportal which is delivering improved revenue growth and reducing client churn

∙ Extend the service offering in broadcast and social media insights to create barriers of entry in key Asian markets

∙ Bundle the social media insight service with King Content to deliver a comprehensive service

∙ Undertake strategic acquisitions and alliances to enter new Asian markets and strengthen our market leading position

∙ Continue to strengthen the Asian management team


Strategic Priorities

∙ Leverage the Isentia client base to achieve new sales pipeline in Asia

∙ Enhance the Communique platform with improved video workflow, improved insights and client reporting portal

∙ Develop global reporting that provides the client with a complete view of the company’s content marketing analytics and the ability to filter by business unit or campaign strategy. Ensure the new reporting tool further enhances clients’ reliance on Communique and the quality of King Content’s strategy development

∙ Build a digital content asset library for clients to increase retention

∙ Develop a new online briefing tool in Communique to extend client contracts

∙ Enhance Communique tools that engage freelance contributors so they can search and pitch for assignments. Ensure our strategy continues to build a barrier to entry for King Content with Communique having the most engaged freelance contributors

∙ Leverage global award for Content Marketing Agency of the Year to attract talent and global leads

CONTENT MARKETING


Increasing Diversification of RevenueISENTIA’S CURRENT TOP 10 CLIENTS*

PRODUCT

INDUSTRY LOCATION MEDIA MONITORING SOCIAL INSIGHTS CONTENT MARKETING ANNUAL REVENUE

TECHNOLOGY EUROPE ✓ >$3m

GOVERNMENT ASIA ✓ ✓ ✓ $2m-$3m

LUXURY/COSMETICS HONG KONG ✓ $1m-$2m

FMCG AUSTRALIA ✓ $1m-$2m

TECHNOLOGY AUSTRALIA ✓ $1m-$2m

GOVERNMENT AUSTRALIA ✓ $1m-$2m

GOVERNMENT AUSTRALIA ✓ $0.5m-$1m

TELECOMMUNICATIONS CHINA ✓ ✓ $0.5m-$1m

TECHNOLOGY GLOBAL ✓ $0.5m-$1m

GOVERNMENT AUSTRALIA ✓ $0.5m-$1m

2015 2016

2 2

3

5

Rest of World

Asia

ANZ8

2015 2016

5

5

Marketing

Communications9

1

2015 2016

2 2

3

5

Rest of World

Asia

ANZ8

2015 2016

5

5

Marketing

Communications9

1

* Based on annualised FY16 H1 revenue

CLIENT MIX CLIENT MIX


FY16 H1 FINANCIALPERFORMANCE


Strong FY16 H1 Revenue Growth

Key Points

> Group revenue growth of 22% with organic growth of 9%

> Asia revenue uplift of 22% supported by:

• Increased Insights product sales delivering VAS growth of 22%

• SaaS growth of 23%

> Asia now represents 19% of group revenue

> 6% increase in ANZ revenue driven by:

• SaaS and content services revenue up 2%

• Continued take-up of additional value-added services products by existing customer base delivering VAS growth of 26%

> King Content revenue contribution of $8.4m from 21 August 2015

> Fixed fee share of revenue to 40% in FY16 H1 from 34% in FY15 H1

80.0

60.0

40.0

20.0

0.0FY15 H1 FY16 H1

11.6

62.2

22%

6%

14.2

8.4

53.3

75.8

Content Marketing*

Asia

ANZ50.5

80.0

60.0

40.0

20.0

0.0FY15 H1 FY16 H1

13.1

62.2

24%

4%

16.3

8.4

51.2

75.8

Content Marketing

VAS

SaaS49.0

80.0

60.0

40.0

20.0

0.0FY15 H1 FY16 H1

11.6

62.2

22%

6%

14.2

8.4

53.3

75.8

Content Marketing*

Asia

ANZ50.5

80.0

60.0

40.0

20.0

0.0FY15 H1 FY16 H1

13.1

62.2

24%

4%

16.3

8.4

51.2

75.8

Content Marketing

VAS

SaaS49.0

REVENUE BY GEOGRAPHY $M

REVENUE BY PRODUCT/SERVICE LINE $M

*Content marketing revenue of $8.4m amounted to $5.1m in ANZ and $3.3m in Asia and Rest of World


Australia / New Zealand ResultsKey Points

> SaaS growth of 2% reflects continued softening of press revenue

> VAS growth of 26% underpinned by increased Insights revenue

> ARPC for FY16 H1 was $32.7K which is a 4.3% increase from FY15 H2 driven by:

• Increased take-up of VAS products

• Improved yield of Insights within existing client base

> Churn of 5% of client numbers and 1% of client revenue

> Increased penetration for all VAS products

> EBITDA growth of 6%

ISENTIA ANZ GROUP REVENUE MIX (% OF TOTAL)

25,231

ARPC

($)

FY14 H1

33,000

32,000

31,000

30,000

29,000

28,000

27,000

26,000

25,000FY14 H2 FY15 H1 FY15 H2 FY16 H1

27,482

29,094

31,39532,742

FY14 H1

20%

15%

10%

5%

0%FY14 H2 FY15 H1 FY15 H2 FY16 H1

Pene

trat

ion

of A

NZ

uniq

ue c

usto

mer

s

14.9%

4.2%

5.5%

4.9%4.9%

7.1% 8.0%8.0%

9.3%7.0%

10.0%

13.2%13.5%

18.2%

14.4%

16.7%17.3%

Insights reports

Social Monitoring + Analysis

MediaDatabase

ISENTIA ANZ GROUP REVENUE MIX (% OF TOTAL)

25,231

ARPC

($)

FY14 H1

33,000

32,000

31,000

30,000

29,000

28,000

27,000

26,000

25,000FY14 H2 FY15 H1 FY15 H2 FY16 H1

27,482

29,094

31,39532,742

FY14 H1

20%

15%

10%

5%

0%FY14 H2 FY15 H1 FY15 H2 FY16 H1

Pene

trat

ion

of A

NZ

uniq

ue c

usto

mer

s

14.9%

4.2%

5.5%

4.9%4.9%

7.1% 8.0%8.0%

9.3%7.0%

10.0%

13.2%13.5%

18.2%

14.4%

16.7%17.3%

Insights reports

Social Monitoring + Analysis

MediaDatabase

$M FY16 H1 FY15 H1 FY16 H1 VARIANCE %

Revenue

SaaS 43.6 42.8 2%

VAS 9.7 7.7 26%

Total Revenue 53.3 50.5 6%

EBITDA 24.0 22.6 6%


Content marketing revenue of $5.1m (not included in ANZ Financials above)

ANZ ANNUALISED AVERAGE REVENUE PER CLIENT (ARPC)

ANZ FINANCIALS

VAS PENETRATION OF ANZ UNIQUE CUSTOMERS


Asia ResultsKey Points

> Asia revenue growth of 22% was supported by strong growth in both SaaS and VAS

> Mediaportal rollout and investment in account management teams reduced churn to less than 10%

> ARPC of $15.1K is a growth rate of 7% YoY supported by higher ARPC from VAS clients

> North Asia continues to benefit from winning large, high value clients lifting ARPC; 3 clients now included in group top 10

> VAS growth supported by strong take-up of Insights products

> Asian EBITDA growth of 33% with EBITDA margin continuing to expand to 23%

9,649ARPC

($)

FY13

16,000

15,000

14,000

13,000

12,000

11,000

10,000

9,000

8,000FY14 FY15 CY15

11,553

14,157

15,137

FY14 H1

500

400

300

200

100

0

35,000

34,000

33,000

32,000

31,000

30,000

29,000

28,000

27,000FY14 H2 FY15 H1 FY15 H2 FY16 H1

ARPC

Customers

9,649ARPC

($)

FY13

16,000

15,000

14,000

13,000

12,000

11,000

10,000

9,000

8,000FY14 FY15 CY15

11,553

14,157

15,137

FY14 H1

500

400

300

200

100

0

35,000

34,000

33,000

32,000

31,000

30,000

29,000

28,000

27,000FY14 H2 FY15 H1 FY15 H2 FY16 H1

ARPC

Customers

$M FY16 H1 FY15 H1 FY16 H1 VARIANCE %

Revenue

SaaS 7.6 6.2 23%

VAS 6.6 5.4 22%

Total Revenue 14.2 11.6 22%

EBITDA 3.2 2.4 33%


Content marketing revenue of $3.3m in Asia and Rest of World (not included in Asia Financials above)

ASIA ANNUALISED AVERAGE REVENUE PER CLIENT (ARPC) ASIA VAS - UNIQUE CUSTOMERS AND AVERAGE REVENUE PER CLIENT (ARPC)

ASIA FINANCIALS


King Content Results

Key Points

> King Content revenue of $8.4m since August 2015 > Pro forma revenue growth was 32% in FY16 H1 compared with FY15 H2 > Revenue mix: ANZ 60%, Asia 15%, Rest of World 25% > Top 10 clients’ ARPC is c. $750K which represents YoY growth of more than 20%.

Remaining client base ARPC is c. $45K > Client portfolio at December 2015 of 71 is a 70% uplift since Jan/Feb 2015 > Loyal and sticky client base. FY14 top 10 remain current clients > EBITDA margin of low double digit due to investment in headcount, marketing and

support functions in conjunction with the integration of the business > Encouraging integration of the business with Isentia

• Solid pipeline with early client wins in Asia• Integration of offices in Hong Kong and Perth


Key Operating Expenses Drivers

Key Points > Organic cost growth of 6%

> Operating expenses increased 23% reflecting:

• Acquisition of King Content

• Investment in scalable platforms through transition to cloud infrastructure

• Investment in Asian management team

• New content sources to drive SaaS revenue

• Continued investment in R&D through acquiring highly skilled employees

$M FY16 H1 FY15 H1 VARIANCE $M VARIANCE %

Cost of sales 16.0 11.7 4.3 37%

Employee expenses 31.0 26.5 4.5 17%

Other operating expenses 5.4 4.3 1.1 26%

Total operating expenses 52.4 42.5 9.9 23%

Note: FY15 H1 restated to reclassify labour capitalisation from other expenses to employee costs

OPERATING EXPENSES


FY16 H1 Results Overview$M FY16 H1 FY15 H1 VARIANCE $M VARIANCE %

Revenue 75.8 62.2 13.6 22%

SaaS 51.2 49.0 2.2 4%

VAS 16.3 13.1 3.2 24%

Content Marketing 8.4 - 8.4 n/a

ANZ 53.3 50.5 2.8 6%

Asia 14.2 11.6 2.6 22%

Content Marketing* 8.4 - 8.4 n/a

Expenses (52.4) (42.5) (9.9) (23%)

Cost of sales (16.0) (11.7) (4.3) (37%)

Employee costs (31.0) (26.5) (4.5) (17%)

Other operating expenses (5.4) (4.3) (1.1) (26%)

EBITDA 23.5 19.7 3.8 19%


Depreciation and amortisation (2.2) (2.1) (0.1) (5%)

EBITA 21.2 17.6 3.6 20%

Amortisation of acquired intangibles (4.5) (4.7) 0.2 4%

EBIT 16.7 12.9 3.8 29%

Net finance costs (1.3) (1.3) 0.0 2%

Profit/(loss) before tax 15.4 11.6 3.8 33%

Tax (expense)/benefit (3.9) (2.8) (1.1) (39%)

Effective Tax rate (%) 25% 24%

Non-recurring items (1.2) 0.8 (2.0) n/a

NPAT 10.3 9.6 0.7 7%

Amortisation of acquired intangibles (after tax) 3.4 3.4 (0.0) 0%

NPATA 13.7 13.0 0.7 5%

Underlying NPATA** 14.9 12.2 2.7 22%

*Content marketing revenue of $8.4m amounted to $5.1m in ANZ and $3.3m in Asia and Rest of World. ** FY16 H1 non-recurring items of $(1.2m) relate to acquisition related costs and restructuring costs. FY15 H1 non-recurring items of $0.8m reflect prior period tax adjustment costs relating to IPO restructure.


Operating Cash Flow

Key Points > LTM Dec 2015 net working capital movement

impacted by growth in the business and acquisition of King Content

> Operating cash flow conversion of 91% in LTM Dec 15

> A dividend is declared of 3.7 cents per share

• 19% increase YoY

• 50% payout of FY16 H1 underlying NPATA

• Franked at 50%

> FY16 capital expenditure expected to remain at 5% of revenue

FY12

50.0

40.0

30.0

20.0

10.0

0FY13 FY14 FY15 LTM Dec-15

$M FY12 FY13 FY14 FY15 LTM Dec-15

EBITDA 22.8 22.9 30.9 42.5 46.3

Net working capital 1.0 0.6 (1.2) (2.9) (4.0)

Operating cash flow 23.8 23.5 29.7 39.6 42.3

Conversion (%) 104% 103% 96% 93% 91%

OPERATING CASH FLOW $M


Capital Structure

Key Points > Total facility of $65 million

• $55 million three year revolving cash advance facility (Facility A), with $55 million drawn down at Completion

• $10 million three year revolving multi-option facility (Facility B)

> $8 million cash and equivalents

> Loan covenant 3.25x providing leverage headroom of 68%

$M FACILITY COMMITMENT DRAWDOWN

Facility A 55.0 55.0

Facility B 10.0 1.0

Total Debt 65.0 56.0

Cash and cash equivalents and prepayments 8.0

Net debt 48.0

Leverage ratio 1.06x


FY16 OUTLOOK


FY16 Outlook

> Revenue trending to a range of $155m to $158m (up 22% to 24% compared to FY15)

> EBITDA trending to a range of $50m to $53m (up 18% to 25% compared to FY15)


Q&A


This presentation contains general information about the activities of Isentia’s Holdings Pty Limited (ACN 144 573 795) (Isentia or Company) which is current as at 23 February 2016. It is in summary form and does not purport to be complete. It presents financial information on both a statutory basis (prepared in accordance with Australian accounting standards which comply with the International Financial Reporting Standards (IFRS) as well as information provided on a non-IFRS basis. This presentation is not a recommendation or advice in relation to Isentia or any product or service offered by Isentia’s subsidiaries. It is not intended to be relied upon as advice to investors or potential investors, and does not contain all information relevant or necessary for an investment decision. It should be read in conjunction with Isentia’s other periodic and continuous disclosure announcements filed with the Australian Securities Exchange, and in particular the Half Year Results for the period to 31 December 2015. These are also available at www.isentia.com.

No representation or warranty, express or implied, is made as to the accuracy, adequacy or reliability of any statements, estimates or opinions or other information contained in this presentation. To the maximum extent permitted by law, Isentia, its subsidiaries and their respective directors, officers, employees and agents disclaim all liability and responsibility for any direct or indirect loss or damage which may be suffered by any recipient through use of or reliance on anything contained in or omitted with this presentation. No recommendation is made as to how investors should make an investment decision. Investors must rely on their own examination of Isentia, including the merits and risks involved. Investors should consult with their own professional advisors in connection with any acquisition or securities.

The information in this presentation is for general information only. To the extent that certain statements contained in this presentation may constitute “forward-looking statements” or statements about “future matters”, the information reflects Isentia’s intent, belief, or expectations at the date of this presentation. Subject to any continuing obligations under applicable law or any relevant listing rules of the Australian Securities Exchange, Isentia disclaims any obligation or undertakings to disseminate any updates or revisions to this information over time. Any forward-looking statements, including projections, guidance on future revenues, earnings and estimates, are provided as a general guide only and should not be relied upon as an indication or guarantee of future performance. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause Isentia’s actual results,

performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. Any forward-looking statements, opinions and estimates in this presentation are based on assumptions and contingencies which are subject to change without notice, as are statements about market and industry trends, which are based on interpretations of current market conditions. For example, the factors that are likely to affect the results of Isentia include, but are not limited to, general economic conditions in Australia and Asia, exchange rates, competition in the markets in which Isentia will operate and the inherent regulatory risks in the business of Isentia. Neither Isentia, nor any other person, gives any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements in this presentation will actually occur. In addition, please note that past performance is no guarantee or indication of future performance.

This presentation does not constitute an offer to issue or sell, or solicitation of an offer to buy, any securities or other financial products in any jurisdiction. The distribution of this presentation outside Australia may be restricted by law. Any recipient of this presentation outside Australia must seek advice on and observe any such restrictions. This presentation may not be reproduced or published, in whole or in part, for any purpose without the prior written permission of Isentia.

All amounts are in Australian dollars.

All references starting with FY refer to the financial period ended 30 June. For example, FY 16 H1 refers to the period ended 31 December 2015.

DISCLAIMER


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