LBG Media PLC (AIM:LBG) chief financial officer Richard Jarvis takes Proactive's Stephen Gunnion through the company's performance in the first half of the year, highlighting a significant revenue growth of 55%, with organic growth contributing 29%.
Proactive: Hello, you're watching Proactive. I'm joined by Richard Jarvis, Chief Financial Officer at LBG Media. Richard, it's very good to meet you. You're out with your first-half earnings; before we delve into those, for viewers who are not familiar with the company, tell us a bit about LBG Media.
Richard Jarvis: Sure. Hi, everyone. So, LBG Media is a global digital entertainment business. Our focus is very much on engaging young adults through a diverse, broad range of content. We're a leading disruptor in the digital media and social publishing sectors. We produce and distribute content across video, editorial, podcasts, and even virtual augmented reality experiences. We've built over a number of years a portfolio of brands that use platforms like Facebook, Instagram, TikTok, YouTube, as well as our own websites. We connect with millions of followers worldwide.
In fact, across our brands and platforms, we have an audience of nearly 500 million now, all of whom love our content. If we look at our business model, it broadly has two revenue streams. We have direct revenues, where we work directly with brands to develop and produce bespoke advertising campaigns tailored to young adults. We leverage our large distribution across the multiple brands and platforms I mentioned.
Then, on the other side, we have indirect revenues, which is a combination of advertising across our social media platforms as well as our own web pages. It's been a strong start to the year for the group, with revenue growth of 55%, and 29% of that is organic growth. This is underpinning the strong performance of the business ahead of the Betches acquisition, combined with positive changes that drove our adjusted EBITDA to more than triple, to £10.2 million in the first half. And with strong cash conversion, it gives us further opportunities for both organic and acquisitive growth.
Proactive: So, Richard, you talked about direct ad revenue, and that in fact grew by 92% over the six-month period. Do you see this continuing? Is this what the company is aiming for?
Richard Jarvis: We certainly have a range of opportunities. Our three growth lenses across the business today are the direct revenue stream, which now makes up 50% of our revenue for the first time; the indirect stream, across social media and web; and our expansion into the US. We definitely want to see that direct revenue opportunity grow.
That audience I mentioned is something blue-chip brands want access to, and we've got an increasing roster of seven-figure clients. Clients love what we do, and that leads to sticky relationships. So, absolutely, this is an area of opportunity for us.
Proactive: Looking at some broker notes post-results, one broker said engaging content is driving your success, but more could be done to drive yields. There's also a big pipeline of opportunities. Are these opportunities more in the US or Europe at the moment?
Richard Jarvis: Our core markets are the UK and Ireland, as well as the US. There’s plenty of opportunity for us in these regions without needing to shift into new geographies right now. We have a lot more we can grow in terms of both direct and indirect revenue. We've barely scratched the surface in the US.
At the heart of it is publishing highly engaging content that our massive audience loves. They spend longer watching it, and we always have opportunities to monetize them. But for now, our focus remains on the UK, Ireland, and the US.
Proactive: Richard, off of that very strong first half, what does the second half hold in store for investors?
Richard Jarvis: As I said, across our three growth lenses—direct, indirect, and US expansion—we have a clear line of sight to growing this business to £200 million in revenue. That’s a waypoint, not the destination. For the rest of the year, our strategy will remain the same as it has been so far.
From a direct perspective, we’ll continue to take market share from traditional advertising channels and build deeper relationships with blue-chip brands. We now have six seven-figure clients and plan to keep building on that. From an indirect perspective, we’ll continue to grow our audience across web and social platforms. Investments in our platform and editorial content have driven audience engagement and improved yields by 90% in the first half.
In the US, we’ll keep embedding and integrating Betches to unlock the opportunities to monetize our large audience there.