ii view: Future Plc flags a return to audience growth

Shares for this FTSE 250 publishing company have more halved during 2022. We assess prospects.

Trading update

Chief executive Zillah Byng-Thorne said:

“We remain confident our diversified strategy will continue to deliver and remain on track for another strong full-year of profitable growth."

ii round-up:

Magazine and website operator Future (LSE:FUTR) today confirmed that it was both on track to meet its full-year 2022 guidance and that its most recent acquisition had completed.

The encouraging start to the second half had continued, aided by a return to audience growth as pandemic comparatives were fully lapped and its diversified business model stayed resilient. 

Shares for Future, which also owns comparison website GoCompare, rose by more than 6% in UK trading having fallen by close to 60% year-to-date coming into this latest update. Shares in fellow publisher and owner of the Express and Mirror newspapers Reach (LSE:RCH) are down by a similar amount during 2022, while shares for ITV (LSE:ITV) are down by around 40%. 

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Future, which owns more than 200 publications including Cycling Weekly and PC Gamer, also confirmed that it had completed the acquisition of Who What Wear, a leading digital-only women's lifestyle publisher based in the US.

Who What Wear strengthens the FTSE 250 company’s position in the Women's Lifestyle arena and gives Future greater scale and reach in North America to further monetise its audience.  

Relatively recent acquisitions include Marie Claire US and Dennis, which owns MoneyWeek, Computer Active and Minecraft World. 

ii view:

Global specialist media platform Future operates through the two divisions of magazines and media. Its magazine business publishes over 100 magazines both, physical and digital, along with more than 700 bookazines. Its media business takes in its website offerings and its events business. It has over 300 million online users on its websites.  

Group sales are split roughly 70/30 between media and magazines. Revenues include a combination of advertising sales, eCommerce product affiliate sales and media event bookings. Around three fifths of its sales come from the UK, with the balance made in the US. 

For investors, a cost-of-living crisis could see customers cutting or reducing subscriptions, while businesses may prove harder pushed to fund advertising. A surge in energy costs and a series of energy providers going under has also hindered energy switching at comparison sites such as GoCompare. 

More favourably, growth via acquisitions is ongoing, while its brand and revenue diversity are worth remembering. An estimated price/earnings (PE) ratio below the three-year average also suggests the shares are not obviously overvalued, and a return to more regular holiday travel following the pandemic is a relief. Future is nicely positioned to capture the consumer switch from paper publications to online sites, so has long-term appeal, although there is clearly uncertainty in the near term.

Positives: 

• Diversity of titles and business revenues
• Growing online customer base

Negatives:

• Uncertain economic outlook
• Advertising revenues can prove volatile

The average rating of stock market analysts:

Strong buy