Future’s capital markets day (CMD) focused on its opportunity to grow brand reach globally, together with demonstrating the scalability of its platform to deliver that growth. There are particularly attractive prospects in the US market, where media revenue per online user is significantly less than it is in the UK. Our forecasts are unchanged at this point, but the emphasis on closing this revenue gap points to further strong growth potential. Management has an impressive M&A record, adding assets and driving returns on the brands. Progress has been reflected in the strong share price performance, but we still consider that the current rating does not fully reflect the opportunity.
Narrowing the revenue gap
The CMD covered in some detail the technology infrastructure that the group has put in place to support the expansionary strategy. Operational management also outlined the ways that the group’s content is tailored to satisfy the requirements of demanding audiences and to deliver commercial revenue streams in advertising and in e-commerce. Adding e-commerce is accelerating the financial return on the Home Interest portfolio purchased in July 2017. The greatest opportunity, though, is in building up US e-commerce revenues. Future’s brands reach a global online audience of 57m, of whom 40% are in the US. However, the region only represented around 16% of group revenue in FY17. Media revenue per online user in the US of £0.73 is a long way short of the £1.79 earned in the UK.
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