Future plc (FUTR) Earnings Call Transcript & Summary

Good morning, and thank you for your time today. I'm delighted to present to you our interim results presentation. And you'll see the momentum that we saw last year has really continued into the start of 2021, leading to another record breaking performance, which is testament to the effectiveness of our strategy. Particularly pleasing is that all of our key metrics are ahead. During the last 6 months, we have enjoyed record online engagement with 31% audience growth. We really are creating the content that our audiences value. This has underpinned the strong revenue result that you'll see, a highlight of which is the organic media growing by 30% in the period. As a consequence of the platform effect, revenues converted into strong improvements in our operating margin up 5 percentage points to 33%. And of course, this has continued into earnings momentum with adjusted EPS growth of 99%, while the capital-light nature of our business means that the earnings have translated into excellent cash conversion. In a moment, I'm going to outline how it's the consistent execution of our strategy that has underpinned these strong results. However, first of all, Rachel is going to take you through the results in a little bit more detail.

Thank you, Zillah. And I'm delighted, too, to share with you another strong set of results for Future to add to our track record. We are reporting revenues for the half year of GBP 273 million, up 89% year-on-year, inclusive of our organic performance and revenues from acquisitions. On an organic basis, we have grown 21% year-on-year this period. Our half year adjusted operating profits have grown to GBP 89 million, and earnings per share growth is 99%. We have continued to convert our operating results strongly to cash with adjusted free cash flow of nearly GBP 94 million. Our net debt at the half year is GBP 241 million, and our leverage is at 1.3x, following a rapid deleveraging post the GoCo acquisition, a key characteristic of our business model. And if I could move you on now to Page 5, I'd like to put into context for you these results set against our previous track record shown here for each half year results period from 2016. What you see is successful execution of Future's strategy translating into results. Future's diversified business model, acquisition strategy to accelerate and drive sustainable growth and the consistency of capital allocation approach enables us to deliver high conversion of our revenue growth to profit and cash. You will note on the adjusted operating profit graph that we're showing strong margin progression per the red line with an operating margin of 33% achieved this period. Also to point out that our free cash flow growth is closely aligned with our operating profit growth, a function of our efficient operating model. And over the next few slides, I want to show you how we've achieved these results, starting with our revenue performance. Our strategy is to grow our business both organically and through acquisitions where we add value by incorporating these businesses and applying our business model. We look at our revenues in 2 key categories, namely those of Media and Magazine. Focusing on our total revenues, in our reported revenues, we include the recently acquired CinemaBlend, Mozo and GoCo revenues, and these feature alongside TI Media and Barcroft acquired in the previous financial year. These 2 segments of revenue have gross contributions of 85% and 61%, respectively, for Media and Magazines. And in the pie chart to the right, you see our revenue split between media and mags and between the U.S. and the U.K. As you see from the table, our organic growth for the period is 21%, and the bridge chart below sets out the year-on-year performance in terms of absolute movement also. You can see that our Media revenues have grown 30%, contributing over GBP 30 million to our revenue growth whilst our organic magazine revenues have declined by 15% and include the impact of the pandemic the year-on-year revenue reduction is a little over GBP 4 million. In terms of geographical split, organic growth in the U.K. was 5%, reflective of the higher proportion of mags and events revenues impacted by the pandemic. U.S. organic growth was 31%. Now let me go into a bit more detail on the media revenue results that have powered our organic performance. On Page 7, we show our Media revenue breakdown by subsegment. And the eCommerce segment includes GoCo revenues for our acquisition period of 6 weeks, and I'll come back to this in a couple of slides. But as you see from this table, we've delivered high double-digit organic growth across all our key revenue segments. Our digital advertising revenues on our owned and operated websites grew 30% in the period. We have experienced growth in inventory sold and yield growth, but also a positive mix effect of inventory sold. And by mix effect, I mean our sale of greater proportions of high-yielding inventory sold directly to our advertising clients. Our digital advertising revenues have performed well off platform, too. Within organic revenues, this is our e-mail newsletter business, where our new product launches, new content launches, alongside a growing subscriber base, have grown our revenues year-on-year. Our video business performance doesn't feature within organic results this year, but is within total reported results. And it's worth noting our advertising results here have also grown strongly year-on-year. Our organic eCommerce revenues grew by 56% as we continue the momentum from last year with continuous investment in the quality of our content and our buying guides. When we look at our revenue trends, we believe that there is some COVID spike due to lockdown and more recent stimulus checks in the U.S., and we estimate a benefit of about GBP 5 million to revenue in the first half. Our other digital revenues of GBP 6 million year-to-date represent materially events and licensing revenues, with our events revenues impacted by the lack of a live schedule of events this period due to the pandemic restrictions. In summary then, overall media revenues you see growing at 59% and 30% organically. And if I could now move you on to Page 8 and moving to our Magazine performance and reported revenue numbers here inclusive of the TI Media magazine revenues acquired last year. What you see on an organic basis, total revenues declined by 15% or just over GBP 4 million year-on-year. Within the revenue mix, subscriptions were in growth with digital format subscriptions provided by third parties such as Apple, Readly and Amazon driving the performance. It's also worth highlighting that, within our inorganic portfolio, subscriptions growth has been 8% year-on-year versus the pro forma and testament to our reader base that still loves to indulge in their interests in print. In the charts, you will see the improving trend of both our organic and inorganic portfolio from when we last updated in quarter 4 of last year compared to the period October to March. The results for the organic portfolio have seen a material improvement in the trend as you see in the chart on the left-hand side. The chart on the right-hand side represents our inorganic magazine portfolio, namely TI Media, and these represent 71% of total magazine revenues. Here, you also see the progression. And you will also notice that this part of the portfolio has been more resilient due to its higher proportion of weekly frequency titles and a distribution footprint that is more concentrated in grocery and independent stores, as opposed to travel outlets and high street stores. Whilst the soft March comparator does flatter the trend by a couple of percentage points, we are pleased with the progression we are seeing on both our news trade and subscription sales. And if I could now move you to Page 9, I'll take a moment to show you our reporting of GoCo results within our numbers. The table here represents GoCo performance for 2 trading periods, the 6 weeks under Future's ownership and the 6-month trading period to March. We show in the first column of the table the segment mapping to Future's segment of eCommerce. GoCompare and AutoSave revenues we describe as eCommerce services revenue and the rewards or vouchers business as eCommerce product revenues. All revenues incorporated under our eCommerce affiliate segment, with a small level of platform services revenues reporting within other media. Looking at the 6-week period under our ownership, revenues of GBP 22.7 million have been included within our reported media revenues in the period. We're very pleased with the GoCo acquisition. We bought a business in good health, and you will see that the business is showing momentum year-on-year across the 3 business segments, with overall revenue growth in insurance revenues, AutoSave revenues and the rewards business, with revenues versus the pro forma up 13%. Trading profit reflects the strong revenue performance, but also a different phasing of marketing costs across the periods. Zillah will give further update in her section of the presentation on the confidence in our combination strategy. And this completes the roundup of revenues. I'd like to move now to show you how our revenue performance has translated into our profit and margin performance. Operating profit margin has grown 5 percentage points to 33% in the period, and there are 3 key reasons for this. Firstly, our revenue mix, high organic revenue growth from our Media revenue segment, namely digital display and e-commerce, which commands higher gross contribution margins. Secondly, our ability to monetize our content multiple times, whether it be via evergreen content on our sites and our products or the ability of our content to deliver different sources of revenue, digital display, e-commerce, licensing or physical product sales. After continued investment in editorial, more of which Zillah will talk about, the cost of our editorial sales and marketing resources as a percentage of revenues has reduced from 29% to 25% due to the factors just described, which we refer to as our platform effect. And then thirdly, our scalable business model. Full integration of our acquisitions and centers of excellence means that our overheads do not need to scale to the extent that our business does. In addition, execution of our business model is focused on staff in lowest-cost locations, meaning that we can continue to invest effectively. You can see this also when looking at our overhead costs, which have reduced as a proportion of revenues from 22% to 17% of revenue. And so with those building blocks in place, here in summary is our overall P&L for the period on Page 11. The roundup of our performance is shown here with key performance drivers being the strong underlying high-margin organic revenue growth, platform benefits of our monetization model and our scalable business model, inclusive of cost synergies from acquisitions and overhead costs reducing as a percentage of revenue. Adjusted operating profit results, a margin of 33%, 5 percentage point increase on the same period last year. Adjusting items, as noted in the table below, includes share-based payments, acquired amortization and exceptional cost of GBP 11.5 million, which are largely GBP 10 million worth of deal fees relating to the GoCo acquisition. Operating profit after adjusting items of GBP 59.7 million has grown 142% year-on-year, outstripping our adjusted operating profit growth. And next, I'll move on to how we efficiently have converted our operating profit to cash. And on Page 12, you see the cash generation of this business, another one of Future's strong trading characteristics. Adjusted operating cash flow in the period was GBP 98 million, and adjusted after capital expenditure was nearly GBP 94 million. Adjusted free cash flow, therefore, representing 105% of adjusted operating profit. Acquisition and financing costs represent net funding movement for acquisitions during the year, and I'll take you through the movement in our financing. If I could move you to the next page, Page 13, this chart bridges our net debt position from the September year-end net debt of GBP 62 million. Our trading performance in the period has translated strongly into cash, with an inflow of GBP 98 million. We have utilized GBP 4 million of our cash on investment and capital and just over GBP 8 million to fund tax and interest liabilities. Exceptional cost outflows include GoCo deal fees, outflows relating to TI Media restructuring costs which were recognized in full in the P&L at the prior year-end and GoCo restructuring costs to date. We purchased our own shares, costing GBP 4.9 million, to be used to satisfy future share options. And within the period, we secured a GBP 215 million term loan facility that was used to fund the GoCo acquisition, being the cash element of the share purchase and the repayment of GoCo debt upon acquisition. We have also funded the purchase of Mozo and CinemaBlend acquisitions in the period with a cash outflow of GBP 25 million. Our net debt is GBP 241 million at the period end, representing leverage of 1.3x, evidencing our ability to rapidly deleverage. And we have material headroom in our debt facilities of over GBP 100 million. And so finally, I hope you have taken away from today's financial update the message of another strong period of results added to our track record, which represented on the left of this chart, shows the virtuous circle of conversion of revenue to profit to cash, proof of our business model's success. Our investment in organic growth and acquisitions enables us to deliver revenue growth year in, year out by increasing our audiences and routes of monetization. Our favorable revenue mix towards media, combined with our ability to write content once and monetize it many times, and the scalability of our operations enables us to improve operating margin. And not only have we grown profitably, but we can continue to convert profit to cash efficiently. We have high cash flow conversion and clear priorities when it comes to allocating this cash. And we have 4 main capital allocation priorities. First, we invest to deliver our organic growth, which is supported by our tech and our content. Secondly, our M&A strategy is focused on acquiring assets which add value to the group and to our business model capabilities. We use our strong free cash flow generation to delever to a net debt level we believe responsible, whilst allowing headroom for further investment in our business, and we have a progressive dividend policy. And so we are proud of these results and remain ever confident in our ability to continue to add strong results to our track record. Thank you, and I'll now hand over to you, Zillah.

Thanks very much, Rachel. And I'm sure you can see why we're very proud of these results, as Rachel mentioned. Before I update you on how we've achieved these results, I just wanted, on Slide 16, for a moment to reflect on our strategy and our business model. Those of you who followed the Future business for a while will be familiar with this slide. It's probably the most evergreen piece of content that we have. On the left-hand side of this slide, you can see what our strategy is. At Future, we operate as a global platform for intent-led specialist media. This is underpinned by our proprietary technology and our data platform. And our ongoing success is very much a function of our diversified revenue streams. Now looking at those revenue in a little bit more detail. On the right-hand side, you can see what we affectionately call the Future wheel or pretty much our business model. And at the center of that is our intent-led content underpinned by our data. Around the wheel are all the different ways in which we monetize our audiences and predominantly these segment into 3 material revenue streams, advertising, consumer direct monetization and e-commerce affiliate. Or as I think about it internally, the holy trinity of media revenues. And I think what you can see here is that our strategy is very much working. If we move then on to Slide 17, I wanted to just look a little bit more detail about what it is that makes our strategy work. And it's not just about writing something on a page. It's also making sure that we have core underpinning pillars which underpin our strategy. Number one is our relentless focus on organic growth, ensuring we create content for high-value audiences with intent is what drives us day in, day out. Number two is a consistent application of our operating model, which drives the platform effect, which Rachel was just talking about. And that ranges from our focus on leadership positions in our brands all the way through to our strategy regarding our proprietary technology. And then where applicable, we use M&A to accelerate the strategy, where we believe the combination of Future and the target will drive additional value, which is unique to our business. Now moving on to Slide 19. I just wanted to look a little bit more detail around what underpins that strategy. As I just mentioned, one of our core pillars in our strategy is the quality of our audience, ensuring we meet their needs time after time is critical. At Future, we don't just have scale, as you can see here, with reaching over 400 million people a month. We have leadership positions across 11 of our verticals from consumer tech to home living. We continue to grow audiences over time, and you can see from the chart on the top half of this page. On the left-hand side is the audience growth since 2018. And you can see that we've seen consistent and progressive audience growth during the last 3 years. The little blobs are the Google algorithm updates. And so while we have lots of updates from Google, our trends continue at pace. While on the right-hand side, what you can see is our audience growth since 2018 by acquisition cohort. And the thing that I really want to call out here is the Future legacy business growth, which has grown from 56 million users in 2018 to over 122 million this half. So really strong performance from the underlying organic business. So if we move on then to Slide 20. I thought it might be helpful to just look a little more at the underlying audience trends across this legacy organic business. What this highlights is that all of our verticals have delivered material double-digit audience growth over a sustained period. In fact, our organic audience CAGR over the last 5 years is 19% audience growth, a really tremendous outcome. And what I wanted to do on this slide is just give you a snapshot of what that looks like across some of our verticals. You can see TechRadar, part of our consumer technology side; PC Gamer, part of our games vertical; Music Radar, part of our music sites; and Digital Camera World, part of our photography vertical, which have all been showing double-digit audience growth over the last 5 years. The key point I'm trying to get across here is it's not just one site that's been delivering the growth in our business and it's not just one vertical that supports it, but rather the operating model across the business, which ensures we create the most relevant content for our audiences. Now on Slide 21, I wanted to look at this in a little bit more detail, particularly the correlation between audience and revenue growth in our organic legacy portfolio. And so I thought it would be useful to just look at a case study of a couple of our brands. On the right-hand side, we have a 4-year snapshot of GamesRadar, which is actually one of our oldest brands, founded 22 years ago. And as you can see, online users have grown 59%, while media has increased at an 87% CAGR over the same period. Now we've continued to invest to support this growth, and editorial salaries have increased our 45% CAGR. And therefore, what's really clearly evident from this is the success of our operating model. With 3/4 of our staff based in the U.K., yet 67% of the monetization in the U.S. Now let's look at Louder, a rock music listening site in a very different vertical, but yet we see very similar trends, which really outlines the scalability of our model and approach. Louder is a much younger brand launched in 2014. And yet during the last 4 years, we've seen very similar trends at CAGR audience growth of 42% and 83% CAGR revenue growth. All of our staff in Louder are based in the U.K. and yet 57% of the traffic come from the U.S. and 69% of the monetization comes from the U.S. What I hope this serves to underline is that we understand the content that matters most to our audiences, and we meet their needs regardless of where we create that content. Now moving on to Slide 22. One of the things that the strong audience growth we have means that it translates in sustainable revenues also. Our media organic revenue growth, as Rachel just mentioned, was up 30% in the period, particularly powered by 2 main areas: digital advertising, up 30% organically; and eCommerce, up 56% organically. Now I wanted on Slide 22 to just look at the drivers underpinning the advertising revenue performance. A few months ago, we hosted a webinar on the impacts of privacy for digital advertising was 2 key takeaways. The first one was that advertisers will want to work with publishers who have endemic audiences at scale. And the second was the first-party data to see more spend being pushed up the advertising waterfall. That's this chart on the right-hand side. As clients look to ensure they can reach the target market they want, resulting in an increase in direct and programmatic guaranteed advertising. Now as you can see from this slide, Future is well positioned to benefit from these trends. We deliver premium quality audiences to our customers. This high-quality audience, coupled with our first-party data insight, has resulted in our top 30 accounts in the U.S. increasing their spend by 67% in March this year versus last year. Now due to the quality of our audience and data, we've seen a 19% increase in direct sold campaigns in the period versus last year. That's our most expensive inventory. We've also seen some yield growth across both direct and third-party inventory. And the impact of that increasing penetration of direct sold, coupled with the underlying yield growth we've seen across the whole stack, has resulted in the advertising yield mix improving 34% versus the same period last year. Now we also continue to make sure we deliver to our clients and audiences the best experience with video an increasing product within our websites, while we've been investing heavily in the period and making sure we may add viewability targets. Now on Slide 23, I thought we could look a little bit more detail in eCommerce. The first half of this year has very much seen a continuation of the trends we've seen previously in eCommerce with our audiences using our content to help them make buying decisions. Now we frequently get asked what we think the trends are given the changes to the longer-term market outlook as a result of the pandemic. And I can't speak for other businesses. And you'll know Future have always been a little bit cautious about predicting future trends. However, when we look at our trading over the last 6 months, we see some interesting data points. First of all, I really do believe there's been an acceleration of retailers to e-commerce over the last 6 months. We saw a 95% increase in the number of merchants working with us during the period, driving sales to over 3,000 retailers in the last 6 months, a real testament to the scale and reach of our tech and that partners trust us to meet their needs. We also think that the prolonged U.K. lockdown in the winter and the impact of the stimulus checks in the U.S. has resulted in some one-off benefits. And while impossible for us to call that exactly, we're estimating that we benefited by around GBP 5 million of nonrecurring sales. On the top chart, which is weekly consumer revenues, you can see the gap year-over-year was greater post Christmas than we'd seen pre. And There's another peak in March, which we think was stimulus check-related. On the bottom chart, you can see the same trends, only we're now looking through the lens of transaction volumes. Since the easing of the restrictions and what feels like the tipping point in vaccinations in the U.K. and North America, we've seen trading return to what we would consider a more normalized level of growth. Now moving on to Slide 25. A core part of our strategy, as Rachel mentioned, is our operating model and what we talk about as the platform effect. I though it would be very helpful to look at its sustainable nature and not just what we've delivered in this half. Making sure we deliver sustainable returns really is important to our business and audience is at the heart of that. In the chart on the top left-hand side, you can see the trends of our audience growth over the last 6 years. And what's pretty clear is that over a sustained period of time we've grown audience and media revenues organically double digit. And most pleasingly, on the chart on the top right-hand side is that our media revenues have grown slightly faster than our organic audiences over the same period. While the operating leverage, as you can see on the chart on the bottom left-hand side, has meant that our -- while we've been continuing to invest in real cash terms in our business, our percent of sales has fallen over time. When you put all this together, what you can see is a consistent track record of accelerating growth in our operating profit with 157% CAGR over the last 6 years. The platform effect is underpinned by our focus on a clear operating model, including centers of excellence, low-cost locations, proprietary technology and investments in valuable content. Slide 26 really brings to life the point about our valuable content. And as I mentioned earlier, we operate within specialist media. And one of the key things we like about that is we create content that continues to earn money in the long term. It's a little bit like big publishing. So if you imagine, we write an article about how to improve your swing in golf, then people will continue to read that article long after it was first published. And therefore, we continue to monetize that article long after we first created it. And so you can see on this chart, around half of our revenues in the year come from content created in prior periods. Now moving to the next slide. You can see how over the last few years we've continued to invest heavily in our content creation function. And as Rachel mentioned, that's our #1 priority in our capital allocations, reinvesting for future growth. We think it's really important to make sure we continue to create new content to support the future growth of the business. During half 1, we announced the recruitment of around 150 new roles across these areas, including 16 new graduates who joined us in January. And as you can see from the chart on the left-hand side, those graduates are already having a huge impact with our audiences despite being onboarded during the prolonged period of lockdown in the U.K. Now on Slide 28, 1 of the questions I often get asked is, are we investing enough in technology assets, ensuring our teams are well resourced to create the products that enable our growth is critical to us. And one of the benefits of our business model is that we in-sourced the low-cost location. So broadly speaking, what that means is that for the same investment we can have twice as many people in Bath as we can in New York. And so we have them in Bath. And at the same time, our proprietary tech platform means that we can reduce redundancy across our product sets, meaning we build our stack once and scale across our business. Now let's look at how we've been accelerating our execution of our strategy through acquisitions and move on to Slide 30. We believe that there is an opportunity to accelerate our strategy through M&A and critically create unique value than we should do so. However, we are very selective. We buy businesses because we believe that the combination of the 2 creates unique opportunities for the long term. We are not financially engineering. We're about building businesses that are sustainable. We then want to make sure that any business meets our criteria. Is it a good culture of fit? Do we think the IP is of enough quality? These are just a few of the questions we consider. And then finally, do we believe we can integrate the business quickly? It's vital that we're not distracted from the core of our business for any length of time whilst it's also ensure -- important to ensure that we can deliver the platform effect we've just talked about to the new acquired business. Over the last 5 years, we spent around GBP 1.1 billion buying businesses while our market capitalization has increased from around GBP 100 million to around GBP 3 billion. We truly believe that we've created intrinsic value through the execution of our M&A strategy. Now on Slide 31, another question that I'm often asked is if there's a typical Future acquisition. And the simple answer is the typical Future acquisition is one where we believe we can uniquely add value. You can see here how the transactions over the last 5 years have underpinned our core pillars, while what's seemed transformational back in 2016 would hardly raise an eyebrow today. We've been able to buy magazines to create digital and U.S.-focused brands. We've bought technology to enable us to increase monetization from existing audiences. And then we've acquired expertise in new areas to allow us to deploy our operating model to new verticals. We have a large funnel of opportunities, and there's no deal that we need to do, which means we remain very disciplined about creating long-term value. And on Slide 32, I just wanted to delve a little deeper into the acquisition of TI Media and I promise this will be the last time we call this out in an update. As a brief recap, just over a year ago, we acquired TI Media, a U.K. magazine publisher of largely women's, homes and lifestyle magazine content. We saw the opportunity to apply our operating model and strategy to this brilliant content, enabling us to pivot from a U.K.-centric magazine to a leading global digital business. As you can see, we've already had early success realizing this ambition, with growth in online audiences in March of 54% and while eCommerce revenues grew 277% in the same ones, real evidence of the momentum. And as mentioned at the full year update, we've identified GBP 20 million of cost savings in the business and are well progressed in realizing these. Now on Slide 33, I wanted to just look at a few case studies to explain how we've delivered that momentum in the TI business. Firstly, Marie Claire. And for the avoidance of doubt, this is the U.K. business, as you'll be able to see, based on the success we've enjoyed in the U.K., why we're so excited about the North American opportunity. Marie Claire has not yet migrated to Vanilla as we only operate it on a .co.uk domain. However, by using our centers of excellence and deploying our other tech assets, we've managed to almost double eCommerce revenues in Marie Claire U.K. compared to last year, while audience is up 26%. With the acquisition of marieclaire.com that we announced a few weeks ago, we see huge opportunities to replicate these successes in North America. Now Women & Home has moved to our Vanilla platform about 6 months ago. And we've seen audience growth there of 45%. While Gardeningetc, really highlights our strategy of leveraging the content across the portfolio, but launching a new brand. And we've seen growth there really start to ramp up, with 76% of revenue in Gardeningetc, coming from the U.S. already. Moving to Slide 34. As many of you are aware, we acquired the GoCo business 3 months ago. And we've been absolutely delighted with what we found. Our focus when we acquired the business is to quickly integrate and that's what -- exactly what we've been doing over the last 90 days. And we're very pleased to confirm that we have the new organization model in place. All staff are now in our new teams, and we've made great progress in the integration of our back office with the HR systems already migrated, finances on track for early summer and the move to the G suite happening in 2 weeks. As a consequence of that work on the operating model, structures, systems and processes, we've been able to identify an additional GBP 5 million of cost savings from the previously flagged GBP 10 million, upgrading our synergy target now to GBP 15 million. And this great progress we've made so far in executing on the integration of the business has enabled to shift our focus onto revenue realization. Moving therefore to Slide 35. When we acquired GoCo, we developed an investment thesis where we thought we could create additional value through the combination of the 2 volumes, as I just mentioned before, doing something unique. And we're really delighted to confirm we've made really good progress on this already. We approach our revenue realization projects as a combination of quick wins and longer-term deliverables, and we've already had some early success. First of all, around lowering customer acquisition costs. We ran some trials on the opportunity to acquire digital media cheaper through using a targeted approach with Future's inventory. And we've already identified opportunities in the region of GBP 1 million where we think there's a materially larger opportunity as we further integrate the GoCo first-party data and propensity models. Another aspect of our investment thesis was the opportunity to diversify revenues within the GoCo Group and scale out global opportunities. We have a working team set up from Mozo, our Australian price comparison business, and GoCo and that collaboration has already led to the launch of broadband comparison on the Mozo brands earlier this month. Now moving on to Slide 36. Another area where we felt there was a strategic opportunity was to grow the addressable market across the GoCo business. We believe this can be achieved in a number of ways, one of which is around harnessing the future expertise in SEO and our centers of excellence model. We felt there was a real opportunity and a quick win to grow the revenue and profits from the voucher business. And as you can see from the chart here on the left-hand side shows that the revenue increase over the last few months within MyVoucherCodes, with SEO now the biggest new generator and revenues up from SEO sources 82% versus same period last year. Now one of our key focus areas was around reaching an organic audience for GoCompare. And while early days, we've seen significant improvements in the SEO rankings of car insurance, moving on average more than 1 position in the SEO search since our ownership. And during May, we've been regularly achieving the #1 spot for car insurance in search. In line with our platform model, we also saw a material opportunity to launch a new vertical, or as I mentioned a moment ago, a new wheel in our business. And our plans there are very well progressed, with bookazines, events and new websites in the offering. So again, very pleased to have created a new content center of excellence that we can grow across the group. Now moving to Slide 38. A core part of our strategy is the ability to grow sustainably. And we do this not just through our operating model, but also in terms of how we work with our broader stakeholder community. On this slide, we've called out a few highlights around what we're doing currently in terms of the wider environment and our governance framework. And I'm particularly pleased to see here the external measure by Sustainalytics that highlights that our business is assessed as being low risk in terms of its environmental impact. But if I move on to Slide 39, during this most unusual of times, we've continued to make sure we did what we could for our wider community, including making donations for school meals and providing laptops. While for our workforce, we continue to implement a company-wide hardship fund and offer all colleagues a second stipend of up to GBP 1,000 in January to help with the increased cost they may have incurred due to the pandemic. However, we want to ensure that we don't -- that we do what we can to minimize hardship for the long term, not just the short term. And so we also undertook to move to above-living wage pays in all of our locations, which saw around 5% of our colleagues having a significant salary adjustment as a consequence. While we delight in sharing future success with all of our employees, we are a profit pool and the recent creation of our staff value creation plan. As a business, it's really vital that we continue to do more. And over the next 6 months, we are committing to publish our ESG strategy with clear targets for the next 5 years. And so then in closing and moving to Slide 41, it's been another record-breaking set of results for Future, a real testament to the ongoing focus and execution of our strategy and underpinned by the continued strength in our organic business. The recent acquisitions are performing exceptionally well, and we're particularly delighted with the momentum we've achieved so far with the GoCo acquisition that I said it's only been 90 days. The ongoing strong conversion of our profits into cash underlines the resilience of our core operating model. Now we've had unbelievably strong first half. And while we think there has been some one-off trading benefits from COVID, we believe that our business has a robust underlying performance and expect to be materially ahead the market expectations for the full year. I'm now going to hand over to the operator to take your questions.

[Operator Instructions] We will take our first question from Nick Dempsey from Barclays.

I've got 3 questions. So first one, when you acquired GoCo, one of the areas of benefit you were most excited about was the potential to use GoCo's tech stack to better monetize the content across your portfolio that ends up with a service rather than a product. Can you give us any update on progress you've made on that, even if it's just planning discussions rather than tangible results? Second question. Why not...

Yes.

Sorry. Should I keep going?

Yes. No, go ahead with your second question.

Second question, when I consider the kind of content that might have most synergies with GoCo in terms of driving traffic there, I guess, I think of consumer financial services advice and auto content, which you don't really have any of or much of. Do you have plans to add content in that area that would seem to be pretty accretive? And last question, you talked about GBP 5 million of benefit from the pandemic within that good media performance in the first half. I guess that's pretty hard to define. I wonder if you could talk about how you set about putting that out because we're going to need to care about that when we think about the comps next year?

Sure. Three really good questions. So on the first one, which is around the progress with the GoCo tech stack, and you're absolutely right, that it is one of the longer-term benefits that we identified in the opportunity. And I think one of the things I called out earlier is that we've now got our teams working together. So we now have one unified tech organization under Kev Li Ying, our CTO. And we've just been signing off the tech road map to integrate that technology onto the future platform. And at the same time, we've just been investing in making sure that the content strategy across the wider Future portfolio delivers the content we think that will lead to eCommerce services. So a lot of the planning has been done. The teams have been put together. So we've created a centers of excellence for SEO across the organization. We've created one tech and engineering team across the organization. And over the next few months, we think we'll begin to see more benefits from that, and I certainly look forward to giving you more details in the November results on the progress we've made there. On the second question, where you asked about content synergies, you're absolutely right, financial services and auto content are core. But one of our core parts of our strategy was the ability to diversify the GoCompare business model so that retain the 80% of the revenues that come from car insurance, but we grow the overall business by growing the insurance market. And we see a huge opportunity there in home insurance and home services. And as I'm sure you'll recall, Future's U.K's #1 publisher of home-related content. So we think we've got a huge opportunity there to use that content to help us drive out the opportunity and the growth in the GoCo business. And then the launch of our new personal and home wealth vertical, which is code for financial services, is where we've been investing in creating a content center to create new content across the Future portfolio to support that. And I suspect over the coming months, you'll see us launch a couple of new brands that underpin financial advice to the consumer. On the GBP 5 million benefit that we addressed on one of my slides, let me just go back to see the eCommerce slide that we had. We actually put those charts into kind of help you be able to -- Slide 23 -- to help you to be able to try and see what we were seeing. It is an art, not a science. However, we monetize our run rates -- we monitor our run rate very closely. And what we felt coming out of the peak trading we saw in Christmas was we hadn't returned to what we'd normally expect in January to look like. And instead, January was feeling more like in October-type month. We saw that trend continue into February. We didn't see the softness you would normally expect from 28 days. And then in March, we saw a spike, which we can only put down to stimulus checks. So when we draw these charts that we've shared with you in 23, using our underlying expectations, that's how we identified in the region of GBP 5 million. But it's definitely an art, not a science. And I'm sure Rachel will be happy to give you more color in due course.

We will now take our next question from Gareth Davies from Numis.

Yes. One follow-up really on GoCo increasing emphasis on Aperture and data in terms of the core Future business. Can you talk a little bit about sort of what you've inherited on the data side with GoCo? Is there a catch-up that you need to do? Or is it just about sort of using the data that they've got already better? Will that be a sort of hindrance in terms of your plans? Will it take a little longer as you build that data up from the depths of data there? And then the second one is an asset we've not talked about much. It's kind of video in Barcroft. You bought it sort of back end of 2019. The pandemic has presumably been a bit of a headwind there in terms of giving everything that you wanted to. As we come out of the pandemic, can you talk a little bit about what's going on in video and how excited you are about stuff there?

Yes, absolutely. Two good questions. So on the GoCo side, we're very pleased with the first-party data that we've acquired through GoCompare. And I think one of the reasons we -- in fact, we've just been posed to upgrading our data marketing platform. I was going to use the code DMP, but I figured most people wouldn't understand that, there and to allow us to actually ingest that data. And then part of the integration, what we've been working on is making sure we have one unified CRM across the group so we don't lose the insight and the value of the data that we get from the GoCompare business. And so we really do think that's one of the ways we continue to enrich the first-party data set. And we see that opportunity to give us really unique cohort audience group that we can then talk to our advertisers about by using that in our Aperture platform. One of the things We did mention at the time of the acquisition was the auto switching business, LAMB. And we haven't spoken much about it here in this presentation, but it is worth pointing out, we've significantly invested in that business over the period as well, significantly increasing customer service, which I think is one of the things we talked about at the time, which was we really need to make sure that we were able to scale that business going forward for the longer term. And one of the things that's really nice about that business is that we have a customer base of over 700,000 customers whom we have a direct relationship with. And again, that really will help to enrich our data platform over time. Your second question was about video and Barcroft. Look, we're delighted with that acquisition. In fact, we're in the process of renaming it, we think, to Future Studios, but we've already created a Future Studios that complements Barcroft. And what you'll see is we've actually released a whole new schedule of program of videos that runs across the future portfolio, including a show called Totally Rated, which does what it said in the box talks about the ratings of kit and which complements the Totally Game series, which is now in its second season, and we're able to sell significant advertising money upfront on that alongside what we monetize through the AVOD channels. And then we've also launched a show called Seriously, which is using Future content expertise, having debates about hot topics in the market. But those shows have been created, crafted and innovated using the Barcroft team's technology. So we're really happy with how that's working in the business.

We'll now take our next question from Simon Davies from Deutsche Bank.

Three from me, please. Firstly, can you talk a bit about marketing at GoCo? Obviously, significantly, it's largest single cost. How much scope do you think you see for efficiency gains there and a reduction in that GBP 100 million run rate of marketing spend? Secondly, can you flesh out comments on current trading? Obviously, remains very strong. Where does the Magazine business sit like-for-like against pre-pandemic levels? And can you talk a bit about the sort of underlying run rates that you're seeing in digital? And finally, can you just talk about M&A pipeline? Do you feel ready to look at other deals? And is there much out there?

Sure. So if I pick up questions 1 and 3, and I'll let Rachel pick up the second one. So marketing at GoCo is obviously one of the areas where we identified as an opportunity, and it is just worth reiterating the point that the GBP 15 million of cost synergies we've announced today do not include any benefits from savings and marketing. These are overhead-related only cost savings. As I highlighted in the presentation, we've seen some early evidence that we can lower marketing costs at GoCo, be that through marketing arbitrage by running digital advertising on our site and, therefore, paying less for the same, but also through the improvements in SEO and driving organic traffic to the site, which then enables us to widen our -- either our market share or to lower the absolute spend in PPC. At this point in time, I think we're more interested in taking market share than we are on lowering the absolute cost. But that's what we continue to do and continues to be a key focus for us in terms of our investment and over the next few months. In terms of the M&A pipeline, at the moment, we're really focused on making sure we deliver the investment case that we've just outlined around the GoCo business and leveraging the benefit of the Mozo business in terms of creating a global opportunity there. And we did announce just a couple of weeks ago the acquisition of Marie Claire U.S., which fits perfectly with our women's strategy in terms of U.S. first and digital first. However, M&A strategy remains the same, as it always has, as we outlined in one of the earlier slides. We do look for acquisitions where we believe we can add value and that the combination of the 2 is unique. But at this moment in time, we're just focusing on delivering the existing value to the shareholders. Rachel?

Yes, sure. So Simon, on your question around the magazine and underlying run rate. So on Page 8 of the presentation, we've got the 2 charts there showing the organic performance and then the inorganic, which is largely the TI, they're operating slightly differently in terms of their underlying performance. You'll see the progression there on the organic performance to minus 15% for the first half. Now I think I'd mentioned in my narrative that we're up against softer comparators for the last couple of weeks in March. So that's flattered by a couple of percentage points there in terms of that minus 15%. But the good news for us is that we're seeing progression there. Obviously, the comps are going to be very tricky now as we're moving into the period when shops were closed in terms of the comparator. And obviously, for -- specifically for the organic portfolio, when the travel shops open and stores open, we should see progression there. On the TI portfolio, which is more resilient because of its weekly format and its distribution through grocery and independents, you see from the chart there, we're seeing that continued progression, again, flattered by a couple of percentage points for the March soft comparison. But really, the trends have improved prior to the strange comparative period that we're now going to be entering into.

We will now take the next question from Tom Beevers from Stockviews.

One question on the Tech & Gaming side. I think you mentioned H1 they remain pretty strong, up 27%, I think, for gaming. Just wondered what you're seeing post the first half, if there's any change there. And then secondly, on affiliate rates, again, post pandemic, have you seen any change there? Have -- a little bit of decline at the beginning of 2020 perhaps I think you mentioned not affecting you, but perhaps you could talk to that if you've seen any movement on affiliate rates.

Yes. Sure. Good questions. I think as Rachel just mentioned, the comps are going to be really unusual over the March through, I think, all the way through to the balance of this year period. And so we're not just looking at our performance year-over-year, but we're also looking at month-over-month. We're a momentum business, so it's really important for us that we see month-over-month grows. And so that's one of the key focus areas that we look at. And as you said, Tech & Gaming have had an exceptionally strong first half, plus 27% in the gaming portfolio. What we're seeing just now is exactly what we expect to see for this time of the year with momentum in our underlying business and in our audience, but the comps versus last year do look a little bit weird. For example, life science is down 30% versus this time last year. Because this time last year, everyone wants to know about the science of COVID. So we think year-over-years are probably not as helpful over the next 3 to 6 months, and we did look at our 2-year numbers, but we just think because of the fast growth in our business that they're not actually that helpful either because our business has got massive momentum in it. But we're very happy with how the audience investments are paying off just now in the ongoing engagement we have with our audiences. In terms of your second question, which was about the affiliate rates, you're quite right, we didn't actually see any deflation in 2020. We know a lot of our other publishers did have an impact on affiliate commission rates, but that wasn't something that we actually had any experience of at all. And in fact, what we've continued to see is an improvement in our affiliate yields over the last 12 months. We call it an EPM measure, and that continues to be very strong for us. We've seen continued yield expansion in that part of our business as well as the expansion we've already noted in the advertising side.

We will take the next question from Jessica Pok from Peel Hunt.

I've just got one last question, please. Just on Marie Claire U.S., can you give us so as to -- I mean, obviously, you've [Audio Gap] e-commerce [Audio Gap] any synergies that can be had with the editorial at all?

Jessica, it wasn't a great line, but I'm going to have a go at trying to work out what you're asking. We'll see if this answers the question. From a cost perspective, we don't see any synergies of the Marie Claire acquisition. We bought this absolutely to invest and growing the brand. When we acquired that business, we acquired 25 heads into the New York business. But clearly, one of the things we were demonstrating in the case studies earlier today is both with the GamesRadar and the Louder example is that we can harness the staff we have in the U.K. to support the marieclaire.com brand. And that's one of the nice things about why we particularly like dot-coms rather than .co.uk or national brands. And so that's very much the strategy we'll be executing against, which is enriching the content and adding to what's already there by using the existing Future resource. I signed off on Friday 3 extra sales headcount. In the U.S., that's testament to our ambition with regards to sales and advertising. One of the things that the sales team in the U.S. had mentioned was that they really needed the kind of injection of a power brand to help them get in the door as we try to build our credibility with the women's vertical. Marie Claire moves into our number seventh largest brand across our entire business, and it moves us into the top 10 now in comScore, which is a real door opener for us when we try to drive premium advertising yields, which, as you can see from the presentation is what our strategy all about, making sure we get the advertising money at the top end of the stack, rather than just on the run of the audience across the whole of the site. From an eCommerce perspective, I think Marie Claire U.K. has been the standout performer across our portfolio with the acquisition. And so we're really excited about the opportunity that represents for us in the U.S.

We'll now take our next question from Ross Broadfoot from Investec.

Congratulations on the results. Just a couple of questions from me. I sort of think they're somewhat interlinked. Could you tell us a little bit more about the 19% growth in direct campaigns in digital ads? And any color you can give on your pipeline or quality of compensation? And then of that 19%, are we talking about new clients here or more with the same? And then the second question is somewhat linked, not post yet, but to what extent is that direct being driven by Aperture? And is that yet to come? And again, just any commentary around progress on Aperture would be great.

Sure. Good questions. One of the things we do at Future every year, and in fact, I think we talked about in our Capital Markets Day a couple of years ago, is set down our store around what we call what's important right now. And one of our what's important right now was to make sure we moved our advertising across -- up the ad waterfall over this 12-month period. And so that's been a real organizational focus for us over the last 12 months. And so while the first-party data and the Aperture platform really play into that opportunity, it's also about making sure we have the right PR stories. It's about making sure we have the right salespeople. It's about making sure we give them the right tools to able to get there and talk about with confidence about the quality of our audiences and the quality of our content. And so our approach, which has been driving that 19% increase in direct campaigns, is a result of that holistic approach to how we run advertising. And I was delighted to announce, just under 2 months ago, the appointment of Deborah Sherry our new Group Commercial Director, who is ex Google and Amazon. And so Deborah brings with us also some real strength in the commercial operations to help us continue to make sure that we drive our business across both the U.K. and the U.S. The Aperture platform is up and running, and so it's absolutely been a key driver in helping us deliver that 19% improvement in the direct campaign mix. But I think it's really about a combination of a whole lot. One of the things we focus on at Future is not just relying on one thing to make things good, but actually the whole system works well together. In terms of mix of clients, as I mentioned in the presentation, during March, we saw our top 30 clients increase their bookings by 67% versus the same period last year. However, we also have seen a number of new clients come on board. In fact, just last week, we booked Prada onto our sites, which our U.K. commercial directors are immensely excited about. And I think that's the first time we've had Prada run on the Future portfolio.

As there are no further questions in the queue, I would like to hand the call back over to your speakers for closing remarks.

Thank you very much for your time today, and we look forward to meeting with many of you over the coming weeks. Thanks very much.