Future plc (FUTR) Earnings Call Transcript & Summary

Thank you. Good morning. It's a real pleasure to be here today to talk to you about our truly exceptional set of results. It's also really great to start 2022 with a new acquisition in Dennis and with a material upgrade to our numbers. We're really excited about the opportunities that lie ahead for the business. And I'm also really delighted to have Penny back alongside me as CFO. We are really fortunate that when Rachel decided to retire after 5 years as CFO at TI Media, Penny was looking to come back to full-time work. Now Penny will talk you through in a moment about the results. However, before I hand over to her, let me just take you through a few of the highlights. Our performance this year has been fueled by our ongoing strong performance in our organic revenues led by our Media division up 27%. And one of the key principles of our business is our operating model, and I'm delighted to see the platform effect working really well with our Media -- with our operating margins at 32%. A truly remarkable year and great to see all elements of our strategy delivering. Now let me hand over to Penny, who will take you through this in more detail. And will get the clicking queued up better than me.

Thank you, Zillah, and good morning. I'm delighted to be here today to present our results for the year. It's an honor to be able to present such outstanding results. And as you can see here, these results just continue to add to our strong track record. So on this slide, we show the key highlights for the year with revenue of just over GBP 600 million, which grew by 79% on a reported basis or 23% growth organically. Adjusted operating profit of GBP 195.8 million was up 110% year-on-year, translating into adjusted EPS of 131.9p, up 77% year-on-year. As you know, cash is an important feature of the group, and we continue to convert cash in excess of profit with adjusted free cash flow of GBP 199 million, up 102% year-on-year. As a result, with net debt of GBP 176 million at year-end, leverage was just 0.8x. However, it's worth noting, as Zillah touched on, we completed on the acquisition of the Dennis publishing assets on the 1st of October and thereafter leverage upon completion was just over 1.9x. So moving on to Slide 7. You can see how these results add to our strong track record of consistent revenue growth converting effectively into profit and cash. And then in the chart on the top right-hand side, you can see very pleasingly the benefit of the operational gearing coming through with the red line showing the operating profit margin, which is up 4 percentage points over the prior year. So let me just go into a bit more detail on the results, starting with revenue. So as I mentioned, revenue grew by 79% on a reported basis through the strong organic growth performance of 23% combined with the contribution of acquisitions, notably TI Media and GoCo. Organic revenue growth accelerated in the second half to 26% with continued robust Media performance across the segments combined with the recovery in Magazines as we're lapping the period in which there were some store closures impacting the Magazine performance. In 2021, Media represented 70% of the group revenue with organic Media growth of 27% and Magazine growth of 4%. It's obviously unusual to have Magazine growth, so you have a slightly distorted picture in the prior year, where Magazine revenues were lower because of the store closures, where Media, conversely, was impacted by the faster acceleration online. So for this reason, we've included 2-year growth rates to help with the understanding. In the year, the U.K. represented 65% of the group revenue, grew organically at 17%; whilst the U.S., which is 35% of the group's revenue, grew organically at 27%. The high U.S. growth rate is driven by the high mix of Media revenue. Prior to the most recent acquisitions, the underlying business was generating more than 60% of the revenue from the U.S. And this remains a key opportunity for us to grow our U.S. revenues to rebalance this mix. So let's just look at Media revenues in a bit more detail. Reported growth of 78% was the strong organic growth of 27% and the contributions of acquisitions, most notably GoCo, which I'll cover in a bit more detail separately. In terms of the organic media performance, digital ads, which comprises digital ads on our website, advertising video-on-demand revenue, which is adverts on things like YouTube and also our e-mail newsletters, demonstrated consistency half-over-half with organic revenue up 27%. The performance is supported by an improvement in yields and demonstrates the importance of our specialist content offering a brand-safe environment and commanding premium rates. And Zillah will talk in a bit more detail about the trends in the ads ecosystem. eCommerce was up a strong 36% organically in 2021 despite a slight slowdown in the second half due to the comparators and some stock availability issues. Other Media revenues were down 17% organically year-on-year. We were really pleased to be able to return to live events in September. Gross contribution was 82%, down 4 percentage points due to the 7 months inclusion of GoCo. If we're excluding GoCo, gross contribution was up 2 percentage points driven by the improvement in the revenue mix. So let's just go on to Magazines. So reported growth of 80% was 4% organic and then the contribution of acquisitions, most notably TI Media. As expected, we've seen a recovery of Magazines in the second half as we are lapping the COVID comparators where stores were shut. Overall, the organic portfolio of Magazines grew by 34% in the second half. On a 2-year basis, Magazines were down 13% on average organically, which is more in line with our expected trends. However, the TI portfolios of Magazines, which is more resilient during -- was more resilient during the pandemic due to the pace of purchase and the higher mix of subscription revenues, that was up 15%, a decline rate of 8% over a 2-year period. It's worth noting the Dennis portfolio of assets are 75% subscriptions and therefore have grown throughout the period in the ability -- through the ability to drive yield through their recurring revenues. Gross contribution of 62% was up 1 percentage point year-on-year, which is a performance we're very pleased with, which is a big mix of both favorable mix and also the increased volume. So let's just go on to the GoCo performance. So GoCo is now fully integrated into the Future business and is part of our savings vertical. But we wanted to show the pro forma results to give you -- show you a bit more how it's performing within Future. This is the last time we'll be able to cover their performance separately. So just as a recap, we acquired GoCo in mid-February, so included in the results are just over 7 months of performance. So we've been really pleased with the performance since acquisition and the integration into the Future business. So starting with MyVoucherCodes, which is the fastest to integrate from the business model perspective, and that's performed really strongly during the period, up 61% since acquisition, with the benefit of our SEO best practice driving greater volumes and conversion. GoCompare, which represents the majority of the GoCo revenue, grew by 8% since acquisition, which is a really strong result. So this performance, despite a challenging market with lower quotes as a result of the pandemic, was driven by an improved conversion rate on quotes supported by the excess payment offer. And we can see a really strong performance in the growth contribution, which has improved 3 percentage points to 67%. We remain convicted of the benefits of this business through the ability to drive content to drive SEO and e-mail marketing. So just to touch on Look After My Bills or LAMB, which declined by 48% in the period due to the disruption in the energy market, these market forces have however helped to accelerate our thinking, and we've moved to an auto-quote as opposed to an auto-switch model, which we believe to be more scalable as it's more efficient from a customer acquisition and also a customer service point of view. So we've recognized a small impairment in the period of GBP 9 million as a consequence of this disruption, but we remain confident in the value of the brand and also the subscriber list, which whilst early days, we've seen really pleasing results on the first test of our CRM strategy with this database. This is a really great example of our agile business model, which allows swift decisions to lean into where we see opportunity. And Zillah will go through the strategy for GoCo in a bit more detail shortly. But in summary, we're really pleased with the performance and GoCo starts in life as part of the Future family with really good revenue and margin progression. So overall across the P&L, we've been seeing a really strong performance, with overall adjusted operating profit increasing from the 28% margin to 32%. So as a result of both improved margins and trading profits as well as more effective back office overheads, so gross contribution margin of 76% decreased by 3 percentage points due to the full year impact of TI, which has a higher proportion of Magazines, and the 7-month impact of GoCo, which has lower gross contribution as all the variable customer acquisition costs including brand PPC are recorded within the gross contribution. Offsetting these 2 elements is continued progress in underlying gross contribution due to the favorable revenue mix, and this has resulted in margin after direct costs up 2 percentage points, demonstrating the platform effect and our efficient use of content. Just to touch on exceptional costs in the year of GBP 27.4 million, which were largely related to the acquisitions and subsequent integration with GBP 13 million for GoCo and GBP 4.5 million for the Dennis acquisition. The integration costs for GoCo were lower than we had previously anticipated, and so we're pleased to be able to deliver the higher synergy number at a lower cost of change. So just before we move on to operating profit and cash, I just want to pause to focus on the 3 fundamental characteristics of our business model that drive consistent margin progression that we saw on the previous slide. So as the business grows, we benefit from the favorable revenue mix with the higher organic revenue growth with higher drop-through to gross contribution. The platform effect means that as we scale, the sales, marketing and editorial costs decline as a percentage of revenue. And this year, despite investment in over 100 new heads in content and tech engineering, we've seen this percentage decline from 30% to 26%. And then finally, we do not need to scale our back-office overheads to the same extent as revenues, so we see overheads decline as a percentage of revenues. So we can just see here the margin progression play out. So despite the dilution from TI Media and GoCo acquisitions, diluting impact margins in the short term as well as some inflationary pressures around -- particularly around pay, the strong momentum in the business and the platform effect to drive the margin improvement. And as we look into the year ahead, we expect this to continue to play out. And whilst we do have some inflationary pressures and some margin dilution from GoCo and also Dennis, we expect to unlock the benefits. The strong platform effect will deliver further margin expansion, and we could see operating margin expand by as much as another percentage point in the year. So just touching on cash flow. As you know, by design, we're a highly cash-generative, capital-light business. And it's a great focus of ours to ensure that the profit converts into cash that can be reinvested into growth. So overall, we're pleased with the performance of adjusted free cash flow of GBP 199 million, up 108% year-on-year, and the adjusted cash conversion rate of 102%. Just a couple of items to highlight that we haven't touched on. So exceptional items which we touched on, on the previous slide relate to the acquisitions, but there's some timing differences from the P&L. And then note also, the tax costs increased in the year as in the prior year, we benefited from the utilization of some losses, but our cash tax remains super efficient, helping to deliver the swift delevering that we can see. So just to reiterate our consistent strong cash generation, we've just included a net debt bridge to show the movements in the year. So we started the year with net debt of GBP 62 million. And then after investment interest, tax, exceptionals, dividends and acquisition, which is principally GoCo, and from the strong free cash flow generation, we closed the year with net debt of GBP 176 million or leverage of 0.8x net debt to bank EBITDA. However, as we completed on the Dennis acquisition for GBP 300 million on the 1st of October, we've included the leverage on that date to provide a clear review of our current leverage of GBP 476 million, leverage of around 1.9x. With our consistent and strong cash generation, we're very confident of quickly delevering as we have historically aiming towards our informal target of 1.5x. So finally, just to finish with the summary of the business model and the platform effect it drives. This year has been another really strong set of results added to our track record with continuing revenue growth, expansion of the margin and conversion of revenue to profit to cash. Our investment in organic growth and acquisitions enable us to deliver revenue growth by increasing our audiences and routes of monetization over time. Improvements in the revenue mix towards Media combined with our ability to write content once and then monetize it many times, and the scalability of our operations enables us to improve operating margin. This allows us to grow profitably and convert profit to cash efficiently. We have high cash flow conversion and then 4 main priorities when it comes to allocating this cash. So firstly, we want to invest to deliver on organic growth. Secondly, our M&A strategy is focused on acquiring assets which add unique value to the group and to our business model capabilities, as you've seen through this year with the acquisitions of GoCo and also the Dennis assets. Thirdly, we used our strong free cash flow to delever to a net debt level we believe responsible whilst also allowing headroom for investment in the business. And then finally, we have a progressive dividend policy. So on that note, I'll hand over to Zillah to share a bit more about the strategy and the highlights for the year.

Thank you, Penny. So for many of you, this slide will be familiar to you. I can't do a presentation without starting here. However, I do believe that this is one of the reasons why we've had such a consistently strong track record is that we're focused on the execution of this strategy. We've created a business that has proved resilient in good and hard times. And at the start of the pandemic, I personally remember saying that our business was in great shape, and our one hope organizationally was that we exited the pandemic we would have the same resilient, strong business. I'm sure you will agree with me today that results underpin exactly that. The reason our business has been able to operate so successfully is a function of our strategy. We've built our business to be agile, able to create the content that matters most to people at that moment in time underpinned by proprietary tech stack. Core however to this diversified model is that we are well diversified geographically with currently 65% of our revenues in the U.K. and, historically, 65% in the U.S. We are diversified through our specialist verticals operating across 11 today, ranging from homes to games; and with 3 distinct revenue streams: advertising, e-commerce affiliates and consumer direct monetization. This combination of geographical, sector and client diversification has enabled us to pivot our model as we faced the most unusual of events at various times through the last 2 years. However, where we believe our strategy is working and delivers without any question, a winning differentiator is our ongoing focus on execution, which is underpinned by 3 key pillars: organic growth, the platform effect and value-creating acquisitions. And as Penny has already outlined, we've got a really strong track record here. What the chart on the right-hand side demonstrates is that while it is audience that fuels our engine, the platform effect and value-creating acquisitions allow us to create true value as you move through our P&L, with 58% CAGR audience growth converting to 72% CAGR EPS, resulting in an adjusted free cash flow CAGR of 112%. Now core to our success as an organization is ensuring we are meeting the needs of our audiences that consume our content, and so I wanted to look at this in a little bit more detail. Future has real scale. We reach over 430 million people each month, creating the content that meets those audiences' needs. Even this week with the desire to find the must-have products, we've been creating live blogs on our sites with where to buy X. I still can't find a PS5, but we certainly hope lots of our customers and clients find the products they wanted. It is this constant focus on providing the audience with the content that they want, which means we continue to reach 1 in 2 in the U.K. and 1 in 3 in the U.S. each month. And while our online reach has quadrupled since 2018, however, we're not satisfied with 1 in 3 in the U.S., and our medium-term objective is to move our U.S. audience to parity with the U.K., i.e., reaching 1 in 2 online in the U.S. Before we get into the detail around that and how we expect to achieve it, I wanted to look a little bit more about the relationship with our audience and the quality of it. It has been an unusual period for our audiences with the business experiencing a real COVID boost to online users as a result of the pandemic lockdowns. You can see from the chart on the left-hand side the clear impact of the 2 COVID lockdown spikes, where we experienced rapid audience growth as a result of demand for information related to the pandemic. This is quite distorting in our short-term audience gross numbers. However, what you can clearly see from the chart is our audience continues to have momentum and having grown 20% organically over the last 2 years. One of the things we mentioned at the start of the pandemic was that some of the pandemic audience was less intent-led than the typical Future user. And consequently, the ARPU attached to that audience was lower than the usual Future user. You'll have heard me talk before about how audience and revenue growth are closely correlated, and the table on the right-hand side highlights this point. You can see how the core organic Future audience as last year on a 2-year average and a 5-year average delivered in excess of 25% media revenue growth. While our organic audiences, with the exception of this year due to the COVID boost, has also grown at north of 20%. One of the things you'll have also heard me talk about is how not all audience is equal. And not only do we intend to continue to grow our audiences to reach 1 in 2 in the U.S., we also have a real focus on making sure we have the most valuable audiences for our partners. And this has been key to some of the other success we've seen recently in advertising. Let's look at that in a bit more detail. The trends we highlighted at the half year have continued with digital advertising organic revenues growing 27% in the year. This performance was a result of having the audience, our advertising partners, most valued. What's been particularly pleasing is that the growth in our yields have accelerated during the second half by 9% compared to H1, which really underpins the quality of the audience we have and our ability to meet the needs of our advertising partners as we enrich our audience data segmentation. This is partly enabled through the growth in the portion of our revenues which were sold direct. Worth calling out, however, is that while direct revenues contribute to 59% of the total advertising revenues, they account for less than 20% of the advertising impressions, highlighting the significant opportunity for further growth in this area. Now as I mentioned when discussing our strategy, unquestionably, one of the drivers of our success has been a diversified nature of our revenues. Our growth in eCommerce during the year was exceptional. We delivered sales to retailers in the region of GBP 1 billion. And you can see from the snippet on the right-hand side that during the recent peak trading period, the Future brands have been in top spots. In this example, for Best iPad, you can see that Future's 3 brands have all -- have had 3 news boxes, T3, TechRadar and iMore; while, TechRadar, GamesRadar, T3 and Tom's Guide have had the top 4 review slots. This is a really great example of our strategy where we use the strength of our brands to give consumers maximum choice. During the last 12 months, we've been working really hard to ensure that the Hawk, our proprietary technology, has -- meets the needs of both our customers and our retail partners. And as a consequence of that investment in product and innovation, we've seen conversion improve by 22% in the second half of this year. This has ensured that we've been able to maximize the value of the audiences we have by meeting their needs. Our newer verticals, women's, homes and sport, have seen an ongoing acceleration in their growth rates as we migrate the legacy TI brands onto the Future Vanilla platform and operating model. It is particularly pleasing to see the size of the opportunity as the growth in these verticals is materially accelerating while the absolute revenues still have significant headroom. This is a really nice segue into a more detailed look at our vertical performance. Aside from the diversified nature of our revenues, the critical element for our ability to deliver sustainable long-term growth is growing new specialist content verticals. As we optimize our verticals, we expect them long term to deliver in the region of 10% to 20% audience and revenue growth. This is achieved from a combination of data analytics helping us identify what's the next right thing to write, ongoing investment in editorial resource and the benefit of a strong back catalog of published content. The chart on the right-hand side highlights this point with nearly half of the revenues arising from content created in earlier years. Today, we reach 1 in 2 in the U.K. and our strategy is to extend our specialist content verticals from 1 in 3 in the U.S. to more like 1 in 2 over the next few years. This is a material market opportunity. And the strategy we've been executing over the last few years, growing our share of newer specialist verticals, puts us in a great position. So let's look at why we think we can shift the dial. As we outlined in the interims, our oldest verticals are tech and gaming with combined audience reach of just under 165 million users. Over the last 6 years, through a combination of editorial investment, new launches and acquisitions, we have grown our share of the U.S. tech market from outside of the top 15 in comScore to consistently being #1. We have delivered in the last 2 years a CAGR of 16% in tech and 30% in gaming audiences, converting to 26% media revenue growth and 40% in gaming. This growth has been delivered in our oldest, most mature brands. As you can see here, PC Gamer, a site more than 15 years old, has audience growing at 22% CAGR; while Tom's Guide, an acquisition from Purch in 2017, has more than doubled its audiences under future ownership. Sometimes I'm asked if our older more mature verticals will ever go ex growth, and I hope this slide helps to outline why we think the combination of data analytics, exceptionally talented editorial staff and the valuable evergreen content gives us the confidence to continue to expect to grow. Now let's look at some of our newer verticals. We've grown our presence in cycling from nothing in 2016 to a leadership position in both the U.K. and the U.S. This was a category we identified as having the characteristics which make us successful, specialist audiences who look for advice on what to buy and what to do and endemic advertisers with products to sell. We acquired one small brand back in 2017 from Immediate Media, then we launched our own new website. And then 18 months ago, we acquired from TI a number of another brands. This combination of acquired and organic has served us well. And you can see here in the top right-hand box, again, the success we have in search engine rankings at critical times. As a consequence of being a market leader in the U.K. and the U.S. and our combined scale, we've seen material growth in our Media revenues and increased success with our advertising partners, resulting in Media revenues now being 42% of the revenue mix and growing in absolute terms 76% year-over-year. Then an example of the page on cycling is good evidence of why we believe we can repeat the success with our Homes portfolio, which is a little earlier on its journey with Future. Like cycling, we had no content in homes in 2016. However, we'd also identified this as a high-value category. We acquired the homes division from Centaur Media in 2017, and then we launched our own brands and events in 2018. And then in 2020, we acquired some additional brands from TI Media. From having no scale over 5 years ago, we're now the #1 publisher of homes content in the U.K. And we progressed from position 42 in the U.S. to -- in 2019 to #14 in comScore rankings this year, giving us the confidence we need to believe we can secure a market-leading top 5 positions in the U.S. over the coming few years. Looking at the progression of the homes vertical, I thought it would be helpful to just spotlight on a couple of brands. Homes & Garden migrated to the Vanilla earlier this year, and Media revenues have grown a whopping 456%, albeit from a small base. More pleasingly is that the mix of digital revenues of the total has increased to 23% in the year. Ideal Home is another brand that we acquired. However, different from Homes & Gardens, we actually have it migrated to Vanilla as it's a .co.uk, however, we have continued to implement the future strategy and the operating model. And you can see here that ad revenue have grown 42%, which is far from modest. And also pleasingly, the mix of digital revenues has grown to 30%. We've also invested in the Homes vertical and new editorial resources increasing head count 14%. And it's this track record that we have in our original Future brands. Our success more recently in cycling and then there's always momentum in homes that really gives us the confidence to believe we can execute on the strategy I've just outlined. Now a core part of our success has been the ability to accelerate our strategy through acquisitions. And we thought it might be helpful to just see at a glance on this rather busy slide how we've been delivering value and accelerating our strategy over the last couple of years. You've heard us talk about how we split our acquisitions into 2 phases: control integration and then revenue realization. And as we've talked about before, when we acquire businesses, we ensure the financial workflow on the basis of the first phase, getting the controls right and delivering any cost synergies. And so that the revenue synergies for us become upside. The other very important thing for us is that is it critically that we complete Phase 1 quickly, which allows us to drive the platform effect Penny talked about earlier. As you can see, we're largely complete in both Phases 1 and 2 for our first 3 acquisitions in the last 24 months with revenue synergies laid down and the momentum in place. And so the delivery of the ongoing growth is now being managed in the BAU environment in our business. And as you've seen earlier, there are fast-growing revenue lines. We are complete on Phase 1 for Mozo, Marie Claire and GoCo and well progressed in the revenue realization work. Sorry. That was a pause before I got to GoCo, which is the best part of the presentation. Given the materiality of GoCo, we thought it would be helpful to look in a little bit more detail about the progress we've made in the last 8 months. As we've communicated already, all of the Phase 1 is completed with the cost synergies targeted -- target uplifted to GBP 15 million in May, with GBP 6 million of that in FY '21 numbers. We've also completed all the work on the operating model and back-office systems. Now in terms of the revenue synergies, we're really pleased with the progress we're making. And as Penny has already mentioned, GoCompare.com grew its revenues 8% and also grew its GC margin 3% under our ownership, i.e., more revenues and more profit, which I think is exactly what we said we'd do when we bought the business. Now you'll recall, we actually identified 4 key areas where we felt we would drive additional value across the portfolio. The first area we identified was a voucher business, where we thought we could have a material impact within the first 12 months. And we significantly improved the SEO performance here, resulting in sales growth of 61% this year, as Penny has already mentioned, but crucially at a much higher margin. We've developed also a proprietary technology, Eagle, which we have now rolled out onto the Future portfolio. And November was the best-ever month under the Future portfolio for vouchers. So we're not yet quite BAU, we're very nearly complete in this area. Now the second area we identified was marketing efficiency for GoCompare. We thought that driving more traffic to the top of the funnel from sources other than PPC, i.e., direct, SEO affiliate or e-mail and reducing absolutely the cost of marketing. We've made really good progress here with SEO rankings for car, largely in position 1 or 2 since we owned the business. And we started to drive content to the top of the GoCo funnel from Future Media brands. We've also decided to reinvest some of the marketing monies into new homes excess provision offer. As in this market, we think offering customers great value and savings is critical, and we also believe that winning in homes is key for Future. The next area we identified is an opportunity with around e-commerce services by deploying the technology that underpins GoCompare onto the Future Media brands so that we could drive conversion further up the funnel while customers are still looking for advice and not just the cheapest deal. This work is going really well, and the products have been launched already in the women's, homes and tech verticals. Finally, we've been working on the data strategy, which allows us to bring the GoCo data into our data lake, enriching our first-party offering. And just this month, we received a material advertising brief in the U.K. based on our ability to segment our data within the Future Media portfolio using the GoCo overlay looking for mortgage and tenders in the market. And this is just the tip of the iceberg of the opportunity that lies there. Now of course, we can't talk today without mentioning Dennis, our most recent acquisition. We completed this 8 weeks ago, and as a quick recap on the strategic drivers for this acquisition, we saw a real opportunity for us to turbocharge our growth in the wealth vertical, our newest identified area. And I was saying recently to someone, I think, on an ARPU basis, this will be the most valuable audience for the group in the longer term. It also gives us a real opportunity to extend our reach in the U.S. with Kiplinger, a fantastic 100-year-plus heritage brand, which we believe we can add significant value to. It's also, when we talked previously about GoCo, one of the areas in which we believe the opportunities to bring the GoCo tech to the U.S. when we think about Horizon 2. We also think there's a real opportunity here to grow our lead generation revenue with a combination of IT Pro complementing existing Future assets and Falcon Tech. We've also added new capability of Future around recurring revenues and subscription management. Finally, with the acquisition of the week, we've enhanced the scale in the knowledge vertical. We made really good progress on this acquisition so far and have already implemented our operating model, which is why we've been so confident in the ability to upgrade our synergies by 60% to GBP 8 million. Now one of the core elements of our strategy at Future is that we operate as a sustainable business, delivering value for all our stakeholders. And so I'm pleased to announce today our updated approach to ESG, our future, our responsibility. Future's always operated as a responsible, sustainable employer and our response during the pandemic served to underline us. We think leading businesses today have a minimum criteria that they need to meet to ensure they contribute to the wider stakeholder communities. And so Future foundation is the codification of the great work we've already been doing in this area under 2 broad pillars, creating a great culture that supports our company and workforce and ensuring we take responsibility for how we operate in the society and our broader planet. However, as we thought deeply about this over the last few months and our approach to CSR, we also wanted to make sure we put our collective strength behind some initiatives where we felt Future had a unique right to win. And we call these our differentiators. There are 2 pillars here that I'm very proud to launch and we'll tell you more about in the next few weeks. The first 1 is around expanding horizons, helping to support life-long learning through society, very close to the core principles of Future. Another one is about shaping the Future as a leading digital media publisher globally, we have a responsibility to ensure that the content that you see online is factually correct, accurate and safe. And we think it's really important that we take a position on that going forward. Look out, as I said, for more details on this in the next few weeks. And so finally, I think you'll agree this has been an exceptionally strong year for us underpinned by our ongoing focus on meeting the needs of our audiences. We see a real opportunity to continue to grow our business through the growth in our existing verticals and also delivering the opportunity from some of our more recent acquisitions. And while we continue to operate in what can only be described as the most strangest of times, we remain absolutely confident that the continued execution of our platform strategy means that we'll be materially ahead of the current expectations in 2022. Delighted to take questions. Gareth?

[Technical Difficulty] Gareth Davies from Numis. Two questions from me. The first one, you flagged sequential yield improvement of 9%. Can you just sort of expand a little bit on that in terms of certain categories currently driving that and sort of disproportionately and how quickly can you roll out that sophistication into other? And sort of how we should be thinking about that yield progression over the next 12 to 18 months? And then the second one, just you sort of made a almost throwaway comment at the end there on Dennis in terms of recurring revenue and subscription expertise and applying that to the Future portfolio. It feels like that could be quite significant around just given the scale of your portfolio. Can you maybe expand a bit on what you're doing there?

Sure. So the first question relates to the 9% acceleration in the Media and the advertising yields that we saw in the second half of this year. And I think that's fundamentally been underpinned by the strength of our Aperture platform, which we ran a webinar on earlier this year. We're really lucky but through by design, not luck, I should say, that Future is a specialist media business. And so we've got really good quality audiences. Our core Media business has high endemic audiences, which is what advertisers want to reach. But the strategy over the last few years was the acquisition of SmartBrief, which has qualified information about our users in the U.S.; the acquisition of GoCo, which enriches our data set; the acquisition of Dennis, which brings qualified subscription information both in the U.S. and the U.K., mean that we really can turbocharge the insight we have about our audiences and really -- make really super top niche segments. And it's that segmentation which has been fueling the growth in the ARPU. So I don't know what I can tell you to expect apart from we're very confident we've built a business, which should continue to perform well, and we see continued upside in the medium term in that regard. With regards to the second point, it's really interesting, isn't it, because we're super excited about the Dennis acquisition. And the reason we approached them about buying that business was the opportunity we see fundamentally in the wealth vertical. I think when we bought GoCo, one of the big questions we faced from shareholders was what does this mean for the U.S. And the acquisition of Kiplinger really underpins the strategy we have in terms of realizing the value of the wealth vertical geographically using the e-com services technology we've been working with GoCo to build. And so the subs and revenue -- recurring revenues were kind of a secondary level opportunity for us but actually super exciting as well. But the first driver for us was that opportunity in Kip. When we built our Media business, one of the things which was really important for us was that we had diversified revenues. And the kind of holy trinity of that is advertising, e-commerce affiliate and consumer monetization/subscription revenues. And so we feel right now going into 2022, we've actually now got that kind of perfect pro forma model to take us forward, and we definitely see further upside across the Future portfolio as a consequence of that.

Yes. It's Nick Dempsey from Barclays. I've got 3, please. So the first one, I'm interested in your widgets on Real Homes for energy and broadband for a couple of reasons. One, how do people find that? Because if you just type into Google best deals for broadband and energy, you get masked by the -- all of the price comparison sites, right? Is it that people who stumble upon that content while sort of browsing through the Real Homes portfolio? Or are you actually trying to compete in that sort of fight for the attention? And second question, plan for AutoSave at the moment at GoCo, I believe you're getting no revenues at the moment from it. Where do we see that going? And what's your plan? Third question, so on Slide 23, when we had audience down 8% and revenues up 27%, I think you've given us some clues as to the reason for the gap there in terms of yield and better Hawk conversion but maybe if you could expand a little bit on explaining what is, I think, for investors a difficult bridge to understand.

Sure. No problem. So first off, starting with Real Homes in the portfolio. So I think that was actually the genesis of the original reason why we wanted to go out and buy a price comparison site was we found we were able to rank in SEO term really well for services. So the always one we were ranking for was best broadband, and I shouldn't say this in a live environment, but if you take the best broadband, I'm very hopeful that you'll find one of the Future sites will rank for it. And so what we've been building out just now is the content strategy that supports that. So the objective is that we will compete with the PCWs on that, but the terms might not necessarily be best energy because that's a very commoditized term but more around what to think about what's the best energy -- a green energy provider or what's the best energy provider for a small flat or so as you start to think about the longer tail, and that's where we think we can bring the Future expertise to play. I think it's really important, however, to note that while we've been building out that tech and it went live about 8 weeks ago, we've been putting our resources to areas where we can make money today from a store perspective, so we haven't built a lot of the content yet where we were building out the tech. But that's where we think that opportunity will come in. And the evidence we had from the diligence we did prior to the acquisition was that we could rank on those terms. So we're very confident of delivering that. In terms of the AutoSave business, I'm really pleased when we acquired the business. So this wasn't one of the key reasons why we acquired it because none of us could have predicted what was going to happen in the energy markets. And it really does go to the strength of the business that we've been able to absorb basically the closure of the energy markets both for the AutoSave business but also for the price comparison part of GoCompare without having any impact on the performance we've talked to you about today. You're quite correct, there are no revenues in our numbers for that right now either in the AutoSave or in the GoCompare business. And we haven't put down any numbers into our forecast for FY '22. So we assume that does not come back at all. One would hope to would provide some upside, but we've learned to be cautious in these unpredictable times. When we bought the business, one of the things we talked about was customer services, and how are we going to scale it. And actually, as we actually spend more time getting to understand the product, what we realized was it was actually quite complex for the user to know who owned the contract that we're working with, was it LAMB or was it British Gas. And so quite often, we were being confused as the actual provider of the service as opposed to the marketplace where they could have the switch. And that was actually costing a lot of margin because you're having to actually deal with a lot of customer query is which actually, we couldn't resolve for them. It also wasn't great in terms of customer experience because they would phone us up and say can help me and we were like, actually, we're not the person you should talk to. You should talk to someone else, which is never a good moment when you have customers. And so we had been thinking longer about how actually was auto switching the right proposition because of this confusion about who actually owned the contract, and so that's why we decided to pivot into auto prompt. We have all the technology to know when your contracts are up for renewal. We know what the best price is, which is -- and we know who you are because we've got the membership of over 0.5 million users, we'll just send you an email saying your price is up for renewal. These are the best deals in the market and then let you choose to actually execute upon that. And we think that will actually lead to a better overall customer experience, and we also think it's going to improve the margins in that business when it comes back. We're very confident it's going to come back, but we also recognize we're in a strange time just now as we've taken a classic Future view, which is to be prudent around what that looks like. On the last point, yes, look, I think the reason we wanted to just explain in a little bit more detail was it is an unusual situation to be sitting here with minus 8% in our organic revenue audience -- organic audience numbers and plus 27% on our revenues. And I think if you asked me to explain what was going on there, it's the point in the chart where you see the big spikes. There was a lot of audience last year that was really low value. And you'll remember that a lot of businesses were taking their advertising revenues down at that moment in time because there was not a lot of good quality people around. And so we said at the time actually we managed to maintain our advertising revenues because the endemic advertisers still want to be around our intent audience, but that spike just isn't or a natural audience. And if you draw the line through it, you can continue to see momentum. And that's why we continue to deliver 27% revenue growth because, actually, it's the intent audience that is most vulnerable to us, and we've never chased big low-value commodity audiences. We're happy to have them if we can be helpful to them, but that's not our core model. And so I think the way to think about the minus 8% is actually underpin the strength of the audience we have because it's the unwinding of the boost from last year.

This is Bridie from Stifel. A couple of questions. Firstly, on e-com, you obviously mentioned you had a tough comp and referred to some stock issues. And this is something that we're sort of hearing a bit more widely, obviously. Can you just help us pick apart the impact of stock somehow? And I suppose I'm thinking you've come through Black Friday trading. Help us sort of shape our first half expectations on the e-com front there. And then the second question, coming back to your yield improvements. I mean, obviously, you've laid out the path of how you've got there, but I'm just trying to understand the Future versus the market more widely. And are we seeing yield inflation more widely in the digital advertising space.

Should I start on one and you can finish it. I'll give you the harder part. So in terms of our eCommerce performance, I think we've been really delighted. I mean 36% growth in the year is outstanding by any one standard. And so we're very pleased with that. I'm very pleased also to be here in Tuesday morning after the peak trading weekend as opposed to before it, trying to guess what was going to happen. And I should never doubt ourselves. We had an excellent peak trading, but we're very pleased with the performance the feedback from our retail partners is we've been a top performer for them. And one of the most highly weighted pieces of content with the biggest audience spikes was our live blogs, which were where to find stuff. And I think that's a really good example where we can't avoid the issues that are in the wider market, which is there are stock shortages. You can't buy a PS5, but I'd like very much to buy one. And -- but what we can do in our business is pivot to make sure that we respond to that and maximize the opportunity. And so being able to have a live blog that was updated constantly about this is currently in stock here, buy it now, was our best trending article across all of our websites. Well, that does it means we maximize the opportunity in that market, and it also means, therefore, then it was a Hawk technology, which is -- takes live feeds from retailers with where there is stock availability, we don't put retailer feeds in there if it's out of stock. When a customer does click through, we actually do take the revenue opportunity that's there. So absolutely, it's a little bit slower than we would have liked in terms of our year-over-year numbers because the comps we're up against, it was very strong comps last year. But do we see any change in the long-term fundamentals, not particularly. But I'll let Penny pick up the rest of that part of the year half 1 guidance.

Yes. So in terms of we -- at the half year last year, we talked about the sort of the boost in the e-commerce numbers, was about GBP 5 million that we called out specifically. So if you normalize for that, then that means that we expect a sort of acceleration in growth rate in the second half, but we're still expecting strong double-digit growth across the course of the year. In terms of your second question on advertising, there are 2 -- sort of 2 trends to be aware of. One is the data segmentation and the sort of quality -- flight quality. And so we are well positioned on that, which -- and that's driving some market growth for those people who've got those endemic audiences. The second factor to be aware of is the high yields available on video revenues. So there's still a very low, small part of our overall advertising mix, and so we see further margin progression from that.

But it's not a sort of general inflationary...

We don't think there's general inflation in the market overall. I think there's been some inflation in PPC from Google in terms of that end of the market, but that's not particularly where we play, so it doesn't impact us per se. But we don't think it's inflation in the market. We think it's demand for our product.

And obviously, your deals done directly, does -- have you seen any impact from the IDFA Apple changes or anything like that yet?

No, IDFA is largely app based, and we're largely browser-based, and so that hasn't had an impact for us.

Simon Davies from Deutsche Bank. A few from me. Firstly, on GoCo, you talked about marketing efficiencies and using your superior SEO capabilities. Can you put any numbers on that? What do you think you are benefiting in terms of revenue synergies? And where do you think that can get to? And what impact, if any, are you seeing from the price walking control of those by the ACA? And secondly, just on Magazine, obviously, return to underlying growth in the second half, not something we're expecting to see again. But what kind of run rate are you seeing in the first quarter in terms of Magazine's sort of more normalized run rate?

Sure, if I pick up the first one and, you take the second one, Penny. So in terms of the SEO benefits, I think I don't think in a position at this point in time to give you detailed numbers. But if I tell you broadly that the mix of SEO is the same just now for car insurance as the mix in volume terms as SEO and SEO converts at the same rate. So it's the same quality of audience in the same proportion just now, but one is free and one is not. Then you can see that, that has an impact as we move through the margins in the organization. So that's a key focus for us just now. And we've -- as we said before, we've grown from position 4 largely to position 1 or 2 in that key term for us, so it's a very valuable audience. So it's a key focus area. In terms of the get price working, for those who don't remember that, the FDA put in some price changes in the insurance marketplace which takes effect from the first of January. As of yet, we haven't yet seen any impact, but we remain bullish on the opportunity for us in terms of we think that distortions in pricing and distortions it will create and certainly in the short term, more desire to look around. And that's actually one of the reasons why we're investing in our home policies all because we want to add to people, particularly in this climate, where there's a lot of personal cost inflation pressure, more added value to the proposition that we have in terms of helping people save money.

And then finally, in terms of Magazine performance, we called out the 2-year average decline rate of 13% as sort of as a good steer on what we like to assume cautiously on Magazines. This quarter has actually started reasonably well. We're still lapping a little bit of comps, but we're always cautious on Magazine, so the 2-year rate's a good steer.

Probably have time for one more if there's one. All right. All right, brilliant. Well, thank you very much for your time. Thank you.