LBG Media plc ($LBG)

Good morning. And thank you for coming today for LBG Media's half year results for 2026. For those of you that haven't met me yet, I'm solid Founder and CEO of LBG Media. And today, I'm joined by Darren. Darren joined us very recently as and in a short space of time, he's certainly shown his impact in the business. He comes with a great background a range of different companies in our relevant sector, whether that's the Guardian WPP Sky. And then I would say it's probably the most notable business where it really stood out to me and his CV was his time at Global, where he helped grow the business from GBP 300 million to GBP 800 million. And I believe in 1 month, carried out 3 acquisitions, 3 big outdoor acquisitions, which we're quite well known at the time. So Dan's got a great background comes with a wealth of experience and certainly been putting up to work since he started. So I'm going to talk you through an overview. Then I'm going to hand over to Darren to talk you through the financials, and then it's going to come back to me for the operational review. So there's 2 realities that I want to touch on today. The first is the real strategic progress that we're making, and I'm going to talk to that and some of the examples in and around up. And then the other is the real short-term turbulence that we faced and given some color behind some of the numbers that we shared. So moving on to the overview. Our long-term ambition has not changed, if anything, with the changes in market around AI, the creator space, the U.S. and other areas that have progressed. Our conviction in the business and the direction of travel has only become stronger. In terms of the destination, we are still going to the same place. We are aiming to be the most engaged entertainment platform for young adults, global relevance, and stronger earnings quality. In 2026 is very much a transition year for us, the transition to where we see the long term. The world is moving in our direction for all of the reasons I mentioned before, around AI, the U.S. market creators. The right way to understand this year is through 2 realities for us. meaningful strategic progress and short-term pressure. So the headline is straightforward. Revenue growth was strong and EBITDA margins were lower. On the strategic side, we made progress with the revenue quality with blue chip demand being strong, the U.S. platform in place and M&A pipeline being healthy. Our direct business now constitutes 72% of the group, and that's up from 44% higher quality, more repeatable. And the shift has happened quicker than we'd expected. On the challenging side, our web business continues to be under pressure. There is structural issues in the market but at the same time, a home hands up the recovery plan that we put in place has not come into effect as quickly as we would have liked. And now we've taken action. We've put a more pessimistic forecast in the business, underplaying the recovery in that part of the business and taking action elsewhere to accelerate the gap that, that puts in place cost actions, acceleration of our direct business, IP investment, YouTube expansion, which we see in the future potentially being materially higher than web over time as that mix changes, proprietary products, AI and data accelerated. So we haven't stood still. We've moved forward. although it's been a challenge. In terms of the long-term strategy, it's not changing. What's changing is the shape and quality of the business as we execute and there's 5 priorities that we're focused on: our direct business, top-tier clients, IP, proprietary products and data and AI. And as mentioned before, our direct business now constitutes 72% of the group, up 44%. We're investing for growth in that, and we're also investing for forecasting accuracy. Our top-tier clients have made significant progress. We're up from $17 million to $23 million plus clients now. with names such as Google, Tesco, Domino's, Nike, occupying those big strategic relationships, which we hold. Our IP-led revenue is accelerating. Snack cars agree to disagree. 2 notable formats for us that are getting global recognition in terms of the development and awareness of those brands and the IP that we're building. Our proprietary products, we built mission control, generate billions of different data points across every touch point of our content across platforms. That enables our content creators to be more informed and make better decisions. A, our production efficiency tool saved weeks and weeks of our team's time in terms of efficiency LAD radar helps us spot trends. And all of these things have enabled us to have better scale, better data and also better advantage when it comes to execution. So there's 5 priorities, 1 direction, more controllable and a more repeatable business. So before I hand over to Darren, what I want to show you is a video on what we've been up to, which very much demonstrates why we exist, which ultimately is to entertain and engage on Gadot. It demonstrates the size and scale of the impact that we have across 0.5 billion people reaching 2/3 of Gen Z every single month and how that scale and engagement ultimately attracts some of the biggest blue chip brands to advertise with us. [Presentation]

Thank you, Solly. Good morning, everyone. It's great to be here. I thought I'd start with a few impressions of LPG as I'm just about to complete my third month actually 3 months today. So I was attracted to an ambitious, passionate company, operating in a really interesting space, focused on entertaining young adults at the heart of social media, and with incredible content, some of which you've just seen. There's an extremely compelling strategic plan and the drive to deliver it. I was excited by the growth potential the potential for further international expansion and to use strategic acquisitions to drive that growth. And these are all things that I hope that I can help with my past experience. Growth is coming through strongly, as you've seen in the direct business, and it's nearly doubled its top line growth in H1. And we have a strong balance sheet, which allows for investment in long-term growth. So the long-term strategy is accelerating. However, we're also seeing short-term turbulence in the indirect business. The decline in our social and web revenues has been faster than we anticipated, and the business has needed to adapt quickly. And that is why we feel it's the right time now to rebase expectations. Now I'll give you the full context around the half year results. So this is the picture of our P&L. We've seen accelerating revenue growth but lower EBITDA margins. Starting with the revenue. Adjusted revenue which is adjusted to reflect constant currency, was up 22%. The driver of that increase was our direct business, which grew 97% at constant currency, with exceptional growth in both the U.K. and the U.S. businesses. Moving to the adjusted EBITDA. This was down 34%. There are 3 main reasons for the drop. Number one, investment in growth in our direct business to capitalize on momentum and support the strategic plan. We invested in senior leaders in upgrading sales teams, and supporting systems and infrastructure. That cost sits in the period while we expect the revenue benefit to build over time. Secondly, accelerating direct growth is lower margin than our indirect business, and revenue generation has moved significantly towards direct with, as Soli said, Direct now represents 72% of total revenues and that's compared to 44% last year. And thirdly, the indirect business has declined at a faster rate than anticipated. That flowed through to the bottom line because the higher margins -- because of the higher margins in the indirect business. So we're driving a deliberate strategic shift towards direct revenues, which have better visibility and less volatility. I'll go into break down the adjusted revenue in a bit more detail. Again, it's on a constant currency basis. I think it illustrates well the contrast in our business with direct revenues up a really impressive 97% but indirect down 40%. So if we start with the direct side, U.K. direct was up 64%. And in the U.S., direct was up 158%. This accelerated faster than we expected on both sides of the Atlantic. The U.S. lapped a seasonably lighter H1 in FY '25. So exceptional growth rates in H1. They won't replicate as much on the U.K. side, I would expect the growth rates to be similar to H1. So that overall picture of growth reflects strong demand from global blue-chip clients and the benefit of investments that we made for example, in content and the quality of the sales team. This is supporting the long-term vision and the strategic direction we previously talked about of securing high-quality revenues with higher levels of visibility. Direct is now almost 3/4 of our revenue. We have talked about the reasons for the decline in indirect, but I want to draw out a few key points. Indirect revenue was down 40% overall. Within that, social was down 42% and web was down 36%. We started seeing the impact of changes to platform algorithms, particularly on Meta in H2 last year. That is the Meta algorithm changing the distribution of and reward for certain types of content and the knock-on effect on our business, which also means lower web referrals. These continued to challenge the business in H1 this year. We also saw lower web referrals, traffic from search due to AI overviews, although that is a smaller factor for us. And we saw the effects coming through from a long-term structural shift away from websites towards social platforms and video content. These are industry-wide dynamics, not specific to us. And we have already implemented plans to attempt to minimize the impact and focus on producing more original content, which will be supported by the algorithms as well as taking cost action. However, the visibility of indirect revenues remains low and hard to predict, and this is the key driver in the range in the revenue and EBITDA guidance that we put out for the full year. Just taking a step back, the growth in direct and the faster-than-expected decline in indirect means indirect is now a much smaller part of the group's revenues. That's the derisking of the business going forward. I'm going to move on to have a look at the cost base. So total costs in the period were GBP 44.3 million. That's up 40% from GBP 31.7 million in H1 last year. More than 95% of that increase was from investment and scaling of the direct business. We've invested in content cost to scale and drive impressive direct revenue growth. A strong focus has been on original content. Within content costs, we've also see talent costs increase as we produce larger scale campaigns for clients such as Google, Uber and Dunkin. We also invested more in marketing and paid social to support distribution of larger campaigns. Finally, we trailed one-off entry campaigns for large brands in the U.S. at lower margin, and that drove about $6 million worth of revenue. Investment in content was a strategic decision as part of our shift to higher growth, more predictable direct revenues, which we guided to in our FY '25 results. Payroll was up 11%. That's below the 22% revenue growth at constant currency. This was mainly investment in senior management, and also upgrading sales teams in direct U.K. and direct U.S. Headcount reductions on the indirect side of the business means that overall head count stayed broadly flat about 470 people across the period. And some restructuring that we've carried out in H1 will mean that we'll see a head count reduction into H2. Overheads were up 21%. And again, reflecting the build-out of the direct business, including technology and marketing costs as key investment areas. So in summary, we're focusing investment on our growth areas of the business, and that's the direct side. I'm going to move on to talk a little bit about our KPIs. You'll see that we've aligned the KPIs for our direct U.S. and U.K. businesses. And I'll start with direct U.S. The number of clients spending more than $1 million grew to $7 million. That's up from $5 million last year. Repeat client revenue was broadly consistent at 61%. And importantly, clients are coming back, but spending more when they do. And you can see the average deal size, which grew significantly, up to $257,000. It was $139,000 in H1 last year. So that's an 85% increase in the average deal size, and it reflects the bigger mandates from the high-profile blue-chip clients that we talked about. KPIs on Direct U.K. So a number of clients on the U.K. side that are over $1 million, grew to $16 million. That's up from $12 million last year. And repeat client revenues were actually 89%, 78% last year so that's really encouraging for future growth. And like in the U.S., we saw a very strong increase in the average deal size, in this case, nearly doubling that's creating deeper, larger, more embedded deals with top-tier clients, and it's a key part of our strategy. And finally, to win direct. Global Audience was steady at GBP 0.5 billion, but you can really see the structural issues we're facing. If you look at the daily web sessions. So daily web sessions, the average for the half was at GBP 2.3 million, and that was down from GBP 5 million in the same period in '25. The steps we're taking to stabilize performance is coming through somewhat in the web yields so web yields per 1,000 sessions actually improved to 1,393 from GBP 10.34 last year. Having a look at cash, we opened the period with GBP 30.8 million of cash, and we ended with GBP 28.4 million of cash. So that's a slight decrease over the period. We don't hold any external debt. Cash conversion was at 63%. That's lower than our typical conversion rate but it was mainly driven by 1 large client payment, which was about GBP 2.8 million. It was due in March. It came in, in April. So if you kind of normalize for that, then cash conversion was actually over 90% and our expectation is that we will have a much more typical cash conversion in the second half between 80% and 100%. So closing cash was also impacted by the move to our fantastic new offices, and that it is reflected in the CapEx cost as a one-off. And finally from me, our capital allocation policy remains the same. We're driving the same strategy. So those are the kind of key elements you can see up there. On the earnout side, there wasn't actually any earn-out payments in H1, but we did in April, make the FY '25 Betches earn-out payment. So that's gone out just after the half year-end. And that really kind of reflects the success of that business since the group acquired it. That just leaves 1 more payment on the Betches earnout, which will go out in FY '27. Supporting our people through our Employee Benefit Trust is a core part of how we retain and motivate talent in a competitive market. Organic growth is obviously a key priority Soli is going to come back and talk about that some more in a minute. But the business generates cash and we reinvest it for growth. On the M&A side, we have a very healthy M&A pipeline. Future acquisitions are a key pillar in our growth strategy. I'm hoping that's a key part of what I can help with, given my background. And all of this is supported by our strong cash position and with no external debt. So hopefully, that's given you a good overview of the financials, and I'm going to hand back to Soli and he's going to talk through some of the strategies for more.

Thank you, Darren. So on to the operational progress. The first half has reinforced 2 things for us. The strategic direction is right. The market has shifted, and we need to act with more pace and discipline and both lessons have been taken on and the actions have been -- already been coming into place. In terms of the long-term strategic progress that we've been making operationally, everything links but to the 5 priorities I mentioned before, direct, top-tier clients, IP, proprietary products and data-led measurement. When I talk about transition and a year of transition for us, these are 5 core important elements that we're focused on in terms of delivering long-term value, which gives us more visibility more control and more repeatability. So in terms of what that looks like, I'm going to show you some elements around that. So the first is our strategic client partnerships I think what this slide shows you is some of the quality of what we're building. Some of the names in which we're working with across the board, whether it's Google, Tesco, Domino's, Nick, Duncan or some of the other big brands that we're working with. We are working with the best in the world, and we are working very closely and driving strategic relationships where we are moving the needle for their businesses. So Google has been a client for a number of years now. We don't just work on the basis of doing advertisement for them. We understand their business objectives, and we help them drive results. We've done that across a range of different products, whether that's Google Pixel, Search, Android, or more recently, Gemini, where they're aiming to be the #1 AI provider, and we're working very closely with them and their team. The next is Tesco, and their objectives are to grow market share, and we are working with them very closely when it comes to growing that within young adults. We reach 1 in 2 millennial and Gen Z across our audience base, and we're working with them to help them move that needle. And then it's the same with Domino's. The big objective for them are to continue to grow their market share and also with new products like Chicken dip where they've entered into that market, we're helping them drive that and launch that into the market with our audit base that we understand better than anyone else. So before I head into the IP side of our business, what I want to talk about is the continued meaningful part that indirect will play in our business. Although the shape is going to be different, it's still going to be an important part of the mix. And by that, I mean, there's going to be a different mix around YouTube that's going to be a bigger part of the puzzle for us. There's a 93% growth in viewership year-on-year on that platform. And over time, with the investment in repeatable IP, we see that as a bigger part of the puzzle a bigger part of contribution as part of that. The key thing is just going to be about timing that. The other elements that are important are Facebook and Snapchat and the shift that Darren mentioned before, with platforms like Facebook are that they are moving more and more towards original content which is absolutely in favor of the investment that we're making into repeatable IP and original content, and we believe over time, we'll benefit from that. We've also demonstrated that our audience continues to grow. April was our biggest ever month on Instagram, 2.3 billion impressions and our YouTube subscribers were growing at rate of knots. Web has been a genuine managed decline. That decline has hit us harder, but we have remained cost disciplined. We've initiated AI to help support and build and grow that. So ultimately, the indirect part of our business continues to be important, but the shape of it is evolving. So on to the IP element and the progress that we've been making, Snuckwars and agree to disagree, are important because they're not just content the repeatable entertainment formats, which are TV grade. Most recently, we had the likes of Daniel Radcliff, Ashton Kutcher, all the Devi wares Prada cast and a number of others across both of those formats and that happened just in the last 6 months. We also launched an offshoot of Sakwa. So snackers for those of you that aren't familiar, is a studio-based format that we have where celebrities come in and taste different country snacks, some brilliant reactions and scenes and entertainment. We have now started to build that out in different directions. We've launched an award show and we've recently just launched a world tour, where for those of you that are familiar, probably by A Celebrity, we had Angry change and his friend Jake traveling to Japan to taste some of the best flavors within Japan, and that was also sponsored by Domino's promoting Chicken dip. So snack cars is a great example of how we're looking to expand that. Some of you will have seen the Sunday Times fast track this week. And what was fascinating to see was the #1 company on there was actually an IP-led creator base company built by Gary Lineker, rest is, and that was the #1 fastest-growing company on there. So for us, that further reinforces the opportunity that we are in fast growth areas of this market, and that was the fastest-growing business out of all of the different sectors on that list, which is encouraging to see. So for us, in terms of how we monetize that, we work with brands such as Domino's, Google and others who will sponsor that content. We've seen fantastic results and ROI that has been driven, that is market-leading and is encouraged further investment into that repeatable IP. And we also see opportunity to monetize the IP further across our indirect platforms. So sponsorship and platform revenue share are the 2 engines that are going to drive this part of our business. In terms of AI, it's already improving how we operate on a day-to-day basis. It's not just theory. It's not just something that we're talking about. We are seeing practical leverage that is benefiting our business. So in terms of the AI stack that we built, we've got Emma, which is a virtual traffic manager that saved 4,000-plus hours a year so far since it was built. We've got Arnold, which is our AI video spellchecker, which cuts the process down from 69 days to 29 hours in terms of savings that is made so far. We've got LAD radar which is our real-time cultural trend identifier, which enables us to get to trends quicker than others are in market. We've got Ludscrab, which is our editorial content tool, and their mission control and the brief on packet, both of those tools and technologies I've talked about before, which enable us to make better decisions when it comes to content creation and the way in which we service clients. We're also embracing a range of different enterprise use cases across all of the different AI providers and giving access to our team to help them on their day-to-day basis. We've got fantastic audience proof here when it comes to the Instagram business whereby Lab Bible has had its highest ever engagement month for many, many years, and you can see the greens across there. We're now starting to turn AI towards our web business and how we can also use that on the recovery plan, which we're putting in place. So for us, we are putting AI to work in a practical way that is driving genuine value in the business already. When it comes to our acquisition strategy, M&A remains an important lever within the business, but only if it clearly strengthens the strategy. We've been strong and selective in terms of our track record around this. We bet has been a great example of that with the U.S. presence and platform that's enabled us to build. Unilab enabled us to corner the U.K. market when it comes to Yongadoks. And again, we've been very focused on the fit. And in terms of the future opportunities that we're looking at, we're looking at U.S. Gen Z platform strength, IP value, audience footprint, diversification and feasibility, all of the different criteria, which we run these opportunities through. We've got 100 opportunities identified, 30 shortlisted, 20 closely monitored and 9 in live discussion. We've got the flexibility to move per the balance sheet that Darren mentioned before, but the bar remains high. So just before I hand over to you guys for questions, let me leave you with 5 points. First, 2026 is a transition year for us towards where we see the long-term value. Second, the direct momentum is real, even whilst the indirect business is being reshaped. Third, the long-term strategy is unchanged, and we've got proof points starting to build around those focus areas, IP, AI, U.S. and top-tier clients. And then fourth, the indirect remains core. It's going to be a lower mix over time, and the shape is going to be changing towards YouTube and quality performance. And fifth, we're obviously disappointed about the revised guidance. I see that as part of growing pains and building a much stronger and a much more valuable business. We have the audience, the brands, the data, the client demand and the U.S. platform to build something significantly bigger. Okay. Thank you. Hand over for Q&A.

It's esport from Peel Hunt. Can I have my usual free, please. You talked about the recovery plan for the indirect business and accelerating that within that, I'm assuming a bit more you talked about a bit more on original content on AI. Can you talk whether there's more cost elements related to that? And just to expand a little bit and have more color on the recovery plan. The second is we're now heading into the World Cup. Can you talk a little bit about what the pipeline for direct is looking like over the next couple of months, both U.S. and the U.K.? And then the final 1 is just on -- can you give us a bit more color on the trading environment for content creators and how that compares across the different platforms?

Yes. Okay. So I'll take the first one. So just playing that back in direct. The web recovery plan trading around the U.K., the direct and then creators. Okay. So I'll kick off on the indirect and let Darren add to that were necessary. So we absolutely back the recovery plan that we put in place in terms of the web business. The key thing for us there is giving it time to grow and build. And we put new leadership in place. We've made a series of cost adjustments in and around up and we believe we've made the right actions on that, and we just need to give it the space to breathe and for those recovery plans that come into place. We're not standing still. So we have put more pessimistic forecast forward in regards to that, and we're looking at that internally. And the areas that we're looking to accelerate are the YouTube expansion and I cited some strong performance metrics that we're seeing within that platform. The move towards repeatable IP is something that is only going to benefit us. We also have a strong team building in that area of the business. We're also looking at accelerating further direct growth and introducing proprietary products that we can offer clients and using data and also offering further sponsorship to enable us to bolster the business there as well as being disciplined around costs. So we're not standing still. We're looking at it through a realistic lens, and we are pushing on in terms of that. So those are the main actions that we've been taking. Anything you'd add?

No, just to say that some cost action that we took in the first half was a restructuring more on the social side of the business. The benefits of that a little bit has come through the first half. Most of the people savings will come through the second half. So there's a bit of that to come. on kind of future investment, it will be around the new strategic areas that Sally talked about potentially a little bit around YouTube, hired some senior people, but it's going to be sort of small amounts. We're not putting big investment back into the indirect side of the business. If these things take off, then we will scale the cost base as appropriate. But other than that, we'll be managing the cost base carefully.

In terms of the trading -- the future trading aspects of the business and the direct business the investment that we're making into the top-tier clients and also the sponsorship products and the growth that we're seeing within our audience across both countries, we believe we'll put us in good stead with our top-tier clients. So we are driving genuine results, market-leading results for those top-tier clients that we're working with. We offer best-in-class service access to young adults at an unrivaled level toward the market. And in terms of the investments that we're making into that support for our top clients across that, we feel very encouraged by what we can see moving forward. So Darren gave us there when he talked for his numbers in terms of expected for the second half across both of those businesses. And I would absolutely support that I don't know if there's anything else you'd add there?

No, I think that's good. I think the third question was well Cup. I can give a little bit more of the numbers around Welcome. Yes. So World Cup is quite an interesting market for us. I think it came in late, but now it's doing pretty well. So I think that might just be a function of kind of macroeconomic circumstances. But bookings broadly around the World Cup are about GBP 6 million. It's more weighted towards the U.K. business than the U.S. We have seen some upside in the U.S., but I think it's to do with -- mainly to do with the demographics of the audience so about GBP 6 million worth has come in, in relation to the World Cup. What I would say is that it's -- I wouldn't think of it as all incremental. Some of this is -- brands spend with us anyway, diverting money into the World Cup. So it's not completely incremental. And I think when we get into next year, these brands will still be spending. So the kind of key 1 spending around the World Cup or Nike, Google, Tesco, some real core clients from us and a longer list of others. So I think definitely driving upside in H2 and the bookings are coming through now. But I think that some of that will be clients that would have spent any way that are putting World Cup campaigns out there.

Again, in terms of the creator piece, so we're in a great position to further capitalize on that growth in the market. So batches, I think, is a great example, given their heritage. They are creators. You walk into the office. You've got creators that have formed their content team on a day-by-day basis, you can see that in the Instagram feeds. We have a lot of demand for that creator roster that we have in the business. We've just launched something called Batches List, which is our exclusive base of creators. We offer them the ability to tap into a large audience, which we have across the business, access to our key clients, access to analytics tools and support and helping them grow their business. So we're in a great position to benefit from that. And we also have something similar in the U.K. So I guess a good example of working with creators is Angry gins and Jake featuring as part of Snap cores World Tour. We've got a great understanding of the market, and we have a lot to offer in terms of helping them and we also represent a number of creators out of market. So it's going to continue to be a big feature of our business moving forward, whether that's the repeat of IP that we're building or whether it's them featuring within our brands and are supporting them with the in terms of distribution, audience usage of our analytics tools, et cetera. So yes, we are certainly in a great position when it comes to tapping into that market, that's grown very quickly and we're moving forward on those basis.

Thanks Roddie Davison from Singers. I think I've got 3 questions, too. So the first 1 is with regard to the U.S. I know the 1 thing you've been working hard on is, I guess, kind of optimizing your -- the skills in your sales team in the U.S. to allow you to build relationships and increase and grow relationships with blue-chip clients. Just wondering the extent to which more has to happen on that front, whether you've got the resource in place or whether you feel you need to add more? And just on the back of that, I mean, can you give us a sense of how quickly you think those large clients in the U.S. and more broadly could build? And the second question is just with regard to perhaps a little bit more granularity on the assumptions that you've made to get to the guidance for the full year. I think that would be useful. And finally, just on the CMA ruling recently in the U.K., I don't know to what extent or maybe you could tell me to what extent do you think that has any relevance at all to the way that the business is building?

Thank you. So I'll take the first 1 on the U.S. and no doubt, Darren can add any additional elements that he feels necessary. So it's a significant opportunity for us. We've got a platform that we've now built via the Betches acquisition. And we certainly see further opportunity in that business as we start to make progress. One of those areas of progress is the investment into the leadership team. So we recently hired a sea comes with great experience in rigor to help us free that next phase of growth in that business and then also a Chief Commercial Officer amongst some other highs within that business. And they are at very early stages, very much like Darren, actually came in at a very similar point in time. We're making the right steps and I can see from experience of the growth of our business here in the U.K., which now is 350 to 400 people. That business is just short of 100 they're going through similar growth journeys as we have in the U.K. business, and we're helping them install the infrastructure, the commercial melts you mentioned, with the right leadership and the right people within that and we certainly believe that we're making the right steps for the long term on really capitalizing on that U.S. market. So obviously, the numbers are big in terms of the growth that we've seen. That's going to be a tough comparator moving forward as has some of the previous growth within that business. The key thing is about doing the right things and setting that business up for success in the future. And we believe that we're doing that with the investment in the people, the product and taking some of the similar steps that we have here in the U.K. Is there anything you'd add?

Yes. I'll just say on the sales team, a bit like the journey we've had in the U.K. When you get this really big embedded large clients. You just need a slightly different type of salesperson to account manage these big relationships, and I think that's what we're kind of investing in and trying to hire and change out some of the people that are kind of used to dealing with a high volume but lower end of the sales pipeline. And I think that's what we've done in the U.K., and I think that will really boost the business as we get that right. And it starts with the leaders, which Solly already talked about who we -- we think we've got the right ones in place.

In terms of the tradings?

Yes. Let me talk a little bit about the guidance. So I would say that we have very good visibility of our direct business. obviously, tracking bookings. We track the pipeline and I think we have confidence in the full year picture around direct. The uncertainty and the reason we put a range into the market is around our indirect business. And we have seen volatility. And as Sollisaid, and I said we thought we saw the bottom of the market when we came and made a trading statement in April, but actually, particularly on the web side, it's got worse than it was then. So what we've done this time around is to say if we kind of drive no improvement and no growth in any side of the indirect business, then that's kind of the lower end of the guidance that we put out there. And that's based on particularly the web side of the business and web sessions coming down to a level which is below the average that you saw for H1, and they've fallen to about 1.1 million sessions per day. And now we're just starting to see some green shoots and they're going up to sort of 1.2, 1.3-ish. But if we build in no kind of upside and assume that they just kind of flat line that's the lower end of the range. And then as we sort of improve that business and drive a bit more through social, you get up towards the higher end of the range. So visibility is hard on that side of the business. We talked about it. I think we have a sensible range in there that we'll be confident with. But obviously, disappointing that we brought the guidance down from the last time we put it out in April.

Yes. I think I'd just add to that is, I'll put my hand up in terms of the expectations around the recovery plan that was expected in there. As Darren mentioned, of course, it's disappointing to be in this position, but we believe we've taken the correct action now, which is to be planning on a conservative basis and accelerating in the areas that will effectively counter that as well as giving the recovery plan the time to move into place. The other elements remain unchanged. So the long-term direction is unchanged. We've obviously had to respond to the short-term elements of it. So the key thing for us here are continuing to move forward with our direct revenue growth the client relationships at the top tier level, stronger IP and working on the business that has better long-term earning quality. In terms of the other questions, so the CMA ruling, on paper, it could be a real positive. And anything that encourages original journalism and support of that, et cetera, absolutely should be. Right now, we are obviously very focused on the recovery plan and would absolutely welcome any structural changes that may benefit us just checking that in relation to Google, yes.

Can I just ask 1 quick sort of supplementary just to -- just to clarify, so coming back to the direct U.S. 7 clients over $1 million at the moment, is the message that you would expect that to build relatively slowly.

I think the key thing for us is putting the fundamentals in place. This is a business that is going from $50 million when we first brought it into the group to sort of setting up eventually to get to the $100 million point is the next big, big milestone, which obviously we've got a way to go by putting in place the Chief Commercial Officer, the COO and the other members of the team within the unset and got for us to be able to replicate the success here in the U.K. direct, we'd absolutely expect that to grow nicely over time based on the changes that we're making, the size and scale of the market, the quality of the product. But yes, I mean, right now, we're not guiding in terms of future years because we're very focused on this year. But we believe that we're making the right steps forward in terms of the moves that we're making to grow that business.

Lan Daniel from Ms. A couple of quick questions. First of all, you touched on the AI tools and the AI you're deploying. Can you give us some quantification on the -- either the revenue impact or the second half next year as those tools are fully deployed? And secondly, if there is a sort of social media ban for youth under 16, obviously well below your target market. But does that give you a pipeline problem in future? Is there any impact? Or is that a concern?

So yes, I'll take both of these. So in terms of the AI tools, it will be very challenging to pinpoint exactly GBP 1 or $1 to the exact returns in regards to that. But what we're seeing, as I mentioned before, whether it's EMA, the tool, which is saving considerable amounts of time. So just recapping on that 4,000 hours each week saved as part of that production efficiency tool that we've made. We can obviously put a quantum against the time on the people side, we haven't to date. Arnold in terms of the video spellchecker, which saved us 69 days in terms of time and then certainly, in terms of ad radar, whereby it enables us to spot trends quicker than others out there. I'm sure that would have given us a significant advantage when it comes to growth in our audience and also for our clients to tap into that. So across that range of tools that we've mentioned before, there is no doubt there is a significant value in that, and we are embracing AI and the use of that moving forward but to be able to put a specific number right now, it would be very challenging. But it's an area where we're massively leaning into.

Was it fully deployed in the first half? Did we have some impact in the first half? Or is it yet to come?

I think in terms of, let's say, the AI brief on packer I'm absolutely certain that would have contributed towards the direct business. And then equally so, lag radar in terms of enabling us to get content quicker -- that is a key reason for clients to come for us. They want our understanding of the audience, whether it's through ad radar or mission control. And they also will use that data themselves to help inform their decisions on a day-to-day basis whether that's through their social teams or for the work that they do with us on driving effectiveness with the clients. So I can't sit here and say exactly yes. But I'm about added significant value. In terms of the social media and the potential under 16 ban, we're obviously watching it very closely. From a commercial standpoint, we don't have any clients that specifically target that on to 16. So there's not going to be a commercial impact on that. We obviously think about Gen alpha in the next wave coming through and ensuring that we're at the forefront of that. So how that may impact that engagement with that next wave of audiences we shall see. I suspect we're just going to see platforms with parents or guidance and certain restrictions in place. And I believe we'll still be able to create entertainment and content for that audience, but there will be more restrictions, and I'm sure all of us agree that there should be some governance and restrictions around this for the safety of young audiences, and that's something that we stand behind. So we'll absolutely be supportive of whatever changes. We will see minimal commercial impact on it, and we'll watch it closely.

Bob us. Just to say that's an impressive growth in the direct business. And my questions are around the investment that you're making in that business and really 3 quick questions. One is what sort of pace or timing of returns do you expect from those investments or those sort of big platform changes where it's not something that you're going to get necessary and return from straight away. So are you going to get those returns in this fiscal year and next fiscal year, et cetera? And then secondly, on those investments, what's your plans for further investment in that area for the next 12 months? And then the final question is just on flexibility of that investment. I mean, is that something that you see as something you can tweak or alter in the case of different scenarios around your indirect business?

I'll give the high level and then you want to speak to specifics. All of the investment that we're making is tied to those 5 areas of focus that I mentioned before. So let's take top-tier clients. We've just hired a gentleman called Dunn, who previously run matters, key accounts grew that business to GBP 300 million. He comes through the wealth of experience, whether it's great block book or client servicing on helping with driving top-tier claim results through the likes of our audience. So we're investing in people like Dan to come in, Maggie, who joined us in the U.S. business who again came from Business Insider and great experience in terms of growth of top-tier clients. But then the other areas where the investment is going is in that repeatable IP, that expansion of the lights of snack was agreed to disagree and AI and product and the other areas that I mentioned before. So everything is very much focused on those strategic areas of growth.

Timings of returns. I mean I think first half was up 97% on the direct business. So I think we're already seeing the benefit of returns on investment that's gone into the direct business. And I would expect to see that coming through in the second half. I talked a little bit about the fact that the U.S. business is lapping a very low first half and it will be more tricky year-on-year. But absolutely, I think we're seeing those returns coming through already on the direct business. And I'd expect to see them come through as we go on and kind of grow. But it's not like a big gap before we see the benefits. We're seeing the benefits now in our business.

Does that mean that you're basically expecting some margins to be relatively steady?

In that business? In the direct business, yes, over time, I think there's opportunities for us to sort of improve the margin in the direct business, and that's certainly kind of 1 of the objectives that Solly and I will be working on together. I think there's some efficiencies we can put through that business. But that doesn't mean we won't continue to invest in the business as well. And but the investment will kind of will follow the growth, and we'll scale it appropriately. I think there's an opportunity for a little bit of improvement on the margin. And as we kind of scale, we should be able to find efficiencies around the way the fixed costs kind of contribute to the margin. So that's kind of where we see that business. With regard to flexibility, I mean, we have an internal discipline around investment, which we call our engine for growth, which is basically about making sure that we put our investment in the parts of the business that are growing and in proportion to how they're growing. And so that's the kind of internal discipline. Sometimes we'll invest ahead. So YouTube is a really good example. We've invested ahead because we have confidence that we can grow that business well. But I think that discipline is in place and will stay in place. And A lot of the investment that we're doing is really around people. There is flexibility around that, some flexibility. And I think we just need to be very careful as we scale and manage the business that we do it proportionately.

Other questions?

There's nothing coming through on the...

Thank you.

Thank you, everybody.