MediaZest plc (MDZ) Earnings Call Transcript & Summary

Good morning. Welcome to the MediaZest plc Full Year Results Investor Presentation. [Operator Instructions] Before we begin, we'd like to submit the following poll. I'd now like to hand you over to Geoff Robertson, CEO. Good morning, sir.

Good morning. Thank you for that. Hello, everyone. Thanks for joining us this morning. My name is Geoff Robertson. I'm the CEO of MediaZest. I'm going to talk today a little bit about the financial results for the year ended 30 September 2024. A brief introduction to the company for those of you who may not know us and also a little bit more color around the results and talking through what we just released a couple of weeks ago. We'll put the presentation online later if anyone likes to read the disclaimer in full. And I'll start with the Board of Directors. So we're a small team, myself, who's CEO; Lance O'Neill, Non-Exec Chairman; and James Abdool, who's our Non-Exec Director. We've all been with the company for many years. So lots of experience in the audiovisual market and in the finance markets and experience with AIM. What does MediaZest do? So we deliver turnkey audiovisual solutions to our clients. So we generate revenue in 2 ways. The first way is in a sort of one-off project revenue that would include things like selling hardware and software, installation, commissioning services, et cetera. And the second way is with ongoing revenue streams, which is follow-up revenue, which is things like service and maintenance contracts, including things like content hosting, ongoing software licensing. So a lot of the software that we license is for content management systems, which is what they call Software as a Service for those not familiar. So it's an annual fee. So that gives us a real recurring revenue stream there and also content management and in some cases, content creation. We do a little bit of that, but we do a little bit for our clients where we can help out. As an overview, we consider ourselves a creative audiovisual solutions provider. So we will find our clients options and solutions and advise them on what they should do in their store or in their workspace that will give them the best result they want for what they're trying to achieve. We provide an end-to-end integrated service. So that means anything from a blank piece of paper, what should we do here, what can we deliver to design, build off-site, test, install, support that on an ongoing basis, refresh it when it's needed, update content, as I've mentioned. So we cover the whole piece, and that's quite a powerful tool because it means that we can touch lots of different stakeholders within the businesses that we work with and really try and bring things together so they get a really good solution that works for their whole business and for our clients. We work in 3 core markets. So retail, automotive, and that's really showrooms, so it's automotive retail effectively, but also corporate offices and corporate workspaces. And the business, the operational business, and it means it's international, which delivers contracts has been going for nearly 50 years, we're 50 years in September this year. So we have a huge amount of experience and ability to show our clients case studies demonstrate that we really know what we're talking about, and that's a real benefit when it comes to pitching for new business. In terms of strategy, we're focused very much on long-term contractual revenues. We target clients with opportunities to deploy solutions across multiple sites over multiple years. So we're really trying to look at clients where they need our services over many different stores, many different countries or different offices and they'll need us on an ongoing basis. As I mentioned, we touch with a lot of stakeholders in different businesses, so we can often be dealing with store format, if it's retail, we can be dealing with marketing, IT, finance. It can be a lot of different departments. That takes a lot of time and effort to really get to know people well to really understand how their businesses work and how we can best work with them. So it means that we need to be really specific when we're targeting those clients that we work with, they need to be clients that can really benefit from our work and we can really deliver value for. But that gives us a lot of longevity with our clients. So we have clients that we've been working with for over 30 years, and that's really good for the long-term future of the business, of course. We've got a quite diversified client base in different sectors. So one of the ways we sort of set ourselves aside, I think, from competitors in our industry is that we work with lots of different clients with sort of 5% to 10%, 15% of our revenue stream. So there's no one client we're over reliant on. And that means there's obviously less risk, but also means there's more opportunities for the business to grow, which is obviously what we've seen in FY '24. I'm going to talk a little bit about those numbers later. Another way we differentiate ourselves from our clients -- from our competitors, sorry, with our clients is in collecting data. So we talk a lot about providing actionable insights. So from our view, like Day 1, installing a system, making sure it all works, all looks great, everyone's happy, everyone's signed off. That's terrific. And that's obviously bread and butter. But it's really as well is that solution delivering on an ongoing basis. We really want to add value to our clients the long-term relationships, the nature of that, as we said before, really important to our business and really important to our clients' business. So if we can give them data that shows what's working and what's not, help them to improve, help them to refresh, help them to tweak things, then we can really start to really sort of move those solutions forward. And we believe that we're right at the forefront of that. We're looking at how we incorporate AI in various things. We look at how we maximize the impact of things like touch screens, how do we make them beneficial, how do we make sure our clients are talking to their customers the way they want to and how do we make sure that their customers are getting the best from the experience. We are U.K.-based, and we have a Dutch subsidiary set up at the very end of 2022. That's been going great first couple of years. We've been really pleased with the with the work to date there, and we deliver pan-European work from those 2 entities. But we also have global projects that we deliver with a partner network, tried and trusted around the globe. So everything from the Far East, Middle East, the Americas as well. In terms of the size of the market that we work in, we believe there's a large addressable market. And if all of us, I guess, are exposed to shops as we walk down, I'm in London. So if you walk down Oxford Street or Regent Street or if you're in Meadowhall, Sheffield or Liverpool ONE in Liverpool, you can't help but notice the digital signage is everywhere, and it's really exploded in the last sort of 12, 18, 24 months, I think. What we're seeing in the market is the expectation that the overall professional audiovisual market that we work in, and that will be across all 3 areas that we specialize in all 3 sectors, so retail, corporate and automotive is expected to increase by $113 billion between '22 and '27. The global digital signage market is the real niche we specialize in. We do outside that, but that's where we're really known. And that's estimated at nearly $27 billion in 2023 and expected to grow to $46 billion by 2032. So there's a huge opportunity coming here. When we talk about latest trends and innovations, and we did a recent event with our partner, Samsung, at their offices and their showroom retail displays in Coal Drops Yard at King's Cross. We have several industry speakers talking about it. And consistently, everyone was talking about investment in the retail landscape in the high street. It's obviously evolving and some players are leaving and some coming. But what we're seeing is a consistent trend is people using tools like digital signage to really grow the customer experience give people a reason to come back to stores, give people a reason to want to be in that store and to tie with that brand. There's some great statistics around, but online is obviously a significant part of various journeys, but it's something like 80% of transactions are still concluded in store. In terms of our strategy in terms of the wider market, there's a lots of small competitors, similar to us, but with maybe one client, but without access to the AIM market and sufficient funds to sort of grow and scale to meet the demand that's coming. So we think that presents a really good opportunity for us to use the listings to become a consolidator in the market and build a leading digital signage business with international reach. So I mentioned we've already started with our subsidiary in the Netherlands, and that's been great, but we see that as a journey that we're just starting on and there's a huge scope for growth. There's no one really doing digital signage sort of globally. So that leaves an opportunity for us to try and build that model. And we did look at an acquisition last year. So those of you who may know us a bit better, we did get pretty close to doing our first acquisition since 2025. We're pretty close. The deal wasn't quite right. The time wasn't quite right. We walked away from it. There was obviously a cost to that. I think as a Board of Directors, we believe very strongly about doing the right deal at the right time, at the right price and not doing a deal for deal's sake. And we're pretty unapologetic about that. And the feedback we've had from our investors is very much that that's appreciated and that they feel the same way. We will continue to look at the market for those sort of opportunities and take them when we can. So when they are at the right time, and like I say, the right price at the right company, but we do think that is something that in the next couple of years will be really exciting for us and help us grow, not just organically with the new business that we're writing. So let's talk a little bit more about the year we just finished and FY '24. Obviously, a big increase in revenue and that follows gross profit. So I think we're up 32% in gross revenue topline, first time back over GBP 3 million since COVID. So that was really great to see after a very tough FY '23. In terms of the retail highlights for us in terms of clients that we work with, so Pets at Home has been a long-standing client now for over 5 years. We deploy digital signage solutions for them in their stores. I think we're well over 100 stores now, and we continue to do lots more in the last year and post year-end. That's an ongoing process with them. That's been great work and getting -- great to see them getting industry recognition as well for their design and evolution of their stores. We did a successful proof-of-concept project with First Rate Exchange Services late last year, late FY '24. And that's for the supply of digital currency boards, that's the photo you can see there into U.K. post offices. We've done 50 stores. There's potential to expand that further. That was a very successful test, look great, a real highlight for us for the year. Lululemon has been a client we've worked with for over 10 years now. We started with the U.K. flagship store in Regent Street, I think it's about 10 years ago. And we continue to see projects with them. Last year, we did Covent Garden. They did a refresh and they moved their store to a bigger store. But we also did several European locations as well with LED video walls so Oslo, Stockholm, Berlin, post year-end. We've also just done Regent Street. Again, they've moved to a bigger site for their showroom here, the sort of their flagship store on Regent Street. It's absolutely superb store. If you're ever in the area, highly recommend going. It's beautifully done. It's a great interpretation of the brand really brings it to life. And again, we've been supplying audiovisual solutions there. So we're really proud of that work. We started to work with Arc'teryx in January '24. We did a store for them in Covent Garden. Again, flagship store, large-scale LED, really impressive, great engagement. Since then, we've managed to extend that. So we've been working with them across Europe as well, places like Munich, Berlin, Paris. Post-year-end, again, that's continuing. So we just did the Chamonix flagship store in January this year. I think it opened in February, and that's an absolutely stunning store. If you are in that area, I would absolutely recommend going in. Again, just a fantastic brand experience in a great location. And finally, sort of project highlights. We won a new global client at the end of the financial year, so summer 2024, providing solutions to Duty Free stores. That's been a really exciting project, and that's really all about ongoing service maintenance content. So that's really helping grow the recurring revenue streams. That's really important for us because the projects and the one-off sales that we make are great. But it's very difficult to predict timing so if any of you are familiar with working in retail, then you'll know that timing can move very easily if leases don't get signed or building works go behind. Typically, we're going in after a refresh or a rebuild or someone's taken over a store. So timing can be really difficult to predict, and that's very difficult as a business then to forecast our revenues and profitability. So the more we can have these recurring revenue streams and understand where we're at, the more we can cover our costs before we even open the doors. The higher percentage of that, then obviously the better visibility as we build. And that's been a really exciting and -- give it a second. Sorry about that. Okay. It's working. In presentations, we don't know if fire alarms were going to go off. Yes, so we're talking about recurring revenue streams. And that's really important for us because it just gives us that ability to predict where we are. It's very difficult if it's based on projects that can move. 2024 has been a massive growth in that, and we see that continuing in '25. And that's really great news for all of us, I think, moving forward. We were talking about projects and partners and highlights for the year. So automotive, we've worked with Hyundai in the U.K. for over 10 years as well. We continue to deploy solutions to their dealer network. They're obviously super strong in electric vehicles. They've got some fantastic models that's come out doing extremely well. We've been really proud to work with them over the last 10 years, and we're extending more projects for them, more dealers doing more to bring that electric vehicle proposition to life with digital signage technology. So that's been fantastic. We see more of that happening in the coming year. KIA, we started working with last year, I think, end of FY '23 in 3 European territories already now. The biggest of those is Netherlands. We've done a lot of work with them in the last 12 months. That's been fantastic. We have a really great client, really doing well again, really at the forefront of electric vehicle technology, doing fantastic work over in the Netherlands, and we're really proud to be part of that in the dealer network and delivering some really fantastic solutions, sort of all about modernizing the showroom, all about bringing the customer experience to life. We still continue to work with Porsche. So we have a dealership in CityLife in Milan, which has now been 5 years, fantastic, again, fantastic experiential showcase for Porsche where they continue to work with us. And also U.K. dealer groups such as Lithia, Norton Way, where we deliver solutions for different stores or different showrooms for them. And finally, we continue our relationship with Rockar. Again, we've worked with for over 10 years. We're very pleased to have worked with them for that time. They've got a fantastic Jaguar Land Rover dealership in Canary Wharf that we've provided and look after. On the corporate office side, whilst retail is our sort of strongest area, we still do sort of buildings and corporate offices. Sometimes that comes from retail clients who like what we do for them in the store. They want us to take that and expand it and do it in their own offices and help them out there. Sometimes it's a completely stand-alone opportunity, and we have several of those. It's a really interesting market since COVID, I think the real -- the Teams room, the PC deployments, that's obviously come to the fore. It looks like people are getting back into offices in lots of different industries now. So I think again, there's going to be another wave of that. So it's important that we're in that market. We do lots of things like video conferencing. You probably just see similar sort of system behind me and meeting room deployments, booking systems where teams are credited, that obviously helps with credibility in that area. Again, it's not our biggest part of the market we look after, but it's a really important part for us, and we can really again deliver value for our clients there. So highlights for the year. As we mentioned, a big improvement in FY '24, return to year-on-year growth, return to above GBP 3 million turnover, positive EBITDA and a small improvement in the cash position. The long-term recurring revenue contract growth is really important for us. So we're running -- run rate was around about GBP 700,000 at the beginning of the year and ended at about GBP 900,000. As we add a store, it adds more on as stores close or move or change, it comes off. So it's a very moving piece, but that's the sort of the run rate we talk about on an annualized basis. We expect to grow that in FY '25. And that's super important in the predictability of our revenues and how we manage our business and our cost base. The European subsidiary in the Netherlands, that continues to deliver strong growth. We've been really pleased with the start of that. I think it either doubled or nearly doubled revenue in the last year as well. Again, lots of work through our friends at KIA, but also the likes of Arc'teryx and Lululemon in the territory. So really pleased with that, and we see a really bright future for that as we push forward. Post period end, the good news has continued really. So the outlook for '25, I think, is really positive. The forward order book looks really encouraging. The visibility into the new financial year looks great. There's obviously lots of uncertainty in the macro environment. It's a strange world at the minute. But I think from what we can see in terms of the clients that we work with, and that's all we've really got strong visibility on. It looks like their plans for the year are really exciting for us and really continuing with where we left off in FY '24. I mentioned the First Rate proof of concept. That was, again, I think it's proved really successful. We've really enjoyed working on that project, and we believe that the solution has been really effective. So we hope to continue that engagement there. So there's lots of opportunity there. And we're targeting, again, continuing year-on-year growth and returning to profitability at the pretax level in FY '25. Obviously, great to get to EBITDA profit this year, but we really need to be a profit bottom line, and that's what we're targeting. So just a little bit about the numbers. In terms of sort of key metrics on the revenue side, up 32% gross profit, 26%. Gross margins are consistent. EBITDA, as we said, back to profitability, so a big positive swing from the prior year, a big improvement on the loss after tax. We obviously want to turn that to profit after tax and improvement in the cash position as well. And again, looking to improve all those metrics in the coming year. And then finally, just a sort of level summary of us. We're an AIM-listed creative audiovisual solutions provider. We work with lots of top brands. No one else in our competitors is AIM-listed and has that opportunity to grow through acquisition as well as through organic growth through sales and new clients. We have multiple long-term blue-chip clients as we talked about, a lot of them are with us for many years, very deep relationships there, growing the recurring revenue run rate quite successfully in the last 12 months and looking to build on that in the next 12. In terms of the overall market, strong long-term demand for what we do in all of the core sectors in which we work. As I said, you have to walk into any shopping center, any main shopping street and you can't help but notice that on the retail side. I think all the buildings that we work in, there's so much more AV and video conferencing technology being deployed. In terms of new business wins, a large contract win we had last year, and there are lots of other business wins coming through and some that we think grow into bigger contracts as well. So that's really encouraging that we're writing new business, but also our established clients continue to roll out digital signage, and they can be long-term projects and long-term programs, and that works really well for us. So it gives us long-term visibility and means that we can grow with them and really help refine what we deploy for them. So it's really useful, real cutting edge and really delivers for them. I touched on the buy-and-build acquisition strategy. Like I said, we looked at it hard last year. It wasn't quite the right time and the right deal, but we are very much mindful of that. We keep an open mind on that. I think that will be a very exciting opportunity for us in the coming years, utilizing the AIM listing. And finally, we remain confident in the ability to deliver year-on-year growth, and we'll be targeting returning to full profit after tax, not just profit after EBITDA in the coming year. So that ends our short presentation. Thank you very much for your time. Apologies for the fire alarm distractions. Hope it wasn't too noisy. And I look forward to your questions.

Thanks very much indeed, and thank you for the fire alarm. [Operator Instructions] As you can see, we've had a number of questions throughout today's presentation, and thank you to all the investors for submitting those. If I may, Geoff, just ask you just to start at the top, read out the question where appropriate to do so, give a response and I'll pick up from you at the end.

Thanks. Yes. So looking down the questions here. So how is the order book looking for this year and next year? How much cash is currently on the books? And is there a possibility of shareholder dilution? So in terms of the order book, I think we touched on that in the presentation. I think this was actually at the beginning. So hopefully, I've covered a lot of that off. It's looking -- yes, it's looking very strong into the new year, which is great. It really is about building those long-term client opportunities to continue to work with us. Cash current in the books at the end of FY '24 was GBP 64,000. We released that number when we do interims and full year results. That's the only time we released that. So that's the latest number I can talk to you about. Is there a possibility of shareholder dilution? Well, that would only be if we issued more equity. We're not currently doing that at the moment. Next question. Thank you for that. Next question, would be able to forecast an ETA of positive cash generation, taking into account all interest to be paid and running costs of the business when can we look forward to loan repayments. It's good to see things going in the right direction. So yes, I think we're obviously targeting getting back to full year profitability after tax in the coming year. That's a target at this stage. We're obviously fairly early in the year still. Second half of the year is obviously our strongest half if you follow the business. So yet to be determined, but that's absolutely what we're targeting and cash generation there. And we would like to pay down the shareholder loans as soon as possible. They've been very helpful, and it has been very supportive. We've had great support from our shareholders. But I think everyone wants that to happen. It's about delivering the numbers. We're focusing on the revenue. 30% growth this year was terrific. We need to follow that up and continue that trend. Next question, recurring revenue has grown well. What strategies in place to extend this further? What do you expect in the next couple of years? That's a great question. I think the recurring revenue is so important for us because it's so difficult, as I said, to predict when stores open. It's very, very common for them to get delayed or drop or pull forward. The timing is really difficult. So the recurring revenue is super important. The strategy is to grow that is really the easiest way to do that is around new installations. So as people grow their networks with us and we do more stores with them, then we typically add a small amount when we do each store that grows that recurring revenue. So really, it's about the volume of new work that we do. So our work to develop existing clients, continue the programs of rolling out with them and bring on new clients is really what's been helped driving that. So sort of 30% topline revenue is a huge increase in business and that follow-on effect from that is obviously more recurring revenues, and that will take some time to come through because if we only installed it in September '24, the full benefit will be felt pretty much across '25. So we'll see as the tail goes, that will really help us improve. In the coming years, what we'd really like to get to is the point where our recurring revenues are greater than our cost base. And we're not there yet, but we're heading strongly towards that. If we continue to grow like we did last year into FY '25, then we'll get much closer to that. And that gives us a much stronger base to be able to talk about consistent profitability and then growing the business and really growing that bottom line. Next question. Can the 30% plus growth in 2024 be sustained drivers in place for the coming years? So yes, absolutely. So I think '23, there were some unusual things happened. One of our clients had some big changes and put a big project on hold. That's unusual. It happens. We understand that, but it's very difficult to account for that in the short term. You have to wait for it to kick on and that's happened. We brought on a lot of new clients who've got long-term ambitions to grow their digital signage. They really see the benefits of what we do for their business and for that as an ongoing plan. And we've really targeted that over the last 2, 3, 4 years. And really last year, we started to see that strategy really come to fruition, and that's continuing. So we're starting to see some of the clients that we brought on that did a little bit with us maybe in '23 and a little bit more maybe in '24, start to think about really how they grow that in '25. So it's a long burn. It's not a quick turnaround journey there. But that's how we see the 30% plus growth be able to sustain. We have around about 25 people. We have been in the past in 2008, I think, we were sort of over 40 people. So we can grow the engineering base to meet that demand, which is the important thing. So from our point of view, the fact we're 50 years into this and 20-odd years into this as digital signage experts means that we've got the ability to really scale that out. And again, not many people have that because there are lots of pitfalls when you get to that stage, and that's what experience has taught us. So I think we're really well set for that. It's really about pushing on and really trying to grow these clients and keep that momentum going on the revenue side. I think everything else follows from that. Next question. What are your thoughts on the share price? And do you believe it presents true value of the business or is undervaluing the company? Yes, I mean, as every CEO probably thinks the share price is undervalued. We'd probably be astonished if I said that I didn't think that as well. I think the difficulty is sometimes particularly with where we've been in the last couple of years is it takes time for the share price to reflect where we are now. We're obviously just put out FY '24 results, which is September, and we're now growing into this year. So there's obviously a delay between results improving and then people being able to talk about it and see that and it's been audited and all put through the proper channels and everything like that. So I think there is potentially a lot more to come. We think we're well set. We think we're the only company that does what we do that's on AIM that has got the opportunity to grow with the acquisition side, but also we've very deliberately been targeting doing lots of different clients with the ability to grow to big clients for us. So that diversified client base, again, we think is sort of a really great strategy that will really see us coming good in the future. FY '22 was very disappointing, but we're really focused on '25, '26 and beyond. FY '24 was a good stepping stone to that. I think there's a lot more to come yet. I think that was the last question.

Fantastic. Indeed, it was, look, you've covered off all those questions. And of course, any further questions that do come through, Geoff have the ability to review those and we publish responses where appropriate to do so on the Investor Meet Company platform. Just before redirecting investors to give you their feedback, which is particularly important to you and the team, Geoff, if I can just ask you for a few closing comments, please.

I just -- thanks for everyone's time today. I appreciate the questions there as well. We think it's been a really exciting FY '24, but we think there's a lot more to come from the company, and we really look forward to delivering more in '25 and beyond. We think it's an exciting time to be doing what we do. We think we're one of the best in the business at it, certainly in Europe, and that puts us in a really good place. So yes, looking forward to growing the company further and to hopefully be able to update with more good news in the future.

Fantastic, Geoff. Thanks indeed for updating investors today. Can I please ask investors not to close this session. You'll now be automatically redirected to provide your feedback in order the team can better understand your views and expectations. This will only take a few moments to complete and it's greatly valued by the company. On behalf of the management team of MediaZest plc, we'd like to thank you for attending today's presentation. That completes today's session, and good morning to you all.