Slide 1: Results for the year ending 31 August 2019
Results for the year ending 31 August 2019 November 2019
Slide 2: Disclaimer
Disclaimer The content of this document (the “Presentation”) has not been approved by an authorised person within the meaning of the Financial Services and Markets Act 2000 (“FSMA”), as amended. Reliance on this document for the purpose of engaging in any investment activity may expose an individual
Slide 3: Agenda
Agenda Introduction and Highlights Brand Alignment Product Sectors Financial Review Growth Strategy Conclusions Tim Carroll Jeremy Wilson Chief Executive Chief Financial Officer Officer 3
Slide 4: Introduction
Introduction Focusrite plc is a global music and audio products group that develops and markets proprietary hardware and software products. Used by audio professionals and amateur musicians alike, its solutions facilitate the high- quality production of recorded and live sound. Founded in 1989 Five
Slide 5: Highlights for the year ended August 2019
Highlights for the year ended 31 August 2019 o Revenue up 12.7% (7.8% at constant exchange rates1) o EBITDA2 up 11.1% to £17.2 million o Year end net cash balance of £14.9 million after the purchase of ADAM Audio. o Final dividend of 2.6 pence, resulting in full year dividend of 3.8 pence, an increa
Slide 6: Brand alignment
Brand alignment New Creator Passionate Maker Market size: $225m-325m Market size: $250m-300m • Very likely to have little or no previous musical knowledge • May or may not play traditional instruments • Demands an immediate, joyful experience • Little or no songwriting experience • Demands ease, acc
Slide 7: Brand alignment
Brand alignment Serious Aspiring Producer The Master/Facility Market size: $100m-150m Market size: $100m-200m • More than just a hobby • Highly skilled musician or audio engineer • Strong demands on gear/technology to achieve • Depends on technology to do the job and make a living professional-level
Slide 8: Product sectors: Focusrite
Product sectors: Focusrite o Focusrite Pro RedNet: Enterprise, Live, Broadcast, Education. Networked Audio over IP $3,000 upwards Red: Creative Professional, Music, Post $2,000 to $3,500 o Focusrite Clarett: Intermediate / Professional user $400 to $1,200 Scarlett: Mass market interface. Home user $
Slide 9: Product sectors: Focusrite
Product sectors: Focusrite Focusrite FY19 FY18 £m £m Revenue 57.6 47.4 o Segment growth of 21.5% driven by strong demand for Scarlett o Third generation of Scarlett interfaces launched; remains number one interface in the world New pic? This one is old Scarlett o Clarett gained numerous accolades in
Slide 10: Product sectors: Focusrite Pro
Product sectors: Focusrite Pro Focusrite Pro FY19 FY18 £m £m Revenue 4.7 4.8 o Overall segment decline of 1.2% o RedNet grew by 4% o Red products nearing the end of their lifecycle o Changes made to the sales organisation “The reason behind using RedNet is that it’s simple. It just works every day…
Slide 11: Product sectors: Novation including Ampify
Product sectors: Novation including Ampify o Novation CONTROLLERS Physical interfaces to control music creation software Grid controllers: Launchpad - $100 to $300. Keyboard controllers: Launchkey - $100 to $250. STANDALONE Function on their own as sound generating devices Grid: Circuit - $330. Keyb
Slide 12: Product sectors: Novation including Ampify
“The SL Mark III does indeed change the game for controllers and sets a Product sectors: Novation new benchmark for including Ampify which future controllers will be judged.” Novation FY19 FY18 Loopop £m £m Revenue 17.7 20.1 o Launchkey range up 13%. o Launchpad, the leading product range for Novati
Slide 13: Product sectors: ADAM Audio
Product sectors: ADAM Audio T Series S Series Entry level studio monitor: $400- High end studio monitor: $500 per pair $1,750-$20,000 per unit AX Series Subwoofers and Mid level studio monitor: $700- headphones $2,000 per pair Subwoofers: $700-$8,000 per unit SP-5 headphones: $500 13
Slide 14: Product sectors: ADAM Audio
Product sectors: ADAM Audio ADAM Audio FY19 FY18 £m £m Revenue 1.8 - o Brand equity o Quality and reliability o Strong financials: o 2018 revenue: €12.9 million o 2018 adjusted EBITDA: €1.7 million o Similar corporate culture o Customer-first focus o Constant innovation 14
Slide 15: Product sectors: Distribution
Product sectors: Distribution Distribution FY19 FY18 £m £m Revenue 2.8 2.9 o Add-on products within music-making industry but UK only and small overall. o KRK monitors. o Products that Focusrite and Novation customers need. o This is part of our strategy which aims to increase lifetime value for our
Slide 16: Financial highlights for the year ended August 2019
Financial highlights for the year ended 31 August 2019 o Group revenue up by 12.7% to £84.7 million (FY18: £75.1 million) o EBITDA up by 11.1% to £17.2 million (FY18: £15.5 million) o Operating profit up by 7.3% to £12.8 million (FY18: £11.9 million) o Adjusted diluted earnings per share 21.4p, up b
Slide 17: FY19: Regional performance
FY19: Regional performance Revenue FY19 FY18 £m £m North America 36.4 32.7 Europe, Middle East and Africa 34.0 29.7 Rest of World 14.3 12.7 Consolidated revenue 84.7 75.1 o North America: up 11.1% to £36.4m (constant currency growth 5%) o Demand for Novation weaker, exacerbated by the trade war and
Slide 18: Income Statement
Income Statement FY19 FY18 o Revenue up 12.7% £m £m o Constant currency growth 7.8% Revenue 84.7 75.1 Cost of sales (48.9) (43.4) o Third generation of Scarlett Gross profit 35.8 31.7 Operating expenses before non- o Gross margin 42.2% (FY18: 42.2%) underlying items (22.3) (20.1) Operating profit be
Slide 19: Balance Sheet
Balance Sheet FY19 FY18 o Intangible fixed assets: £m £m o Acquisition: £12.0m of identified intangible Intangible assets 24.1 6.0 assets + £4.9m of goodwill Tangible assets 1.6 1.3 o Remainder largely Focusrite cap'd R&D Total non current assets 25.7 7.3 Inventories 15.2 11.4 o Working capital 20%
Slide 20: Cash flow
Cash flow FY19 FY18 o Working capital increase due to the acquisition £m £m and business growth EBITDA 17.2 15.5 Movement in working capital (2.6) (0.2) o Investing £19.9m, (FY18: £4.5m) Operating cash flow 14.6 15.3 Interest received/(paid) 0.2 (0.1) o Acquisition of ADAM Tax paid (0.8) (0.5) o Cap
Slide 21: Focusrite Growth Strategy
Focusrite Growth Strategy Grow the core customer base The number of musicians not yet using technology to sculpt, perform or capture sound outnumbers those who do by as many as 14:1. Through innovation, disruptive technology and an unfaltering focus on our customers’ needs, we can change this. Our m
Slide 22: Grow the core customer base
Grow the core customer base o Innovations that make music-making and audio production accessible o Disruptive technology that genuinely challenges the status quo o Perfectly integrated hardware and software that tackles our customers’ pain points o ‘Best choice’ solutions to fit every budget 22
Slide 23: Expand into new markets
Expand into new markets o Expansion of core products into new verticals: o Podcasting, streaming o Geographic expansion: o Regional based personnel o Localisation initiatives o Closer touch with end-users o Acquisition of more businesses that fit both strategically and culturally. 23
Slide 24: Lifetime value for our Customers
Lifetime value for our Customers o Lead the industry in putting the needs of the music-maker and audio engineer first o Offer software and content to augment and enhance their creative process o Create a connected experience that pulls their music-making environment together o Support them on their
Slide 25: Conclusions
Conclusions o Revenue up 12.7% to £84.7 million (FY18: £75.1 million) o Focusrite strength continues, boosted by third generation Scarlett o Novation declined ahead of key product launches around the year end o All regions grew o Group remains mindful of macroeconomic factors - strategies in place t
Slide 26: Enriching Lives Through Music
Enriching Lives Through Music 26