Slide 1: Results for the period ending 28 February 2019
Results for the period ending 28 February 2019 April 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 Four b
Slide 5: Highlights for the period ended February 2019
Highlights for the period ended 28 February 2019 o Revenue up 4.1% (0.5% at constant exchange rates1) o EBITDA2 up 11.4% to £8.9 million o Cash up from £22.8 million at FY18 to £26.2 million at HY19 o Interim dividend of 1.2 pence, an increase of 20% o Two new products and several software upgrades
Slide 6: Brand alignment
Brand alignment New Creator Passionate Maker Market size: $200m-300m Market size: $200m-250m • 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: $75m-100m 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 HY19 HY18 FY18 £m £m £m Revenue 26.3 23.4 47.4 o Scarlett and Clarett both grew in absolute terms, leading to segment growth of 12.3%. o Scarlett continues to sell strongly (sales up 12%) and remains the number one audio interface in the world. o Clarett continue
Slide 10: Product sectors: Focusrite Pro
Product sectors: Focusrite Focusrite Pro HY19 HY18 FY18 £m £m £m Revenue 2.6 2.3 4.8 o RedNet and Red both grew in absolute terms. o RedNet was the fastest growing range in the Group, leading Focusrite Pro to revenue growth of 14.8%. “The reason behind using RedNet is that it’s simple. It just works
Slide 11: Product sectors: Novation including Ampify
Product sectors: Novation i n c lu d in g A m p if y 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 -
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 i n c lu d in g A m p if y which future controllers will be judged.” Novation HY19 HY18 FY18 Loopop £m £m £m Revenue 9.8 11.4 20.1 o Launchkey range up 24%. o Launchpad, the leading pr
Slide 13: Product sectors: Distribution
Product sectors: Distribution Distribution HY19 HY18 FY18 £m £m £m Revenue 1.7 1.7 2.9 o Add-on products within music-making industry but UK only and small overall. o KRK monitors and sE microphones. o Both are products that Focusrite and Novation customers need. o This is part of our strategy which
Slide 14: Financial highlights for the period ended February 2019
Financial highlights for the period ended 28 February 2019 o Group revenue up by 4.1% to £40.4 million (HY18: £38.8 million) o EBITDA up by 11.4% to £8.9 million (HY18: £8.0 million) o Operating profit up by 16.4% to £7.3 million (HY18: £6.2 million) o Diluted earnings per share 11.0p, up by 23.6% (
Slide 15: HY19: Regional performance
HY19: Regional performance Segmental Revenue HY19 HY18 FY18 £m £m £m Europe, Middle East and Africa 19.3 16.0 29.7 North America 15.0 16.8 32.7 Rest of World 6.1 6.0 12.7 Consolidated revenue 40.4 38.8 75.1 o EMEA: up 20.7% to £19.3m (constant currency growth 18%) o Growth across most countries o Pr
Slide 16: Income Statement
Income Statement HY19 HY18 FY18 o Revenue up 4.1% £m £m £m o Constant currency growth 0.5% Revenue 40.4 38.8 75.1 o Record comparative from HY18 Cost of sales (22.5) (22.6) (43.4) Gross profit 17.9 16.2 31.7 o Macroeconomic factors Operating expenses before non-underlying items (10.6) (10.0) (20.1)
Slide 17: Balance Sheet
Balance Sheet HY19 HY18 FY18 £m £m £m o Intangible fixed assets include £5.4m of Intangible assets 6.7 5.2 6.0 capitalised R&D and £1.3m of goodwill & Tangible assets 1.2 1.4 1.3 other intangibles Total non current 7.9 6.6 7.3 assets o R&D expenditure 6.5% of revenue o Typically capitalise c70% and
Slide 18: Cash flow
Cash flow HY19 HY18 FY18 o Working capital increase (cash outflow) £m £m £m o Working capital 19.8% of revenue EBITDA 8.9 8.0 15.5 (compared to 16.2% last year) Movement in working (1.8) 1.1 (0.2) capital o Lower creditors Operating cash flow 7.1 9.1 15.3 Interest received/(paid) 0.1 0.0 (0.1) Tax p
Slide 19: 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 20: Grow the core customer base
Grow the core customer base o Innovations that make music-making 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 “Playing with Peak’s distort
Slide 21: Expand into new markets
Expand into new markets o Bring down the barriers to creativity in new communities o Introduce our technology and innovations to new audiences for whom sound and creativity matter Latin America initiatives o Hire full-time employees in Mexico and Brazil o Localise our website, marketing collateral a
Slide 22: Lifetime value for our Customers
Lifetime value for our Customers o Lead the music industry in putting the needs of the music-maker 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 creative jour
Slide 23: Conclusions
Conclusions o Revenue up 4.1% to £40.4 million (HY18: £38.8 million) o Focusrite strength continues o Novation declined, but pipeline now stronger o Regionally, EMEA strong, but US affected by the trade war o Group remains mindful of macroeconomic factors - strategies in place to respond to future d
Slide 24: Enriching Lives Through Music
Enriching Lives Through Music 24