Slide 1: Results for the period ended 31 August 2023
Results for the period ended 31 August 2023 28 November 2023 1
Slide 2: Agenda
Agenda Introduction & Highlights Slide 3 Tim Carroll Sally McKone Financial Review Chief Executive Officer Chief Financial Officer Slide 6 Environment, Social & Governance Slide 13 Operational Review Slide 15 Strategic Update Slide 28 Summary & Outlook Slide 40 Additional Information Slide 42 Sectio
Slide 3: Introduction and Highlights
Introduction and Highlights Results for the period ended 31 August 2023 3
Slide 4: A global music and audio products group
A global music and audio products group Content Creation Audio Reproduction 77% 23% of revenue of revenue § Focusrite: audio recording § ADAM Audio: studio § Martin Audio: live and installed sound, equipment monitors, acquired July 2019 acquired December 2019 § Focusrite Pro: audio § Sequential: hig
Slide 5: Review of the year ended August 2023
Review of the year ended 31 August 2023 A challenging year facing Content Creation sales 32 new Reshaped Group Sonnox acquired in headwinds of inflation and decrease of products to provide future December 2022, destocking 9.7% vs FY22 launched scalability strengthening the (-15.3% OCC 2 ), partially
Slide 6: Financial Review
Financial Review Results for the period ended 31 August 2023 6
Slide 7: Financial Highlights
Financial Highlights § Revenue impacted by a challenging global market down 2.9% reported (-9.5% organic constant currency) § Gross margin at 47.5% is 2.2% points higher than FY22 as freight normalises and component costs stabilise § Adjusted EBITDA1 down to £38.6m from £41.7m in FY22 reflecting low
Slide 8: Income Statement
Income Statement FY23 FY22 £m £m § Revenue -2.9% Revenue 178.5 183.7 (organic constant currency -9.5%) Cost of sales (93.7) (100.5) § Gross margin 47.5% (FY22: 45.3%) Gross profit 84.8 83.3 ‒ A net increase of 2.2% points with freight normalisation benefit partially offset by more Operating expenses
Slide 9: Gross margin increasing
Gross margin increasing FY22 to FY23 margin bridge § Overall increase of 2.2% points vs 0.7% 3.9% 0.8% prior year 47.5% 45.3% § Freight costs have decreased by 3.9% of -3.2% sales, resetting to pre COVID levels, minimal air freight now utilised § Increased promotional activity with deeper discounts
Slide 10: Overheads bridge
Overheads bridge § Increased overhead § Linea annualisation § Share based § Inflationary costs § Investment in base due to £0.8m and addition payments are a credit relate mainly to ‒ Audio Reproduction to acquisitions, inflation of Sonnox £0.4m of £0.3m in the year employee costs support growth and
Slide 11: Balance sheet
Balance sheet FY23 FY22 £m £m § Intangible fixed assets Intangible assets 83.4 76.6 ‒ Acquisitions: £7.2m increase from Sonnox Tangible assets 12.5 10.9 ‒ Investment: £8.6m of R&D and £1.7m of licences Total non current assets 95.9 87.5 § Tangible assets increase of £1.6m due to Inventories 55.3 48.
Slide 12: Cash Flow
Cash Flow FY23 FY22 £m £m § Adjusted Free cash flow as a % of sales EBITDA 38.6 41.7 6.8% of revenue Adjusting and non-cash items (2.0) 0.2 ‒ Long term average 10-12% Movement in working capital (7.6) (26.8) Operating cash flow 29.0 15.0 ‒ Impact of Scarlett stock and debtors phasing at period ends
Slide 13: Environment, Social and Governance Review
Environment, Social and Governance Review Results for the period ended 31 August 2023 13
Slide 14: Our First Environment and Climate Report
Our First Environment and Climate Report A significant increase in the quantity and quality of our disclosures. Includes an in depth and extended look at: § Product Lifecycle Assessments § Circular Economy § Our plan towards Net Zero § Climate-related Risks and Opportunities § Greening Music Tech –
Slide 15: Operational Review
Operational Review Results for the period ended 31 August 2023 15
Slide 16: Content Creation
CONTENT CREATION Results for the period ended 31 August 2023 16
Slide 17: Content Creation Growth by Brand
Content Creation Growth by Brand FY23 FY22 Reported OCC1 £m £m growth growth Focusrite: Focusrite (inc Pro) 86.3 97.2 -11.2% -16.2% New product launches delivered a return to growth in H2 Novation (inc Ampify) 16.6 20.6 -19.5% -23.5% from a H1 decline of 35% impacted by destocking preparing for a la
Slide 18: Content Creation Regional Revenue Performance
Content Creation Regional Revenue Performance FY23 FY22 Reported OCC1 £m £m growth growth North America: North America 65.0 66.4 -2.2% -8.2% Maintained our market share in a declining market. Market data shows six quarters of ongoing decline EMEA 52.9 55.9 -5.4% -8.6% due to macro issues Rest of Wor
Slide 19: Content Creation Maintaining a Market Leading Position
Content Creation Maintaining a Market Leading Position We have outperformed our category across multiple distributors Thomann Sweetwater Amazon (large EU online retailer) (large US online retailer) 46k ratings § Our products are consistently Regularly 5 of top 10 audio 4 of 5 most popular audio Best
Slide 20: Scarlett 4th Gen Receiving Rave Reviews
Content Creation Scarlett 4th Gen Receiving Rave Reviews "The new Scarlett 4i4 delivers a top-notch sound, has sufficient I/O for many different projects, is easy to use and looks smarter than ever – it’s hard to think “The new Scarletts are slicker audio "While the new Scarletts will be instantly o
Slide 21: Content Creation Strong Period of Innovation
Content Creation Strong Period of Innovation 15 New Products Across a wide range of use cases & customer personas 20 Product Updates to existing products Results for the period ended 31 August 2023 21
Slide 22: Content Creation Acquisition: Sonnox
Content Creation Acquisition: Sonnox § Industry renowned developer of software tools for audio professionals § Acquired for £7.2m consideration (net of cash acquired of £1.9m) in December 2022 § Earnings enhancing in current year – revenue £1.1m for 8 months since December 2022 § Developer team will
Slide 23: Audio Reproduction
AUDIO REPRODUCTION Results for the period ended 31 August 2023 23
Slide 24: Audio Reproduction
Audio Reproduction Market growth 17 New product Linea integration Optimal Martin, Linea introductions Audio Live events and Linea contributing and Optimal experiences still strong, Martin now has the most £5.0m revenue, Healthy sales particularly at premium complete range across all doubling product
Slide 25: Audio Reproduction Regional Revenue Performance
Audio Reproduction Regional Revenue Performance FY23 FY22 FY23 FY22 Reported OCC1 Audio Reproduction £m £m growth % growth % All regions: North America 12.7 8.1 56.9% 31.9% Experienced solid growth vs FY22 as live events EMEA 16.6 14.2 17.1% 9.6% came back in full force Rest of World 12.2 9.7 26.6%
Slide 26: Audio Reproduction LIVE is back to its best
Audio Reproduction LIVE is back to its best Festivals Returning Globally Localised Tours in Abundance Rental Companies – including New Partners – Buying § Glastonbury, Hyde Park, All Points § Localised tours across the globe are East, PennFest, Shambala and Carfest back, albeit international tours S
Slide 27: Delivering New Products to Support a Growing Market
Audio Reproduction Delivering New Products to Support a Growing Market § Strong in smaller installations and 60% point source products. This will be Market Mix Our Mix bolstered by Optimal Audio as the 50% 53% Market mix classified by range of throw brand grows and develops 40% § Investment this yea
Slide 28: Audio Reproduction New Product Strategy
Audio Reproduction New Product Strategy 0-15m 15-30m 30m + POINT SOURCE CONSTANT CURVATURE OPTIMISED LINE ARRAYS 2021 XD Series WAVEFRONT PRECISION POINT SOURCE CONSTANT CURVATURE OPTIMISED LINE ARRAYS Today FLEXPOINT TORUS WAVEFRONT PRECISION Results for the period ended 31 August 2023 28
Slide 29: Strategic Update
Strategic Update Results for the period ended 31 August 2023 29
Slide 30: Our growth strategy has remained consistent
Our growth strategy has remained consistent Create a Great Place to Work Engagement across our teams to create an inclusive and listening organisation Grow the Core Customer Base Investing in R&D to continue to deliver innovative market leading solutions which expand our product range Expand into Ne
Slide 31: Our strategy has delivered growth
Our strategy has delivered growth Group Growth since 2014 Listing Focusrite US Focusrite EMEA Focusrite ROW Distribution § FY15 to FY23 17.8% Revenue CAGR ADAM Sequential Sonnox Martin through organic growth and acquisitions. 200,000 180,000 17.8% § 10.2% Organic growth CAGR in this 160,000 8 year t
Slide 32: Organic growth ahead of the market
Organic growth ahead of the market Focusrite/Novation In all regions Other brands Has more than doubled market Growth has outstripped the market, Have the potential to share in the US between 2015 to leaving Focusrite in a premier position mirror this penetration 2022 from 10% to 23% through and wit
Slide 33: Focusrite's path of market penetration can be mirrored by newer brands
Focusrite’s path of market penetration can be mirrored by the newer brands Market size assumptions £1,200 § US is the biggest regional market across all our brands US EMEA RoW £1,000 £1,125 £m, Revenue-basis § Only for Focusrite/Novation is the US the biggest £800 £875 region for revenue across our
Slide 34: Constantly refining routes to market
Constantly refining routes to market Content § In majority of smaller Distribution Reseller End User markets Creation Content § In UK, Germany, and Reseller End User Australia with a hybrid Creation model in the US Content § Updated global End User eCommerce channel for Creation Focusrite/Novation b
Slide 35: A successful history of acquisitions
A successful history of acquisitions Acquisitions: Revenue Pre and Post Acquisition 40 Sales 12m prior to Acquisition FY23 § All acquisitions have 35 36.5 continued to grow since 30 joining the Group 25 § Brands maintain their own identity and connection to 20 20.9 customers, focusing on 18.5 15 inn
Slide 36: With more to come from a scalable Group structure
With more to come from a scalable Group structure FOCUSRITE GROUP Content Creation Audio Reproduction § A Group structure able to support multiple brands in both divisions Focusrite/ ADAM Sequential Sonnox Martin Optimal Linea § Aligned to support different Go to Novation Audio Audio Audio Research
Slide 37: The global market for Content Creation is growing
The global market for Content Creation is growing § Content Creation is growing, fuelled by people’s demand for music, podcasting and streaming § The US is the largest single region at over 33% of the world’s revenue, and the only region with reliable market data § Opportunities exist in other regio
Slide 38: The demand for experiences supports Audio Reproduction growth
The demand for experiences supports Audio Reproduction growth § Audio Reproduction’s market ranges from the large major festival experiences of Glastonbury and Coachella to the installed sound at a local Church, bar, gym or restaurant § Post COVID there has been a strong bounce back with underlying
Slide 39: Future growth strategy
Future growth strategy Create a Great Place to Work Workplace offices becoming engaging hubs for collaboration and teamwork Clearer career paths with programmes to support development Grow the Core Customer Base Planned product introductions across all brands, maintaining market positions and expand
Slide 40: Future growth expectations
Future growth expectations § Market growth – low single digit over the medium term, flat in FY24 Overall Growth targets Content § Focusrite brands maintain market share with other brands gaining Creation share across regions § Mid to high single § Growth through new products and digit for the Group
Slide 41: Summary & Outlook
Summary & Outlook Review Results for the period ended 31 August 2023 41
Slide 42: Current trading and Outlook
Current trading and Outlook Current Trading Content Creation: current market conditions remain difficult, impacted by some channel destocking, but underlying demand, evidenced by registrations remains strong Audio Reproduction: performance remains strong Outlook Revenue : An ongoing challenging mark
Slide 43: Summary
Summary Strong delivery of New products across all brands, with flagship next generation Scarlett launched in August Successful integration of Linea Research and Oberheim, with further acquisition of Sonnox Continued investment in People and systems to deliver on our strategy to be a Great Place to
Slide 44: Thank you Q&A
Thank you Q&A 28 November 2023 focusriteplc.com
Slide 45: Additional Information
Additional Infomation Results for the period ended 31 August 2023 45
Slide 46: Our market
Our market Results for the period ended 31 August 2023 46
Slide 47: Our market
Our market Results for the period ended 31 August 2023 47
Slide 48: Environment and Climate Change
Environment and Climate Change FY23 FY22 § The UK’s Taskforce on Climate-Related Financial tCO₂e tCO₂e Disclosures is mandatory this year. Scope 1 & 2 ‒ We are compliant and have assessed climate change as low § Net 0 0 risk in the short term (up to 2030). § Gross 431 427 § We now calculate our GHG
Slide 49: Social: engaging with all our communities
Social: engaging with all our communities The Focusrite/Novation team at the Summer Event 2023 Our focus is employee led initiatives within our communities and to enable more people to create music Donated over 7,000 Novation 6th year of partnership with Sponsorship of Accessibility Zone and Launchp
Slide 50: Foreign exchange
Foreign exchange FY23 FY22 Exchange Rates £m £m Average US$:£ 1.21 1.31 Natural hedge for USD €:£ 1.15 1.18 § US and ROW revenue. § Total c50% of revenue but Average rate of forward contracts almost all cost of sales so minor net profit inflow €:£ 1.16 1.13 Weighted average applicable rate Euro hedg
Slide 51: Restated Adjusted EPS
Restated Adjusted EPS Restated Restated Restated FY20 FY21 FY22 £'000 £'000 £'000 Reported profit after tax 4,091 28,279 24,776 § Tax on adjusted items has Adjusting items 15,101 5,641 6,011 been restated to include Tax on adjusting items (749) (1,588) (1,376) the deferred tax credit due to the amor
Slide 52: Disclaimer
Disclaimer The contents of this document (the “Presentation”) and any securities of Focusrite plc (the “Company”) In particular, certain statements in this Presentation may constitute forward-looking statements and referred to in this Presentation have not been approved by an authorised person withi
Slide 53: Removing Barriers to Creativity
Removing Barriers to Creativity 28 November 2023 focusriteplc.com