Slide 1: Results for the period ended 29 February 2024
Results for the period ended 29 February 2024 1
Slide 2: Agenda
Agenda Introduction & Highlights Tim Carroll Sally McKone Slide 3 Chief Executive Officer Chief Financial Officer Operational Review Slide 6 Financial Review Slide 21 Strategic Update Slide 28 Summary & Outlook Slide 32 Additional Information Slide 36 Section Quick links Results for the period ended
Slide 3: Introduction & Highlights
Introduction & Highlights Results for the period ended 29 February 2024 3
Slide 4: A global music and audio products group
A global music and audio products group Content Creation Audio Reproduction 70% 30% 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 period ended February 2024
Review of the period ended 29 February 2024 Overview Content Creation Audio Reproduction A challenging half year facing macro-economic headwinds and Content Creation sales decrease Audio Reproduction growth channel destocking of 19.8% vs HY23 (-17.3% OCC) of 21.4% (23.6% OCC2). Industry data shows r
Slide 6: Operational Review
Operational Review Results for the period ended 29 February 2024 6
Slide 7: Content Creation
CONTENT CREATION Results for the period ended 29 February 2024 7
Slide 8: Content Creation Growth by Brand
Content Creation Growth by Brand HY24 HY23 Reported OCC1 Focusrite: £m £m growth growth FY23 H1 focus on selling remaining stock of 3rd gen Scarletts in Focusrite (inc Pro) 29.4 40.1 -26.8% -23.6% 86.3 a soft market, impacting initial sell through and re-orders Novation (inc Ampify) 7.9 8.2 -4.6% -0
Slide 9: Content Creation Regional Revenue Performance
Content Creation Regional Revenue Performance HY24 HY23 Reported OCC1 FY23 Globally: A very tough market for all home £m £m growth growth £m recording/consumer electronics categories driven North America 24.5 31.1 -21.2% -17.1% 65.0 by industry wide channel overstock and macro- EMEA 24.0 28.2 -14.9%
Slide 10: Content Creation ROW impacted by China macro concerns
Content Creation ROW impacted by China macro concerns Rest of World sales by Group brands 25 Weakness in China consumer spending Focusrite Other CC Audio Reproduction widely reported and impacting industry peers 20 Rest of World region is made up of APAC (80%) and Latin America (20%) 15 The Grou
Slide 11: Content Creation Direct to Customer channel
Content Creation Direct to Customer channel eCommerce sales and share Revenue As a % of CC total sales 3.5 8.0% Focusrite.com & Novationmusic.com 3 7.0% Scalable upgraded eCommerce shopfront for 2.5 6.0% the Focusrite and Novation brands launched in 2 5.0% July 23 4.0% 1.5 3.0% Strong growth a
Slide 12: Content Creation Market in second year of post COVID decline
Content Creation Market in second year of post COVID decline US market data is the only widely available source for our industry (US Music Trades census) ‒ US Sales down 8.2% in 2023 for Recording products (-11.6% 2022) ‒ US sales down 5.8% in 2023 for Electronic Musical Instruments ( -8.1% 2022)
Slide 13: Content Creation Underlying demand remains strong
Content Creation Underlying demand remains strong End user registrations holding steady on prior year and up 50% over FY19 Despite ongoing weakness in US sales of computer music hardware the market, end user demand Scarlett product registrations by month for our key Scarlett product 250 has remain
Slide 14: Content Creation Maintaining a Market Leading Position
Content Creation Maintaining a Market Leading Position We have outperformed our category across multiple top channel partners Our products are consistently shown in the top 5 most popular products in our category across main resellers Industry leading Trustpilot reviews and NPS scores (FY23 NPS:
Slide 15: Content Creation Maintaining a Market Leading Position
Content Creation Maintaining a Market Leading Position 46k ratings We have outperformed our category across multiple distributors Best seller categories Results for the period ended 29 February 2024 15
Slide 16: Content Creation Scarlett Transition
Content Creation Scarlett Transition > $500 market Scarlett product registrations by generation Pro level, multiple inputs and outputs Gen 3 Gen 4 Gen 3 in the market – Gen 4 launch moved 100% out of FY24 90% 80% 70% 60% Sub $500 market 50% More functionality, multiple inputs and 40% outputs 30% Gen
Slide 17: Audio Reproduction
AUDIO REPRODUCTION Results for the period ended 29 February 2024 17
Slide 18: Audio Reproduction
Audio Reproduction Market growth New products Linea integration Optimal Martin, Linea continue growth Audio Live events and Linea more than and Optimal experiences remain Martin now has the best doubled production Strong sales strong, particularly at ever line up of products vs FY23 pipeline premium
Slide 19: Audio Reproduction Regional Revenue Performance
Audio Reproduction HY24/23 HY24/23 Regional Revenue Performance Audio Reproduction HY24 £m HY23 £m Reported growth % OCC1 growth % FY23 £m EMEA & ROW growth continues especially ROW as COVID North America 4.3 5.2 -17.6% -12.2% 12.7 restrictions removed. North America has a slower start but EMEA 10.4
Slide 20: Acquisition: Sheriff Technologies (OutBoard and Timax)
Audio Reproduction Acquisition: Sheriff Technologies (OutBoard and Timax) TiMax are pioneers of the rapidly expanding sector of immersive sound experiences, while OutBoard specialise in entertainment rigging control Acquired for £2.3m consideration (net of cash acquired of £0.1m) in December 202
Slide 21: Financial Review
Financial Review Results for the period ended 29 February 2024 21
Slide 22: Financial Overview
Financial Overview Revenue impacted by a challenging global market down 10.9% reported (-8.4% organic constant currency) Gross margin at 47.5% is 1.3% points lower than HY23 with underlying margins stable and a one-off stock provision impact Adjusted EBITDA1 down to £12.1m from £18.1m in FY23
Slide 23: Income Statement
Income Statement HY24 HY23 FY23 £m £m £m Revenue 76.9 86.2 178.5 Revenue decrease of 10.9% (organic constant currency decrease 8.4%) Cost of sales (41.7) (45.6) (93.7) Gross margin 45.8% (HY23: 47.1%) Gross profit 35.2 40.6 84.8 ‒ Underlying margins flat with a one-off impact Administrative over
Slide 24: Stable underlying Gross margin
Stable underlying Gross margin HY23 to HY24 margin bridge Stable underlying margins with overall decrease of 1.3% due to one-off stock provision 0.8% 0.6% 0.2% 1.3% 47.1% 47.1% Product margins (invoiced sales less 45.8% product costs) have increased by 0.8% points due to overall lower level of p
Slide 25: Balance sheet
Balance sheet HY24 HY23 FY23 Intangible fixed assets £m £m £m ‒ Acquisitions: £2.1m increase from Sheriff ‒ Investment: £4.5m of R&D and £2.5m of licences Intangible assets 87.5 84.3 83.4 with £3.1m of amortisation Tangible assets 11.4 10.8 12.5 Tangible assets decrease since FY23 of £1.1m Total
Slide 26: Net debt impacted by working capital
Net debt impacted by working capital Cashflow Movements £m Net debt has reduced in the half year to £27.3m of net debt from £1.3m net debt at the year end FY23 Working capital HY24 Biggest impact is due to working capital – 15.0 with seasonal outflows from creditors, +12.1 -2.3 10.0 -7.9 not off
Slide 27: Cash Flow
Cash Flow HY24 HY23 FY23 £m £m £m EBITDA 12.1 18.1 38.6 Adjusted Free cash outflow of £20.8m Adjusting and non-cash items 0.1 (1.8) (2.0) ‒ Impact of working capital movements, Movement in working capital (21.6) (10.4) (7.6) expected to largely reverse in H2 Operating cash flow (9.6) 5.8 29.0 In
Slide 28: Strategy Update
Strategy Update Results for the period ended 31 August 2023 28
Slide 29: Consistent growth strategy
Consistent growth strategy Create a Great Place to Work Workplace offices becoming engaging hubs for collaboration and teamwork Benchmarking programme in place to assess technical roles Grow the Core Customer Base 11 new products in H1 with more planned for H2 Continued investment in our D2C ecomm b
Slide 30: Our Content Creation market: Structural Growth potential
Our Content Creation market: Structural Growth potential Growing Global Content Creation Market Music Creation Growth for Professionals and Hobbyists Driven by social media and expansion of The market for recorded music is growing Increasing use of technology for both streaming services driven by de
Slide 31: Our Audio Reproduction market: Structural Growth potential
Our Audio Reproduction market: Structural Growth potential Global market for Live Music: 2017 = $26.7bn Market growth expectations in low to mid single digits Underpinning market growth expectations our brands will continue to take market share through product innovation and expansion, supported by
Slide 32: Summary & Outlook
Summary & Outlook Review Results for the period ended 29 February 2024 32
Slide 33: Current trading and Outlook
Current trading and Outlook Current Trading Content Creation: current market conditions remain difficult, impacted by channel destocking, with new product introductions to support revenue Audio Reproduction: performance remains strong Outlook Revenue: Revenue remaining at current levels with full ye
Slide 34: Summary
Summary A global market with structural growth potential A global £5.5bn market: driven by the creation and experience of listening to music World leading brands 13-brand innovative portfolio with sales into 240 territories globally Maintaining and growing market share in challenging times 5 acquisi
Slide 35: Thank you Q&A
Thank you Q&A focusriteplc.com
Slide 36: Additional Information
Additional Infomation Results for the period ended 29 February 2024 36
Slide 37: Our market: Global Market of up to £5.5 billion
Our market: Global Market of up to £5.5 billion Total Market of £1,750m - £2,000m Total Market of £3,000m - £3,500m Results for the period ended 29 February 2024 37
Slide 38: Our market: Q1 US Market updates – remain challenging
Our market: Q1 US Market updates – remain challenging Results for the period ended 29 February 2024 38
Slide 39: Environment and Climate Change
Environment and Climate Change FY23 FY22 The UK’s Taskforce on Climate-Related Financial tCO₂e tCO₂e Disclosures is mandatory this year. Scope 1 & 2 ‒ We are compliant and have assessed climate change as low Net 0 0 risk in the short term (up to 2030). Gross 431 427 We now calculate our GHG
Slide 40: Foreign exchange
Foreign exchange HY24 HY23 Exchange Rates £m £m Average US$:£ 1.25 1.19 Natural hedge for USD €:£ 1.16 1.15 US and ROW revenue Total c50% of revenue but Average rate of forward contracts almost all cost of sales so minor net profit inflow €:£ 1.12 1.17 Weighted average applicable rate Euro hedge
Slide 41: 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 42: Removing Barriers to Creativity
Removing Barriers to Creativity focusriteplc.com