12th Apr 2023 11:00
(Alliance News) - LBG Media PLC on Wednesday reported a strong year of progress in 2022, with solid increases in revenue and viewing figures.
However, analysts noted that the key to further progress for the digital media and youth content publisher would be the expansion of monetisation across further social media platforms, such as TikTok.
The Manchester, England-based firm said its 2022 revenue grew by 15% to GBP62.8 million from GBP54.4 million the year prior. This was driven by increased activity with new and existing clients in the UK, Australia and Ireland, LBG said.
An increase in numbers of views to 98.4 billion across web and social video also contributed to this increase.
"It might not want to present it in these terms but the online publisher of LADbible specialises in clickbait and it is very good at what it does," said Russ Mould, investment director at AJ Bell.
"Offering advertisers access to the hard-to-reach 18 to 34 demographic helps drive advertising revenue. However, the company is not immune to wider economic trends and earnings fell in 2022 as advertising spend dropped."
LBG's pretax profit fell by 10% to GBP7.3 million from GBP8.1 million, as operating profit dropped to GBP7.5 million from GBP8.2 million.
Meanwhile, adjusted earnings before interest, taxes, depreciation, and amortisation fell by 6.5% to GBP15.7 million from GBP16.8 million in 2021.
Mould noted that the company is "heavily focused" on social media and video streaming platforms, pointing to its agreement with Facebook to share revenue from in-video adverts on the platform. The AJ Bell analysts cautioned, however, that LBG is still waiting for other platforms like TikTok, Instagram and Snapchat to develop a monetisation model for third parties.
This was also a key area for Liberum analysts Ciaran Donnelly and William Larwood: "While not monetisable currently, LBG's audience with TikTok to 29 million followers, this presents a significant revenue opportunity when TikTok rolls out its monetisation model for its content creators."
"When these social platforms roll out their monetisation models, this will add to LBG's revenue. Anecdotally, when Facebook rolled out its monetisation model it added GBP5 million of revenue at a high margin. We have not factored the monetisation of other social media platforms into our forecasts but management has commented that TikTok monetisation could add a similar level of revenue to when Facebook turned on its monetisation mechanism."
Liberum left its 2023 forecasts largely unchanged. It explained that current market expectations see revenue at GBP69.4 million, which would represent growth of 11% year-on-year, and adjusted Ebitda at GBP19.4 million, which would represent growth of 24% year-on-year.
"We sit slightly above consensus estimates. Adjusted Ebitda growth is expected to outpace revenue growth as the benefit from the cost restructuring undertaken in [the second half] annualises in 2023."
LGB said its 2023 year-to-date performance has been positive, amid continued momentum from the fourth quarter of 2022. The company added that it remains on track to deliver external expectations for the full year, anticipating a revenue of GBP69.3 million and adjusted Ebitda of GBP19.4 million.
AJ Bell analysts Russ Mould said whether LBG's "laddish brand" will remain relevant for the next generation "is open to question", adding that the company "may have to adapt to survive".
In contrast, Liberum called the stock a "great way to play the growth in digital media", with upside potential from mergers & acquisitions.
Shares in LBG Media were down 1.3% at 76.00 pence on Wednesday morning in London. Over the past 12 months, the stock is down 58%.
By Heather Rydings, Alliance News senior economics reporter
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