COVID-19 Impact: What do Media Intelligence Company Filings Tell Us?
A couple of months back, Burton-Taylor International Consulting published a detailed report exploring the likely impact of COVID-19 on the $4.5 billion global market for Media Intelligence/PR software and information solutions.
Since then, several Media Intelligence/PR software companies have published financial results for their latest reporting periods. This blog post highlights key data in those filings and puts the results into context relative to previous company announcements.
Few Media Intelligence companies publish full financial figures throughout the year, so this is a small, but revealing, snapshot of recent activity. It indicates some adverse impact from COVID-19; but plenty of positives as well.
Isentia: modest COVID-19 impact, underlying margin maintained
Australia-based Isentia, the largest Media Intelligence provider in the Asia-Pacific region, recently published results for its fiscal year to end-June 2020.
The pandemic hit the Asia-Pacific region early, so you might Isentia to be suffering more than most. However, it says COVID-19 has had only a limited impact on its results.
Its revenue for fiscal 2020 was AUD110.3m (~USD78.3m), down 10.0% from a year earlier. In the previous fiscal year, revenue had dropped 10.1% in a fiercely competitive market. Isentia said last August that it expected its rate of revenue decline to slow in FY2020.
Isentia said in reporting its latest results that the net negative impact of COVID-19 on revenue was between about AUD500,000 and AUD1 million, with some slowing of new business and some pauses and small cancellations, partly offset by additional revenue for its value-added products, including daily news briefings and analysis services.
Burton-Taylor concludes that in revenue terms, the impact of COVID-19 on Isentia has been relatively undramatic – somewhat hindering a hoped-for slow-down of an existing trajectory, rather than being a primary driver.
Underlying EBIDTA for the latest fiscal year was down AUD2.2m to AUD20.9m, an 18.9% margin, compared with an 18.8% margin for the prior fiscal year. This underlying EBIDTA number is in line with pre-pandemic guidance of AUD20m-23m, published back in August 2019.
The company said the performance reflected its quick action with cost containment programs and also highlighted its continued success in driving down its debt. It did not provide guidance for future periods, citing uncertainty relating to COVID-19 and Copyright Tribunal proceedings.
ACCESSWIRE: fast growth, though some easing in Q2
In the US, shareholder communications company Issuer Direct said in its Q2 results that revenue for its ACCESSWIRE press release distribution service in Q1 and Q2 2020 increased 19% and 10% respectively, compared with year-earlier periods.
Excluding the loss of revenue from an investment commentary business, withdrawn by a partner during 2019, Issuer Direct said ACCESSWIRE revenue would have grown 30% in the first six months of this year.
The company does not disclose detailed financials for its press release unit; Burton-Taylor estimates 2019 ACCESSWIRE at around USD5.1m and notes that its revenue growth for 2019, also excluding the investment commentary business, was 44%.
This analysis indicates that revenue growth for ACCESSWIRE has slowed somewhat during the pandemic; though Burton-Taylor considers that most companies in the sector would still be extremely happy with the rate of expansion the business has been achieving.
EQS/DGAP: press release revenue surge on COVID-19 volume increase
Also In the press release distribution segment, Germany-based investor relations and corporate compliance company EQS Group reported that its news and disclosure-related revenue rose 26% in the first half of 2020, helped by a higher volume of releases, especially with corporate guidance updates in March and April relating to COVID-19.
The figure was very positive – though is dwarfed by a towering 98% increase in EQS’s H1 2020 video and audio webcasts revenue, as companies switched from physical to virtual events.
EQS does not publish detailed financials for its press release distribution activities; Burton-Taylor estimates revenue for these at around USD13.3m for 2019.
EQS Group management said the company did suffer some adverse effects from the pandemic, including longer sales cycles and fewer IPOs; but overall, the negatives were more than outweighed by the positives.
Agility PR Solutions: growth, at a lower rate
Filings for US-based digital services company Innodata indicate that revenue for Agility PR Solutions, its Media Intelligence business, was up 4.9% from a year earlier in Q2 2020 and up 9.3% for the first six months from the comparable period – indicating a slowing, but still respectable, pace of growth in the second quarter, as the pandemic took hold in the business division’s North American and UK target markets.
Agility PR Solutions revenue for 2019 had risen 9.5%, according to Burton-Taylor calculations, totaling USD10.7m for the year.
Innodata said the revenue increase in Q2 was principally attributable to higher volumes from subscriptions to its Agility data platform and newswire products.
The division narrowed its losses compared with the previous year over the first half of the year, though with better performance on that front in Q1 than in Q2.
Innodata said on its latest earnings call that it believes it will succeed at growing its Agility platform business this year. It said it had improved sales productivity for the division and the economics now supported rapidly scaling the sales force, notwithstanding a tougher selling environment; “we are now running the numbers through our models to figure out exactly how fast we can go, given our resources”.
Access Intelligence: double-digit H1 growth, slow-down in new business
UK-based Access Intelligence PLC, owner of the Vuelio, ResponseSource and Pulsar businesses, said that revenue for its fiscal H1 2020 to end-May, excluding the recently acquired Pulsar, rose 10% from a year earlier to GBP6.8m (~USD9.0m); including Pulsar, revenue rose 52% to GBP9.4m.
The company said its annualized contract revenue (ACV) base increased 12% in the period, to GBP19.1m.
It also said the group’s “robust” response to COVID-19 disruption prevented a possible impact on client service, product development or the company’s sales and marketing capabilities; “ COVID-19 response measures included GBP1.1m of cost savings of which GBP1.0m will be realised in H2 2020”.
However, company non-executive chairman Christopher Satterthwaite said that a slow-down in new business wins had meant that the Group’s new sales were approximately 19% behind the Board’s expectations at 30 June 2020 and the Group’s ability to generate new business in line with original 2020 expectations remained unclear; “notwithstanding the current environment, I remain confident in the long-term growth opportunities available to the Group as we continue to seek to open new sector and territorial opportunities”.
Sprout Social: strong growth, if at a slightly lower rate
In the social media software segment, US-based Sprout Social reported Q2 revenue of USD31.4m, up 27% on a year earlier, saying that on an organic basis, growth was up 35%.
This compares with Q1 revenue growth of 31% to USD30.5m, with organic growth of 44%.
For the full year, Sprout Social gave revenue guidance of USD128m-USD130.5m as of its Q2 results, an expected overall growth rate of 26% at the mid-point of the range, with an organic growth rate of approximately 33%.
The latest full-year revenue guidance is at the upper half of the range given in Q1 results in May, at an earlier stage in the pandemic; the company also indicated slightly improved expectations for non-GAAP operating loss for 2020 as of its latest results.
Back in February it had issued revenue guidance for the full year of USD131.7m-USD133.7m, at a growth rate of 26%-28%; so its latest view is a modest reduction from earlier expectations, but still an expression of strong confidence in the market need for social media management solutions.
Hotto Link: continued growth in social media solutions
Also in social media solutions, Japan’s Hotto Link reported revenue for the first half of 2020 of JPY1,897m (~USDxxm), up 15.8% from the year-earlier period, with an operating loss narrowing to JPY121m from JPY408m.
For Q1 2020 the company had reported revenue of JPY944m, up 11.9% from a year earlier, and an operating loss of JPY112m, compared with a year-earlier loss of JPY147m.
The relative performance over the two quarters again indicates a solid market for social media solutions.
Chris Porter is an Associate at Burton-Taylor International Consulting, Part of TP ICAP Group, where he is responsible for research and analysis covering the Media Intelligence/PR Software & Information industry.
Burton-Taylor International Consulting offers unique insight into the global Media Intelligence/PR Software & Information Industry. For Burton-Taylor’s detailed analysis of expected COVID-19 impact on the Media Intelligence industry, click here. For Burton-Taylor’s latest report analyzing M&A trends in the Media Intelligence industry over the last 10 years and more, click here.