Isentia shares smashed as content division reports revenue drop for first half
Shares in Isentia plummeted by 26% on Thursday after the company revealed King Content, which it acquired for $48m a year ago, projected a loss of $2m for the division in the first half the 2017 financial year.
The media monitoring and content business has also announced it has begun searching for a replacement for former King Content founder and CEO, Craig Hodges, who has been named executive chairman, with Isentia CEO John Croll blaming strategic decisions made in the division for a “loss of momentum”.
The market savaged Isentia shares following the announcement, despite the company reporting a 23% year-on-year revenue increase to $156m, with an underlying net profit after tax up 16% to $33m.
Shares dropped from Wednesday night”s close of $3.25 to finish at $2.38 at the close of trade on Thursday after the market update was delivered at the AGM.
CEO John Croll told the AGM that the outlook for core parts of the business for FY2017 were strong, but criticised decision making in the content marketing division.
John Croll: King Content ‘lost revenue momentum’
“Content marketing, (representing approximately 7% of FY16 EBITDA), lost revenue momentum due to decisions made in regards to strategy, new business development and client retention in FY17,” Croll said.
“These decisions will see content marketing report an EBITDA loss in the range of $2m in FY17 H1 with a positive contribution for the full year.”
Croll said that management initiatives which aimed to regain the content marketing revenue pipeline included the implementation of a new organisational structure, with the search for a CEO now underway after King Content CEO Craig Hodges was moved to the chairman’s role.
Isentia will also integrate the King Content sales team with Isentia’s team.
Croll projected that Isentia’s full year 2017 first half EBITDA would be below the corresponding period, but full year revenue growth would be in the “high single-digit range”
“For the three years beyond FY17, Isentia’s 2020 strategy is expected to deliver strong revenue and earnings per share growth.”
Unbelievable, always thought the King Content story was too good to be true. Isentia were suckered
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Ahhhhh…..first Brand New Media, now King Content. Common themes being seen here.
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Who did the due diligence on that deal?!? Must be hiding in a hole somewhere…
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