Isentia’s woes continue in face of declining spend and increased competition
The woes of media intelligence group Isentia have deepened, with the ASX-listed company reporting a $22m operating loss for the first half of the 2019 financial year.
Isentia, last year’s worst performer among ASX-listed media and marketing companies, reported EBITDA moving from a $11.4m surplus last year to a $12.8m loss this year.
The company’s Australia and New Zealand operations saw a 10% fall compared to the previous year, to $44.7m.
Despite the income fall and the restructuring of the business under former Yahoo Australia boss Ed Harrison, who appointed as CEO last September, the group’s operating costs only fell 0.3% to $51.2m.
Isentia boss Ed Harrison
In a statement to the ASX, Isentia’s directors said: “ANZ revenue declined compared to previous period due to lower SaaS sales reflecting macro media trends (lower press and broadcast volumes) and increased competition (price erosion and customer churn). However, ANZ Value Added Services (‘VAS’) revenue proved resilient despite a reduction in the SaaS base of ANZ.
“Asia revenue was marginally higher compared to the previous period due to growth in SaaS revenue. Mid to high single digit revenue growth in South East Asia was offset by a disappointing performance in North Asia.”
The group also impaired $22.25m of previously recognised intangible assets, including $18.9m in goodwill and wrote off $2.9m of its internally developed software platforms.
I’ve previously worked under Ed, publisher side. Whilst he’s a nice guy, he now has three companies behind him (in a row) which have failed by losing market share, under his leadership. Fairfax, Yahoo!7 and Isentia.
Regardless of current industry environments and competitive challengers, strong leadership should know how to strategically plan for changes like the ones he’s faced. Sadly, this hasn’t happened.
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Absolute downhill since the purchase of King Content. All smoke and mirrors. Such a bad decision
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I don’t disagree with your thoughts on the outcomes for the three media companies but they were all very tough businesses to fix so good on him for trying.
Secondly, if you are going to make a negative comment then please use your own name. My assumption is that Ed is a more capable and strategic person than you are.
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Hey Anonymous, I’ve also worked under Ed – he’s a fantastic operator. He had the worst media job in Australia running Y7 while Seven pulled out all its content, and he’s been with Isentia for two minutes. Surely he needs another year’s results before we can start to judge his performance?
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Such a shame to see a once great company turn to absolute custard.
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The loss is driven by the $22.25m ‘impairment of assets’.
If there was no ‘impairment’ there would have been a modest profit of $170k which would have represented a $4.175m turnaround.
They also get to bank some more carryover tax losses for future years.
It feels like it’s a ‘draining the swamp’ set of figures to make next year look a lot brighter. Don’t underestimate Ed.
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iSentia is one of those businesses you just feel is ripe for a takeover and turnaround.
– Strong underlying idea
– Out of date processes to execute
– Legacy M&A challenges dragging down the share price
If they just refocused and modernised the processes (probably replacing a lot of OPEX with technology in this case) it could be an interesting business again.
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Don’t get me wrong about Ed. Ed is a nice guy and I respect his charismatic leadership style but look at what he has done at Isentia so far. Most of the new Isentia executives he hired are from Fairfax i.e. they have worked with him in past. And my god that was some costly affair (1.5M in additional cost as mentioned in the H1 financial report) and he could not find anyone more suitable for these jobs. Both Yahoo7 and Fairfax, all Ed did was taking credit for someone else work.
Forget about a turnaround, none of the new executive or existing team members including Ed have any real experience with a SaaS product and leading the growth. Just look at their LinkedIn profiles. Even with Jen, their new CPO, I hardly see any real product success story to back her experience. It’s one thing to consult how to build a product and another to really build products for growth and turnaround. Unfortunately, if one makes the same mistake thrice I have to question their ability and experience.
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Churn is still not fixed so the biggest challenge is not accounting but revenue growth and client stability. Isentia may be able to improve EBITDA marginally due to cost-cutting initiatives but any projection for EBITDA growth seems overoptimistic.
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Good luck to Ed, He has replaced most of the executives but were the company is suffering and has been for years is in sales and account management. Isentia was successful as it was the default service clients used. Competition has finally come in and unfortunately the sales teams are full of people who have been hanging around resting on their laurels so the requirement for them now is to actual get and retain new business, they don’t have the will or skills for that part of the sales cycle. Surprising the only exec Ed hasn’t replaced is the one in charge of sales. His Bio sales he’s been there 15 years, when it was mainly gravy. The business is hungry but the sales teams are bloated.
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