Nine’s FY22 earnings reveal highest ever group EBITDA and leading FTA ad market
Nine Entertainment Co. (ASX: NEC) has released its results for the FY to June 2022, reporting revenue of $2.7 billion and the highest ever group EBITDA Nine has seen.
Nine reported net profit after tax of $315 million, in addition to strengthened audience numbers across its key platforms.
Group EBITDA of $701 million equated to growth of 24%, ahead of first half growth of 15%, and slightly ahead of the `more than 22%’ guidance given in February.
EBITDA was up 24% on the previous corresponding period, reflecting the continued momentum of FY21.
Stan, Publishing and Radio saw strong performances, with the segments reporting EBITDA growth of 22%, 53% and 81% respectively.
22% revenue growth at Stan was driven by a 9% increase in ARPU. There was an increase in active Stan subscribers (currently more than 2.5 million) and strong growth in Stan Sport subscribers.
Mike Sneesby, Nine CEO said: “At Stan, we have continued to grow ARPU and revenues, and have remained clearly profitable, and cash flow positive, notwithstanding key investments in Sport, Events and Original content. In Radio, we have refocused and strengthened our underlying business while building our audiences, most notably our Digital audiences – 27% of our listeners used a digital device to access our content during the June half. And we have reset the profitability of our Publishing business, growing audience reach and subscribers through targeted investment in the product.”
38% growth was seen in Domain’s (ongoing) EBITDA, leveraging the stronger property market.
Despite macroeconomic headwinds, Sneesby was confident in Nine’s ability to weather the storm and see continued growth in diversified revenue streams.
“Whilst broader economic factors are beginning to impact some areas of the market, Nine’s strong competitive position and balance sheet stands us in good stead. We have successfully diversified our earnings base, with more than 30% of our revenue now from subscription and licensing. Moreover, across all of our advertising-based businesses, we are confident that we will continue to grow our share, reflecting our content and distribution capabilities, as well as our focused approach to sales and the associated use of our extensive data pool,” he said.
Nine’s Broadcast division (comprising of Total Television – Nine Network and 9Now – as well as Nine Radio) together reported EBITDA of $401 million on revenues of $1.37 billion for the year.
Across Total Television, revenue increased by 10% and EBITDA by 19%, with strong growth across both Nine Network and 9Now.
The metro free to air advertising market was up 9% for the year, and 4% in the second half.
Nine recorded a market-leading full year Metro FTA revenue share of 38.2%, attracting a commercial network share of 38.4%.
In the YTD to June 2022, FTA EBITDA increased by 14% to $285m, Nine’s highest ever reported FTA profit.
Positive results were seen at Stan, with current active subscribers up 6% year-on-year and increasing on February 2022.
In Q4, average active subscribers to Stan Sport were more than 150% higher than the same quarter last year.
Stan’s $29 million EBITDA ‘reflected a period of strategic investment’, primarily Stan Originals and Sport.
Digital subscription and licensing revenue increased 66% across the year, driven by double-digit growth in subscription revenue as well as revenue from digital platforms of Nine’s mastheads – The Sydney Morning Herald, The Age and the Australian Financial Review.
Publishing reported combined revenue of $594 million and EBITDA of $180 million, which was up 53% on FY21.
Advertising revenue from Nine’s Publishing assets recorded growth of 10%, both in digital and print.
Publishing costs increased by 7% – $27 million – with approximately half of this figure related to increases in staff and production costs, and the remainder reflecting Nine’s ongoing investment in publishing content.
Nine also announced an intention to buy-back up to 10% of issued capital on market.
Peter Costello, Chairman of Nine said: “2022 has been a record year for Nine, on many levels. From a profit perspective, we have reported the highest ever Group EBITDA as well as Total TV and Publishing EBITDA and margin. At the same time, our ambition to accelerate profitable growth from our digital businesses is being realised, with more than 50% of EBITDA now attributed to our digital expansion, tracking ahead of the long-term targets we have previously communicated. For our shareholders, from our FY22 profit, we have also paid or announced a record, fully franked dividend of 14 cents per share”.
For the remainder of FY22 and looking ahead to FY23, Nine’s investments will be targeted across its key platforms, with cost inflation expected to impact its headcount expenses.
Nine is expecting H1 FY23 Group EBITDA of $380 million -$400 million, in addition to continued growth of its subscription business and Domain.
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