Q&A with Ed Harrison: Isentia’s ‘simplified’ future in a complex world

INTERVIEW:
Ed Harrison, CEO, Isentia (EH)
Vivienne Kelly, editor, Mumbrella (VK)

VK: What should the market’s key takeaway be from your financial results results?

EH: Ultimately we’re really pleased, and what we’re seeing is we’re starting to see the benefits of 18 months plus of hard work since I arrived and created a new executive team, and the result we have put out is very much in line with our guidance that we provided back in November.

So all of that is good for us…. You’ll see that the EBITDA line is just marginally lower year on year. Our revenues are down, but we’ve been able to [stabilise] our cost base to offset the majority of that decline, so I guess the other call outs would be that we’ve got very varied reports across the group. It ranges from double-digit growth in south-east Asia to a very challenging market in north Asia including the unrest that’s occurring in Hong Kong, and then the Australian market just on an ongoing basis is really in a competitive phase at the moment, so some pressure on pricing revenue in Australia.

So those I think would be the sort of main highlights there. Probably worth noting that we got debt down significantly over the year – obviously we’ve been carrying quite a bit of debt for some time, so we’ve reduced that by almost $10m in the course of the year – which we’re really pleased with.

An overview of Isentia’s recent financial results (Click to enlarge)

And then, beyond the financials, we’re just starting to see our full-year strategic roadmap delivering. So we’re investing in technology. Were investing in product. We’re putting in the region of $10m per annum into capex, and that’s allowing us to create new products and new services for clients, so we’ve got a great new mobile app thats delivering real-time content to our clients. We’ve launched a new reputation product that allows clients to mange reputation in a very different way to that that’s done traditionally. So a whole significant pipeline of product coming through…

But ultimately that media portal is the key product. It’s the largest media intelligence platform across APAC and most-used platform across APAC, and we are making a lot of change to that platform, so we’re getting new data sources in, we’ve got a whole set of analytics tools in there, and we’re seeing that customers are more engaged in using the platform than they ever have been before.

So I think that’s probably all the things that we’re most pleased with.

VK: There was an interesting discussion during HT&E’s results, where obviously a lot of media companies are under pressure with factors outside of their control in terms of the economy and unrest in Hong Kong, and the bushfires and coronavirus… and some of the investors on the HT&E call were questioning whether the market at the moment is suffering from a cyclical decline or a structural decline in media. Which one do you think it is?

EH: That’s a pretty tough question to answer.

We’re in a very different space. We’re not a traditional media company. There’s undoubtedly structural shifts for traditional media companies, but that’s not us. We run across all media channels including social media, so a huge part of our business is dealing with emerging social media platforms. So as media transforms and changes, that’s actually a larger opportunity for us. What we’re trying to do is make sense of that for clients, and there is more data, there is more noise, we’re really following all of the conversations occurring outside of their organisations. And as that dynamic plays out, there’s growing need for services like ours that make sense of all of that.

Isentia has turned a corner, according to Harrison

Our business is not experiencing the structural [change] the same way as traditional media businesses. Obviously those macro, those economic factors, yes, that may well impact us. But we’re very different from those for want of a better word ‘traditional’ media companies.

VK: There was a time a little while back where the sentiment certainly was that Isentia was in trouble. Do you think you’ve turned that reality and that perception around?

EH: Absolutely.

So, you can see it in the numbers.

Isentia’s half-year financial results (Click to enlarge)

So I think two main things. One is the reduction of debt over the period. So $10m reduction in one year. So, very manageable debt level. And then what we’ve been able to prove as well is the efficiency we can create in the business. So we’ve invested in a lot of automation. For example, the print part of our business, so ingesting and determining relevance within print media, was only a short time ago 80% human and 20% machine, that’s now the other way around. So that process is largely automated, and we’re moving quickly to a world where that will be 100% automation. And we’re looking at other content or data pipelines for similar changes, so broadcast will follow a similar route. So that just means that our cost base is coming down, we’ve been able to reduce debt, so we’re in a good spot.

VK: And what about looking forward to 2020? There’s obviously a lot of headwinds that you alluded to before with coronavirus and unrest around the world. How optimistic are you about the rest of 2020?

EH: We’re not broadly calling unrest around the world. We have a very narrow specific issue in the Hong Kong market that’s certainly impacted. That is one of our larger operations across Asia. So that has a unique impact in that market. As things stand, we’ve not seen an impact of COVID-19 at all on the operations. We’re obviously keeping a very close eye [on it]. But again we’re not seeing an impact of that flowing through as yet.

The only place we see structural decline is the Chinese market, an that is unique for us because we largely focuse there on more traditional media channels, and we don’t have quite the same social media footprint that we do in all of our other markets. So we do experience that impact in north Asia, in China specifically.

VK: What else is in the pipeline for you in 2020? I know you mentioned a lot around the media portal, are there any other developments on the horizon, or are you working on perfecting what you’ve got?

So the big strategic development is moving the entire business onto the single platform. At the moment we have a number of different platforms across the region. So Media Portal will become the single platform. And we are largely investing in social media analytics tools within that platform. Sp that’s really the growth area for us, is investing in those social media analytics tools within Media Portal. So that’s what we’re [doing with] our products.

We have a continuous roll out of what we call out ‘Insights’ products. So these are the human-created insights. We have a large research team. We are not just a technology business. We have a large team of people that work on behalf of clients in research and understanding media, and we’re looking at new products in that space as well.

Harrison: We’re not just a tech business

So I mentioned the reputation product. It’s really disruptive product. And typically, organisations have measured reputation through surveys exclusively. What we’re now doing is bringing in social media data that signals into that, so you can look at what people are actually saying, rather than how they respond to survey. So a really interesting new product. There’ll be more of those types of products rolling out as well.

So that’s the consumer end, or the client end, and then in the back end, just as importantly is the automation that I talked about before, so increasingly AI and machine learning allowing us to reduce the labor costs and also speed up, so what a lot of clients will see is increasing speed coming from our products as we automate more and more of those services.

VK: Obviously a few years ago you had the King Content acquisition and then the disposal of that? Do you have any desires to give diversification like that another go?

Look, at the moment the focus is very much on the core of our business. We were quite deliberate about that when we put the strategy out a little over a year ago. And so that really remains our focus, is core media intelligence products and managed services.

We think that that market is significant in size, with lots of opportunity for growth, particularly across Asia and south-east Asia. So if you look at south-east Asia, increasingly we’ve got growing sophistication of PR and comms disciples in those markets, increasing appetite for needing to understand the data in this space, and a lot a lot of multinationals that are operating in the region looking for multinational partners. And we’re one of very few, or really the only significant APAC player. So all of those things play to our advantage.

Vivienne Kelly

Vivienne Kelly was previously the editor of Mumbrella from 2016 to August 2020.

topics Ed HarrisoniSentia

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