Jaywing plc Interim Results September 2024

Jaywing plc (AIM: JWNG), the Data Science and Marketing business, with operations in the UK and Australia, today announces its interim results for the six months ended 30 September 2024 (“H1”).

Financial highlights

Reconciliation of Operating Profit/(Loss) with Adjusted EBITDA

Contributions by Operating Unit

⁽¹⁾ Adjusted EBITDA represents EBITDA before restructuring charges arising from cost saving actions taken in FY25 and share based payment charges

⁽²⁾ Including accrued interest

Operational Highlights

• Group Revenue down 14.9% to £9,452k, driven almost entirely by a weak first half performance in UK Risk Consultancy.

• Adjusted Group EBITDA down by 106.7% at £(88k).

• Australia underwent a period of investment in staff and related costs associated with a second office opening in Melbourne which impacted H1 results. The benefit of this investment is expected to deliver stronger growth in H2.

• New business wins in H1 across all divisions are expected to deliver a stronger second half performance notwithstanding that business confidence in the UK is fragile.

• Ongoing focus on UK cost and cash saving efficiencies including the recent exit from the Company’s Sheffield lease to assist operating cash flow generation

• Full report here

Commenting on the results, David Beck, Executive Chairman of Jaywing Plc, said:

Following the Board and management changes at the beginning of the financial year we have continued to restructure the UK business to bring its cost base in line with its underlying revenues. We have recently exited the lease on our Sheffield office, which has been a significant factor in helping us deliver total annualised cost savings in the UK business of over £1m over the past year. The UK market for our services remains challenging and we have reorganised and simplified the structure of our UK operations into two main operating units and tightened the focus of their respective market propositions and revenue generation capacity.

We have invested in our growing Australian business with the opening of a new office in Melbourne and an increase in staff to service a burgeoning client roster. We have also been successful in winning new business in other APAC territories beyond Australia.

Australia

Jaywing Australia has seen consistent and pleasing revenue growth after a very strong FY24 that saw revenue growth of 28% for the full year, under constant currency. We have continued to build on our significant wins of OES, New Balance and Crocs with all having higher revenues than the previous half year as well as key wins that will flow through to H2 with a stronger end to the year expected. The EBITDA is slightly down on a strong prior year as we ramped up our delivery capability to service the new business won with a step up in monthly revenue expected in the second half of FY25.

UK Agency

The UK Agency results reflect industry wide headwinds, most notably clients delaying or reducing spend and longer onboarding periods for new clients beginning to deliver revenue. These factors have led to a reduction in year-on-year revenue of 4.8% despite good client wins including Yorkshire Tea and OES.

Despite the industry wide headwinds, the Agency has been able to hold Adjusted EBITDA broadly flat year-on-year as we continue to keep a close control on costs including the re-location from our Sheffield office. UK Agency EBITDA per head in the first half was up 25% to £41k.

Decision (our AI-based PPC automation tool) operates within Agency and continues to build, with 14 clients on the platform. It has had particular success for its brand bidding module, which automates bidding on PPC brand search terms to deliver optimum efficiency in paid versus organic search, with demonstrable saving in costs to its clients.

Our heritage in data and AI is well placed in the market and the launch of our Accelerator Lab, which is a hub for cutting-edge AI and data science and is designed to transform data into actionable insights. It brings together data scientists, AI experts, and strategists to develop innovative solutions for modern business challenges. We are continuing to build the client base for our existing suite of award-winning AI-based tools, and continue to bring others to the market, most notably “Comprehend” which enhances organic search performance.

UK Risk Consulting

Whilst we remain confident in the potential of the Risk Consulting sector going forward, the first half year was extremely challenging and delivered a disappointing revenue performance, despite good wins with Northern Trains and Trustly. Several key customer contracts came to an end and new business was slower to come on stream than we had anticipated.

We continue to highlight the advantages of our proprietary tech, most notably Archetype (our AI modelling tool that helps to predict customer behaviour) is gaining traction with customers who are keen to better understand and take advantage of our AI based solutions. We have enhanced our team through the appointment of a new Senior Strategic Partner. We have already seen an improvement in trading since the end of H1 and we now have a strong pipeline of opportunities which give us confidence in our expectations of a much better second half performance. Our risk consultants and analysts continue to provide a fast-paced, flexible and high-quality service that competes strongly in this market sector.

Head Office

Head Office costs consist of Board salaries and fees, listing costs, audit and insurance fees and have been reduced by 20% following changes made to the Executive Board in May 2024 with a continued focus on efficiency.

Net Debt and Cash Flow

Net debt increased by £1,808k since 31 March 2024 to £14,770k as at 30 September 2024, due to an increase in funding and compounding of interest.

During the reporting period the existing loan facility was increased by £1,030,000, which included an arrangement fee of £30,000 payable to the Lenders. These funds were drawn down in two equal tranches in May and June.

Working capital continues to be closely managed with debtor days for the Group increasing slightly from 45 days at the year end, to 47 days.

People

Jaywing has an extraordinarily committed and collaborative group of employees in both the UK and Australia, which is a key factor in enabling us to work through this challenging period and obtain our Great Places to Work certification. Jaywing remains committed to talent thriving and has invested in Leadership Development training and developing our Equality, Diversity and Inclusion practices. We have successfully merged several agency teams together to find better and more integrated solutions for clients. I would like to thank all our employees for their continuing contribution and support.

Outlook

We expect the impact of our focus on costs will begin to be felt in the second half of the financial year, when combined with recent new business wins in our Australian business in particular, we anticipate an materially improved second half performance. The UK market remains challenging against a backdrop of sluggish UK economic growth, and wider geopolitical uncertainties contributing to business confidence being slow to recover, although there is a healthy pipeline of opportunities in both Agency and Consulting for the second half of the year.

The company’s cash position remains tight and is likely to continue to be so for the remainder of the financial year.  If the second half of the current financial year delivers, as we currently anticipate we expect the business to become increasingly cash generative. Our new business pipelines and steps taken to rationalise the go to market strategy and cost base give cause for a degree of optimism. 

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