• Group Revenue: $1.4 billion for the six months to December, up marginally from the prior period.
• Group EBITDA: $268 million.
• Net Profit After Tax (before specific items): $95 million.
• Statutory Net Profit: $96 million, including a net specific item expense of $16 million.
• Digital Revenue Growth: 6% increase across the six months.
• Subscription and Licensing Revenue: More than 30% of total wholly owned revenue, with 8% growth for the half.
• Cost Reduction: $35 million removed from the business, with expectations to exceed previous guidance by $10 to $20 million in FY25.
• Net Debt: Reduced from $489 million to $481 million as of December 31.
• Cash Flow from Operating Activities: $209 million, excluding the Domain group.
• Interim Dividend: Fully franked FY25 interim dividend of 3.05 cents per share.
• Streaming and Broadcast Revenue: $860 million, with nearly one-third from subscription revenue.
• Stan Revenue Growth: 7% increase, with a record H1 EBITDA of $29 million, up 16% from last year.
• Publishing Revenue: $268 million, with a combined EBITDA of $74 million.
• Digital Subscription Revenue Growth: Approximately 15% increase.
• Domain Revenue Growth: 14% growth in EBITDA, with 12% growth in core residential business revenues.
• Audio Revenue Growth: 2% total audio revenue growth, with a 50% rebound in Radio EBITDA.

• Warning! GuruFocus has detected 9 Warning Signs with NNMTF.

Release Date: February 24, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Nine Entertainment Co. Holdings Ltd (NNMTF) reported a 6% growth in digital revenue across the six months, driven by platforms like 9Now, Stan, Domain, and Drive.
• The company successfully delivered major events such as the Olympics, Paralympics, and the Melbourne Cup, generating over $160 million in revenue from the Olympics alone.
• Subscription and licensing revenue now account for more than 30% of total wholly owned revenue, with an 8% growth for the half.
• Nine Entertainment Co. Holdings Ltd (NNMTF) has embarked on a transformation program, 92,028, aimed at strategic and cultural transformation, focusing on cost efficiencies and revenue opportunities.
• The company announced a fully franked FY25 interim dividend, reflecting a strong financial position with a solid balance sheet and leverage of around 1.4 times EBITA.

Negative Points

• The absence of meta revenues and a challenging free-to-air advertising market posed headwinds to reported numbers.
• The cost base was higher this half due to the Olympics and Paralympics, impacting overall profitability.
• Print advertising declined by 14%, reflecting softness in the travel, business, and luxury goods sectors.
• The programmatic advertising market remains weak, affecting the publishing segment's performance.
• Radio broadcast advertising revenue is expected to decline in the low mid-single-digit percentage in the upcoming quarter.

Q & A Highlights

Q: Can you confirm if Nine Entertainment has capital losses of $19 million that could offset any CGT related to Domain? Also, what is the strategic value of Domain to Nine Entertainment? A: Yes, Nine Entertainment has capital losses of $19 million. Domain holds strategic value as it synergizes with Nine's digital growth, especially as the business becomes more digital. However, it's too early to comment further on the Domain proposal. (Matt Stanton, Acting CEO)

Q: What factors are driving the turnaround in the TV ad market from the first half to the third quarter? A: The market sentiment has improved, and strong audience performances, particularly from events like the Australian Open and Married at First Sight, have driven growth. The team has also improved in selling premium assets, learning from the Olympics. Easter timing will have a few million dollars impact between quarters. (Matt Stanton, Acting CEO)

Q: How do you view the ad revenue potential for Stan, and could it reach 10% of the revenue base over time? A: There is significant opportunity in the broader digital video market, and Stan is well-positioned to capitalize on this. The introduction of ads in Stan Sport is a step towards tapping into this potential. (Matt Stanton, Acting CEO)

Q: Can you provide more details on the $100 million cost efficiencies and whether this is a gross or net number? A: The $100 million is a gross number, excluding Olympic costs. While there will be some investment in areas like Stan and streaming, the focus is on strategic moves such as content commissioning and marketing efficiencies. (Matt Stanton, Acting CEO)

Q: With the new operating model, how does the shift from platform-led to consumer-led strategy lead to more revenue? A: The consumer-led approach focuses on providing a first-class experience, ensuring content is personalized and accessible across platforms. This enhances advertising results and monetization opportunities across advertising, subscriptions, and marketplaces. (Matt Stanton, Acting CEO)

For the complete transcript of the earnings call, please refer to the full earnings call transcript.