Media business Time Out (TMO:AIM) has been splashing the cash to drive strong e-commerce growth as it continues to transition its business from listings to transactions.
The company has a global distribution network, including magazines and mobile apps, which it aims to monetise through digital advertising and commission for online bookings.
E-commerce sales soared 57% to approximately £7.3m in the year to 31 December, driven by higher revenues from affiliate sales, offers and live events.
Overall sales are up 19% to £44.4m on the back of 12% underlying growth and a boost from franchisee acquisitions in Australia and Spain.
HIGHER COSTS FOR DIGITAL GROWTH
Time Out’s strategy is taking a toll as higher costs to acquire more consumers and develop the digital business led to a £14.2m loss in earnings before interest, tax, depreciation and amortisation (EBITDA) last year, widened from 2016's £10.6m EBITDA loss.
Berenberg analyst Benjamin May is optimistic Time Out has more to offer. He says the opening of markets in New York and Miami will ‘contribute modestly’ to sales this year, but will require an incremental £6m of capital expenditure in 2018 with a small drag on profitability.
‘On a multi-year view, the market business alone has scope to deliver c£15m of EBITDA across the five sites - Lisbon, New York, Miami, Chicago and Boston,’ comments the analyst.
He flags Time Out is encouraging more people to book tickets for events through its site as the conversion rate from unique monthly visitors is currently 1.2%.
