“Only those businesses with a stronghold in subscriptions and agile digital publishing platforms have resilience in the toughest of conditions,” B2B publisher Aspermont has said, while announcing it will launch a digital meeting-place ‘disruptor’ in the second half of 2020.
ASX-listed B2B publisher Aspermont has released its 2020 half-year results, which are interesting to review given the impact that COVID-19 has had on its publishing and events businesses over the last six months. But more importantly, the company gives some insight into the new direction that the company will pursue, spearheaded by the pandemic.
Headquartered in the UK, Aspermont publishes for the mining, agriculture, energy and technology sectors, and has offices in Australia, UK, Brazil, North America and the Philippines.
Before delving into Aspermont’s 2020 half year results (October 2019 to March 2020) and plans for the future, it’s worth explaining the company’s diversified revenue model.
Over the last four years, Aspermont has focused on growing its revenue in three main areas:
- Premium subscriptions: viewed as the “bedrock” of its business, made up 39 per cent of the company’s reported 2019 revenue.
- Events: seen as lead generation into ongoing premium subscriptions and continued engagement with the company, made up 15 per cent of its previous year revenue
- Media sales: including display advertising, content marketing, lead generation offers, jobs and classifieds revenue, contributed 46 per cent of its 2019 revenue.
This context is important when considering the increase and/or decrease in growth percentages of each business area during the first half of 2020.
Over half (55 per cent) of the company’s revenue is gained from the Australasia region, which has traditionally made up the largest portion of its readership.
However, in the last few years the company has been focusing on North America as a key market, and has grown its audience in the region by 500 per cent to account for 45 per cent of its total audience. Aspermont’s Asia Pacific audience now accounts for 28 per cent of its total.
Aspermont’s 2020 half year revenue results
Like many publishers, the COVID-19 pandemic had a large impact on Aspermont’s revenue estimates for the last quarter.
“[The first half of 2020] has seen disruption in growth momentum due to the impacts of COVID-19. A few specific factors have created material distortion in the reported performance of the business compared with its underlying performance,” the company explains in its half-year report.
In the first half of 2020, subscription revenue remained steady at a 7 per cent growth rate. Aspermont said that its investment in content and technology platforms to establish “premium audience solutions” have contributed to the continued growth, which signals 15 successive quarters of comparative growth in subscriptions revenues.
The demand for independent and reliable content also had an impact on the performance of the company’s subscription revenue.
“In crises such as COVID-19, the importance of being able to access independent and reliable content, in a timely manner, is paramount and by the middle of March we started to see large traffic spikes in our digital audiences,” the company said.
In response to this, in April, Aspermont allowed ‘free-to-air’ provision of COVID-19 related news and other content produced within its premium subscriptions.
Events planned for the quarter had to be postponed to November 2020 due to the coronavirus social distancing restrictions, which led to a 43 per cent decline in event revenue compared to the previous year.
Media revenues were also impacted because of a “deterioration in client budgets and spends”, but still grew by 13 per cent compared to 2019 based on the launch of new products and services, and the company’s move from transactional selling to providing end-to-end marketing solutions for its clients.
The launch of its recent Mining Journal Stakeholder Engagement Programme is a good example of the new solutions that the company provides.
To offset revenue declines, the company identified and executed $2 million of annualised cost-saving initiatives at the end of March, and it plans to execute additional operational savings, alongside the securing of government grants and a proposed small capital raising.
Expected continued impacts of COVID-19
In the second half of 2020, Aspermont said that it expects current lockdown and social distancing restrictions to continue to impact its ability to run live events, and to resume normal office working conditions for its staff who are all working remotely.
“We also expect to see tougher market conditions for media revenues continue throughout the second half and extend debtor days and therefore cash collection cycles, in our subscription business,” it said.
During the second half of 2020, the company is expecting:
- Low to no revenue for the events division
- Single digit growth for media, as opposed to double digits
- Single digit growth for subscriptions, as opposed to double digits.
It is also factoring in a level of cancellations for client marketing campaigns that have been previously booked, although it expects that the impact from this should be low.
Aspermont said that it expects to report an ‘anomalous result’ in its profit and loss report for the 2020 year-end result due to the impact on revenue the postponement of its events will have on its business; lower than expected media and subscription revenues; and, the cost savings it expects to report against last year’s figures given the initiatives it has implemented to combat the business impact of COVID-19.
The publisher believes that the anomalous result will likely affect the 2021 year as well.
“With so much events revenue (and corresponding contribution) shifting from FY20 to FY21; the full year FY20 result will be adversely affected with the expectation of an improved FY21 result,” the company stated in its half-year report.
Longer-term, the company said that it has a “proven model that exhibits resilience in abnormal market conditions such as those presented by COVID-19”.
“Over the past three years Aspermont has delivered consistent growth in revenues, margins and profitability whilst making significant investments to enhance the scalability of its model.
“Subscriptions are the bedrock of the business and are expected to grow for a long time regardless; as they have done on a comparative basis for the last 15 quarters,” the company stated.
How Aspermont plans to adapt to a new media reality
Aspermont said that COVID-19 isn’t the first time that the publishing and media sector has been faced with significant challenges to their business.
“There is no doubt that the Global Financial Crisis in 2008 marked a crossing point for most print publishers and traditional advertising businesses. At that time, ‘new media’ bypassed the traditional formats and took control of large swathes of market share in terms of audience/eyeballs and advertising dollars,” the company said.
“2008 did not however expose a more fundamental weakness in the commercial media model as the COVID-19 crisis is now.
“And that is the undeniable reality; for both new and traditional media providers; that only those businesses with a stronghold in subscriptions and agile digital publishing platforms have resilience in the toughest of conditions.”Aspermont, Half-Year Report.
Aspermont said that it has an advantage in this area, as subscription businesses are not something that can be built overnight; they “must be developed through content quality, framework, process, and technology over decades; with a strength in renewal rates being the enduring results of accrued trust built over that time”.
The company also said that, whilst the current crisis will in no way signal the end of live face-to-face events, the market does now demand higher quality digital solutions to provide it with ‘meeting place’ optionality.
“In our sectors no competitor provides anything of real merit in this digital forum but in [the second half of 2020] Aspermont will launch a disruptor.
“We have been looking to build a digital ‘meeting place’ solution for many years and this COVID-19 period has finally given us the time and impetus to bring one to market,” it said.
The company said that Mining Journal’s recently launched Stakeholder Engagement Programme provides an insight into how well Aspermont is set up for this next phase.
The publisher points to constant innovation, technological agility and organisational adaptability as the key drivers of success, not just over the next six months but the longer term.
“We have spent many years building a newly skilled operational team and never has Aspermont had the technological armoury to execute innovation with the speed and effectiveness that it does today. We adapt with speed and that sets us apart.”
Aspermont’s half year results report can be accessed here.