Pre-tax loss for musicMagpie as revenues dip in first half

musicMagpie has hailed the firm’s “strong performance” for the six months to May despite a drop in revenue and profits.

The Stockport-headquartered business has said its interim revenue for the six months to the end of May 2022 was £71.3m, down from £72.8m for the same period in the previous year while its adjusted EBITDA was £2.6m, down from £6.2m.

It also reported an adjusted pre-tax loss of £700,000, down from a profit of £4m for the same period in 2021.

The group said growth in Consumer Technology largely offset “the expected post-pandemic” reduction in Disc Media and Books.

Consumer Technology revenue including subscriptions, was up 15.9% to £46m while Disc Media and Books revenue fell 23.6% to £25.3m with the prior year H1 benefitting from pandemic lockdowns.

The group also committed to a three-year £30m revolving credit facility with HSBC UK and NatWest signed post period end to drive future Rental growth. 

musicMagpie said while the current economic environment remained uncertain, it expects to grow its Consumer Technology segment, which represents 65% of Group revenue, in the second half of the year from its growing base of rental subscribers.

In addition it expects continued sales revenue growth from its recent expansion of ‘marketplace’ sales through a new partnership with Back Market, and from additional listings with long-term partners such as Amazon.

The Board continues “to be confident that the business is well positioned for future growth” and Adjusted EBITDA remains in line with its expectations for the full year.

Steve Oliver, CEO of musicMagpie, said: “I am pleased that the business has delivered a strong performance in our strategically important Consumer Technology division, which now represents two-thirds of our total revenue.

I am also delighted with the progress being made in our device rental subscription service. In light of the continuing squeeze on consumer spending, we believe that this will become an increasingly attractive option to a wider range of consumers seeking to replace their non-discretionary technology products in a cost-effective way.

“Whilst the successful growth of this offering has a short-term compression on the financial performance of the business relative to a one-off sale, it will deliver higher revenue and EBITDA over the life of the device.

“It therefore remains our overriding growth strategy for the medium term, and we are delighted to announce HSBC UK and Natwest’s support in the form of a new £30m three-year revolving credit facility to further support our investment in this area.

“Notwithstanding the challenges presented by the current macroeconomic uncertainty, we expect consumers will continue to seek ways to raise cash and save money and as a result, we are confident that the business is well positioned for future growth in H2 2022 and beyond.”