musicMagpie shares fell 9% to 45.5p in early morning trading on Wednesday following a reported revenue dip to £71.3 million in HY1 2022 compared to £72.8 million in HY1 2021.
The technology upcycler confirmed its growth in Consumer Technology mostly offset the expected post-Covid drop in Disc Media and Books demand.
musicMagpie announced Consumer Technology revenue made up 65% of total revenue, with a 15.9% growth year-on-year to £46 million against £39.7 million.
“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,” said musicMagpie CEO Steve Oliver.
Meanwhile, the company’s Disc Media and Books revenue fell 23.6% to £25.3 million from £33.1 million in HY1 as a result of Covid-19 lockdowns.
The circular tech economy group highlighted a gross profit slide to £19 million from £23.7 million, along with a gross margin decrease to 26.6% compared to 32.6% on the back of a change in overall product mix towards Consumer Technology, with a rising proportion sourced from intermediary wholesale partners.
The firm also reported a pre-tax loss of £1.0 million from a HY1 2021 loss of £17.7 million, with a post-tax loss of £3.2 million against £17.7 million in HY1 2021.
musicMagpie noted a net debt climb to £3.3 million against £1.8 million, in line with management expectations.
The company announced an investment into Consumer Technology with rental assets of £3.6 million from £1.4 million year-on-year, and investment in IT platforms of £2.2 million against £900,000 the year before.
The firm also confirmed its new committed three-year £30 million revolving credit facility with HSBC UK and Natwest, signed post-period, in a move to drive future rental growth.
FY 2022 guidance
musicMagpie commented its outlook included an expansion of Consumer Technology, with an expected rise in rental subscribers.
“I am also delighted with the progress being made in our device rental subscription service,” said Oliver.
“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.”
The company added it anticipated growth from its partnership with sales channel Back Market, alongside additional listings with partners such as Amazon.
musicMagpie said it was confident in revenue and EBITDA for HY2 2022, with expected resilience in Disc Media and Books gross margins and sales from Back Market projected to carry the group into a strong HY2 financial period.
“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,” said Oliver.
