Shares of Stockport-based musicMagpie rose as much as 20% on Thursday after it published a strong trading update for the full year ended November 30, 2023, including a record Black Friday period helping to off-set a softer first half of the year.
On November 27 musicMagpie shares fell about 15% after it was announced that BT Group plc did not intend to make an offer for musicMagpie. This followed news that private equity firm Aurelius Group also announcing it did not intend to make an offer for musicMagpie.
musicMagpie shares remain down 44% year to date.
The Stockport firm went public in 2021 at 193p but its shares have since fallen more than 93% to about 13p.
musicMagpie allows consumers to buy, rent and sell refurbished consumer technology.
“Full year revenue is expected to be £136.6m (2022: £143.3m), with a record Black Friday period helping to off-set a softer H1,” said the trading update.
“Consumer technology revenues for H2 were up 7.5% over the same H2 period in 2022, and for the year were £95.4m (2022: £96.6m).
“Overall gross margin was 27.7% (2022: 26.2%) as the group continued to focus on margin expansion as opposed to revenue growth.
“As a result of the gross margin increase and ongoing tight cost control, as well as the strong end to the year, EBITDA is expected to be up 15.4% at £7.5m (2022: £6.5m).
“The number of active rental subscribers grew by 21% in the year reaching 37,100 as at 30 November 2023 (30 November 2022: 30,500).
“Total rental revenue for the period was £8.3m, up 57% (2022: £5.3m).
“The group continues to segment the rental offering to those customers with higher credit ratings and a greater propensity to renew and intends to maintain this managed approach to the subscriber base for the foreseeable future.
“Net debt as at 30 November 2023 was £13.1m (31 May 2023: £13.6m) and benefitted from management’s focus on cash versus rental growth.
“Leverage at 30 November 2023, being EBITDA to net debt, was 1.7x (31 May 2023: 2.0x).
“Net debt is mitigated by future contracted rental revenue of £3.6m and rental assets on the balance sheet with a net book value of £7.7m.
“It also continues to be supported by the £30m committed RCF facility provided by HSBC and Natwest, due for renewal in July 2026.
“Whilst the challenging consumer environment and inflationary pressures continue, the board is encouraged by musicMagpie’s H2 performance and remains confident in the Group’s strategy and in its medium-term prospects.”
musicMagpie CEO Steve Oliver said: “We are pleased with the performance of the group in the second half of the year, and are delighted that our focus on profits and cash has delivered significant EBITDA growth.
“Our strategy of proactively managing the number of active rental subscribers has also helped in this regard and will support our short-term objectives on profits and cash into 2024, bolstered by an enhanced Buy Now Pay Later offering.
“I remain confident in the business and our ability to navigate the difficult external market conditions, especially given the outstanding level of trust that consumers continue to have in our brand, as demonstrated by our excellent 4.4 Trustpilot rating based on over 277,000 reviews.”