Reach Confident of Full-Year Performance Amid Digital and Print Stability

Key Points:

1. Digital revenue increased by 2.5% in Q3 2024, despite a 5% decline in page views.
2. Data-driven revenues grew by 10% and now represent 46% of digital income.
3. Reach plc remains confident in delivering its full-year financial expectations, bolstered by cost savings and strategic growth initiatives.

Reach plc (LSE:RCH) has provided a trading update for the third quarter of 2024, covering the three months up to September 30. The company remains optimistic about its full-year performance, driven by solid digital revenue growth and sustained print circulation income. Despite challenges in the wider media landscape, Reach plc continues to capitalize on its strategies in both digital and print sectors, keeping costs in check and maintaining robust advertiser relationships.

Digital Revenue Growth and Strategy

One of the key highlights of the third quarter was the 2.5% year-on-year growth in digital revenue. This increase came despite a 5% decline in page view volumes, which was compensated for by a higher yield from digital trading activities. As previously noted, advertisers had shifted some of their spending to June and July in alignment with high-profile events such as the European Football Championships. This shift in advertising expenditure had a positive impact on digital revenues during the earlier summer months.

A crucial element of Reach's digital strategy has been its Customer Value Strategy, which focuses on driving higher levels of data-driven revenue. This approach has proven effective, with data-driven revenues increasing by 10% and now accounting for 46% of the company’s total digital revenues, up from 43% in FY23. By leveraging customer data, Reach has been able to provide more targeted and valuable advertising solutions for its partners, helping to enhance the overall effectiveness of its digital offerings.

Print Revenues and Stability

Despite the ongoing industry-wide shift towards digital consumption, Reach plc's print division continues to show resilience. Circulation revenues have remained stable, aided by strategic cover price increases and strong promotional activity designed to counteract the volume declines. This balanced approach has allowed Reach to maintain predictable print revenue streams.

Print advertising also continues to hold strong, with demand from retailers providing a solid boost. Reach’s ability to manage volume declines while capitalizing on print advertising opportunities has helped the company offset some of the broader challenges in the print media sector. While the print industry continues to face long-term headwinds, Reach's proactive strategies have ensured that it remains a key revenue contributor for the company.

Outlook for Q4 and Beyond

Looking ahead, Reach plc remains confident in delivering its full-year expectations. The company is closely monitoring the ongoing impact of changes made by tech platforms, which have affected referral volumes. Despite this, Reach expects to see further digital growth in the fourth quarter, as it continues to refine its digital strategies and build on the momentum from Q3.

On the cost management front, Reach is performing slightly ahead of its initial savings target of 5-6%, set at the beginning of the year. This diligent focus on cost efficiency has provided the company with greater flexibility to navigate the evolving media landscape while maintaining profitability.