Exchange: LSE | Sector: Technology | Industry: Media Entertainment
Q4 2024
Published: Sep 13, 2024
Earnings Highlights
Revenue of $142.21M down 15% year-over-year
EPS of $-0.22 decreased by 1% from previous year
Gross margin of 100.0%
Net income of -36.28M
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Manchester United plc (0Z1Q.L) QQ4 2024 Results – Tech-Driven Media & Entertainment Platform Delivers Revenue Resilience Amid Strategic Investments
Executive Summary
Executive Summary: Manchester United plc reported Q4 2024 revenue of GBP 142.21 million with a gross profit of GBP 142.21 million, yielding a gross margin of 100% in the quarter driven by licensing and media rights activity. Despite the top-line resilience, the company posted an operating loss of GBP 32.41 million and a net loss of GBP 36.28 million, primarily reflecting ongoing investments and non-cash amortization rather than a decline in cash generation. EBITDA stood at GBP 20.70 million with an EBITDA margin of approximately 14.55%. The company generated robust operating cash flow of GBP 125.86 million and free cash flow of GBP 118.97 million after minimal capital expenditure of GBP 6.89 million, contributing to a cash balance of GBP 73.55 million at period-end. Total debt remained elevated at GBP 555.26 million, with net debt of GBP 481.71 million, signaling a high-leverage balance sheet aligned with strategic investments in direct-to-consumer, media rights, and global merchandising.
The quarter sits within a broader portfolio of four quarters that show volatile revenue and earnings trajectories as the group continues to invest in growth initiatives, including digital platforms and international distribution of Manchester United content. While profitability remains pressured on a GAAP basis, the positive operating cash flow and strong working capital performance underscore a cash-generative core that supports ongoing investments and debt servicing. Investors should monitor the pace of debt reduction, cadence of rights renewals, and the monetization trajectory of direct-to-consumer offerings in a competitive media and sports rights environment.
Balance Sheet and Liquidity:
- Cash & Equivalents: GBP 73.55m
- Total Debt: GBP 555.26m; Net Debt: GBP 481.71m
- Total Assets: GBP 1,344.79m; Total Liabilities: GBP 1,199.90m; Total Stockholders’ Equity: GBP 144.89m
- Current Ratio: 0.36; Quick Ratio: 0.35; Cash Ratio: 0.15
- Return on Equity: -25.0%; Debt to Equity: 3.83x; Debt to Capitalization: 0.793
Cash Flow and Working Capital:
- Change in Working Capital: GBP 120.58m; Accounts Receivable: GBP 18.07m; Other Working Capital: GBP 102.30m
- Free Cash Flow Yield and Cash Flow from Operations indicate a cash-generative core despite near-term profitability pressures.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
142.21M
-15.01%
4.04%
Gross Profit
142.21M
7.41%
17.37%
Operating Income
-32.41M
-12 366.54%
51.07%
Net Income
-36.28M
-1 141.90%
49.26%
EPS
-0.22
-1 129.05%
48.84%
Key Financial Ratios
currentRatio
0.36
grossProfitMargin
100%
operatingProfitMargin
-22.8%
netProfitMargin
-25.5%
returnOnAssets
-2.7%
returnOnEquity
-25%
debtEquityRatio
3.83
operatingCashFlowPerShare
$0.76
freeCashFlowPerShare
$0.72
priceToBookRatio
14.77
priceEarningsRatio
-14.74
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Transcript Highlights: The earnings transcript data was not provided in the input. As a result, this section synthesizes management commentary themes and potential implications based on the reported results and typical market discourse for a technology-enabled media and entertainment platform. If a transcript becomes available, we will add direct quotes and group them by themes (strategy, operations, market conditions) with context and significance.
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Forward Guidance
Forward Guidance: No explicit forward guidance was included in the provided data. Given the strategic focus on digital platforms, direct-to-consumer (DTC) monetization, and international media rights, investors should monitor: (a) cadence of investments versus cash generation in the DTC app and MUTV platform, (b) renewal and pricing dynamics of Premier League/UEFA rights and other licensing agreements, (c) progress on deleveraging and debt-servicing capability, and (d) potential upside from merchandising and e-commerce breadth. Our assessment of achievability hinges on continued cash generation from operations and the company’s ability to balance investments with debt reduction in a volatile media-rights environment.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
0Z1Q.L Focus
1.00%
-22.80%
-25.00%
-14.74%
BIRG.L
1.00%
52.50%
2.77%
6.45%
JVTSF
0.00%
0.00%
0.00%
0.00%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Investment Outlook: The QQ4 2024 results display a cash-generative core with robust operating cash flow and meaningful free cash flow, even as GAAP profitability remains negative due to ongoing investments and amortization. The balance sheet remains leveraged, underscoring the need for disciplined deleveraging while continuing to invest in growth avenues such as DTC, digital content distribution, and international rights. Relative to peers and industry benchmarks, the company commands a premium on valuation metrics such as price-to-sales but carries material earnings risk that could compress multiples if rights markets turn adverse. The key catalysts for upside include successful monetization of DTC streams, favorable rights renewals, and a clear debt reduction path. The downside risk centers on rights-cost inflation, currency fluctuations, and macro headwinds that could dampen sponsorship and consumer spend. Overall, the investment thesis rests on the ability to convert brand strength and content rights into durable, cash-generative growth while steadily reducing debt over the next 12-24 months.
Key Investment Factors
Growth Potential
Direct-to-consumer monetization expansion via MUTV and the mobile app; growth in global merchandising and licensing revenue; broader international media rights deals and digital distribution
Profitability Risk
High leverage and debt load; reliance on volatile sports-rights market; regulatory and macroeconomic risks; currency exposure in GBP; potential volatility in consumer discretionary spending
Financial Position
Cash generation remains solid from operating activities; positive free cash flow supports investment spend and debt servicing; near-term profitability pressured by non-cash items and investments; liquidity metrics show modest cushion against short-term liabilities
SWOT Analysis
Strengths
Global brand with a devoted fan base and universal recognition in football and entertainment
Diversified revenue streams including licensing, merchandising, media rights, and DTC offerings
Strong cash flow generation from operations supporting ongoing investments
Weaknesses
Significant indebtedness and high leverage (Debt to Equity ~3.83x)
Negative GAAP net income despite robust revenue
Profitability headwinds from investment cadence and amortization
Opportunities
Expansion of DTC platforms and international streaming/distribution
Upside from refreshed merchandising programs and e-commerce partnerships
Renegotiation/renewal of high-value media rights with potential favorable terms
Threats
Volatility in sports-rights pricing and renewals
Regulatory scrutiny and potential tax or licensing changes
Macro uncertainties impacting consumer spending and sponsorship
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