Company Interview / Infomedia's global expansion plans

Key topics discussed:

Infomedia's (ASX: IFM) earnings report highlight a rise in earnings, revenue and net profit.A strategic review of Infomedia's global operations underscoring advancements in cybersecurity measures and solid partnerships in China with OEM businesses focusing on electric vehicles. Infomedia's financial standing with its increased dividend payouts and plans for future investments and acquisitions to boost its global market presence.

Jens Monsees, CEO of Infomedia, shares his company's recent earnings report, revealing a 33% earnings per share increase, an 8% rise in revenue, and a 32% net profit growth. Jens emphasises the importance of scaling operations amidst a challenging economic environment, despite the clear business success. Infomedia, a global enterprise with 85% of its revenue coming from outside Australia, is pursuing a long-term strategy that commenced two years ago. FY 25 is set to mark an additional strengthen-phase year, with forecasts promising noteworthy progress.

Infomedia is significant for its delivery of data, software, and AI solutions to the global automotive dealership business, with 47,000 dealerships under worldwide contract. The company recently increased partnerships in China with OEM businesses focusing on electric vehicles, successfully doubling its engagement over FY 24. Jens also highlights the crucial roll-out of their upgraded cybersecurity measures given their management of data from 52 different global brands.

Infomedia’s impressive balance sheet boasts zero debt, robust acquisitions, and $70 million cash at hand, permitting strategic investments with appropriate partners. Jens highlights the potential for profitable growth along with organic growth and possible acquisitions outside Australia; particularly in Europe and America. The company also increased their full year dividend by 5%, pleasing shareholders. Looking ahead, contracts in Japan and Malaysia, growth in Canada and Mexico, and strong gains in the EMEA region bode well for the future. New developments in software for light commercial vehicles and fresh lucrative partnerships, especially in the Middle East, promise exciting news for the company.

Full unedited transcript below:

0:00

Info Media, posting a 33% jump in earnings per share revenue rising 8% to $141 million. Reported net profit hiked 32%, reaching just shy of $13 million. The company, however cautious about the future, expecting some challenges ahead, including potential customer churn and the need to scale its operations further in a tough economic environment. A full year dividend of 4.2 cents per share, fully franked, has been declared, up 5% on full year 23 payments. Let's get straight into the details with info. Metas CEO Jens Montes, who joins me now. Jens, good to see you. Do you think you can kind of expect this kind of growth to continue in full year 25? Yes, we are working on a long term strategy. So we started two years ago with the change phase. Now we are in the strengthening phase and the results are showing very good progress. We are doing another one year strengthened phase in FY 25. And then we go into scale and uh, very pleased. It's a global

0:59

business. 85% of our um, revenue is sitting outside Australia. and we obviously have to be a bit cautious on the fluctuation that we see on fixed rates. So, as you say, a global diversified business and that was always your goal. Let's just take a step back and tell us what you're doing at info Media. And I guess some of the growth that you're seeing internationally.

1:22

Yes, we are delivering data and software and AI solutions for the global dealership business, the automotive business. And currently we have 47,000 dealerships worldwide under contract. You increased some of your partnerships with China as well. Tell us about some of those.

1:42

Well, we see a very strong increase of the market share of the Chinese OEM business partners. They are basically focusing fully on EVs, electric vehicles, and we are pleased to double our engagement there over FY 24. And we see further opportunities to grow into that market. You've also upgraded cyber security. Tell us where you're out with that. Because of course this has been a year where the importance of cyber security has been highlighted, given the global outage we saw a couple of months ago. Yeah, no, we are very pleased with the measures that we put in place and cyber security especially, um, you know, protect, uh, protecting the valuable data from all the OEMs that we're working with. We have around 52 different brands globally where we manage the data and the data assets is very exclusive, and it's a treasure for info media. And therefore, we are very happy

2:42

that we cannot report any incidents. And we hope that it's continued to be the way. So you have no debt, but how strong is your balance sheet? What sort of further acquisitions might you be eyeing?

2:54

So Info Media was always a very strong track record of, um, successful acquisitions. We bought a company called Netezza. Um, five years ago. We bought the biggest e-commerce platform in the US three years ago. And uh, with all these cash at hand, Hence, we are obviously further pursuing that road. Um, focusing on organic growth and profitable growth, as well as an acquiring businesses outside Australia that might be in Europe or in Americas. But we also have to be very disciplined. We have, uh, 30 now, 70 million, um, currently cash at hand. And we are wisely investing this at the right time with the right partner, completing our ecosystem. We mentioned that you increased your full year dividend. So the, um, fully franked dividend of $0.02 per share for the second half of full year 24. What sort of likelihood are you

3:54

expecting that you can see sustainable growth in shareholder payments?

3:59

Well we grow topline. We grow um, our profits. And we obviously let also our shareholders participate in that. Um, the dividend is up 5% compared to last year. The full year dividend is up 5%, fully franked. I think the shareholders are very happy with us. And, uh, it's one thing is the dividend, but I think the overall growth and profitable generation out of the operations of the business is a key driver of our share price. Share prices up this morning based on our strong results. So I'm very pleased of where we are currently hitting. Now I mentioned you had new contracts in China. What else are you seeing in terms of growth in the APAC region?

4:44

Yeah, we see, um, a lot of new contracts coming in with the Japanese, but also Malaysia market. We see a new segment that we are currently entering, which is the light commercial vehicles. If you think about e-commerce and also delivery of packages to the households, that's a very big growing, uh, category. And we are pleased that we have signed two new contracts in that space. And obviously that is not only for Australia, but for the global market. We are now developing these solutions. It's very exciting times. We see further growth in Canada and in Mexico. Mexico is becoming the automotive hub for the Americas continent, where Chinese OEMs are importing more and more cars but also producing locally. We have one new ground there. We have made a lot of dealer management system integrations in Mexico, so it's a wonderful global business that is further

5:44

growing and improving our global footprint. What about your growing footprint in EMEA? What is that looking like?

5:53

EMEA is currently growing by 9%. It's a very exciting but also diverse market. We see a lot of different languages, a lot of different DMs providers, and currently we are winning a lot of ground in Europe, specifically continental Europe. But we also have now new business in the Middle East, which is exciting, very big dealerships, very modern, and they obviously like the newest and most innovative technology that comes from info media. So very new and exciting new partnerships in the Middle East as well. And Gen Z are now preparing for phase three, the scale phase. What does that involve?

6:36

The scale phase is starting in FY 26. Uh, from 26 on, we expect that the growth on the top line is accelerated and the growth of the cost line arc is, um, maintained. So we see a further opening of the doors. We have done another percentage point of profitability in FY 24. We accept we expect for the coming year FY 25 stable margins. And then for the scaled phase, the top line will further increase and the cost line will further decrease. So we mentioned that you are expecting further growth in full year 25. So total revenue in the range of 144 to $154 million. But what happens if we do see you know, an upset in the apple cart, so to speak, and the macroeconomic changes a lot. How were you sort of hedged for growth then? Yeah. It can go both ends. That's why we are

7:35

providing a corridor. I think the positive upside is that our business seem to be very, very stable. Um, consumer indices are not impacting our business. We have a purely B2B business that is running very well with long term recurring contracts. 99% of our revenues actually recurring, settled in contracts. That is 3 to 5 years out. And therefore, um, we are pleased with the with the strategy and also with the outlook. Um, we are known I had the questions last year from analyst of um, is that a very conservative, um, guidance? I think we just need to take a little bit of, um, prudent approach to look at both ends, the top end and the bottom end. But we will further grow the business and we will further, um, see very profitable growth of the business.