ii view: Future using share buyback money to pay off debt

Full-year trading update to 30 September

ii round-up:

Future (LSE:FUTR) today said trading for the year to late September had been broadly in line with City expectations, although it is halting its share buyback programme to focus on reducing debt.

As part of a continuous review of capital allocation priorities, the magazine and Go Compare owner is pausing the existing £30 million share buyback £6 million shy of completion. There's no change to the dividend policy.  

Shares fell more than 10% in early deals before staging a full recovery later in the session. Future shares came into this latest news down by more than a half over the last year. That’s similar to business information provider GlobalData (LSE:DATA) during that time. The FTSE Small Cap index is up around 13% over the last year.

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Future’s magazine brands include Country Life, Marie Claire and PC Gamer. Group revenues come broadly come from advertising, magazine subscriptions, media events and affiliate sales. Affiliate sales work by allowing Future to promote and sell products or services of customers on sites such as Amazon.com Inc (NASDAQ:AMZN) in exchange for a commission on each sale.

The owner of over 170 specialist media brands continues to expect annual 2026 sales and adjusted profit (EBITDA) broadly matching analyst forecasts of £707 million and £180 million respectively. That compares with £739 million and £223 million in 2025.

In March, Future highlighted changes in the Google search engine which had reduced website traffic and therefore hindered ad sales.  

A predicted 2026 adjusted profit-to-net debt, or leverage ratio of 1.7 times compares with 1.3 times last year. Annual results to 30 September are due 3 December.

ii view:

Founded in 1985, Future creates specialist media content which is then distributed via websites, magazines, newsletters and live events. The consumer, or B2C business generated most profit in the first half to late March at 60%, followed by Go Compare at 34%, and the B2B business the balance of 6%.  

For investors, group net debt of £314 million as of late March compares to a current stock market value of £272 million. The importance of metrics set by tech giant Google and its owner Alphabet Inc Class A (NASDAQ:GOOGL) is not to be ignored. The impact of AI on media content production in the years ahead is difficult to predict, while pressured consumer incomes given elevated energy prices and expected interest rate rises could lower customer subscriptions.

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On the upside, a previously refreshed management team are pursuing initiatives including driving use of the group’s specialist media content among AI providers. Bolt-on acquisitions to assist growth have recently included SheerLuxe, a Women's fashion and lifestyle publisher for the young. Pressured consumer spending given elevated energy prices is likely driving demand for the price comparison business Go Compare, while the group’s portfolio of known brands including ‘What Hi-Fi’ and ‘Golf Monthly’ could attract potential buyers.

For now, halted share buybacks combined with predicted falls in sales and profit offer firm grounds for caution. That said, well-known brands and a forecast dividend yield of over 5% may still appeal to more speculative investors.

Positives:

• Diversity of titles and business revenues
• Strong brand names

Negatives:

• Uncertain economic outlook
• Advertising revenues can prove volatile

The average rating of stock market analysts:

Strong hold