PHMG reports another year of strong financial growth

Strategic highlights:

• Revenues grew 13% to $70.5 million (£61.7m) (on a constant foreign exchange basis), largely driven by new client wins and improved client retention
• Operating profit of $19.1 million (£16.7m) and PBT of $16.0 million (£14.0m), reflecting both investment in customer acquisition and operating cost discipline
• Very strong client retention levels with 90% of clients’ revenue remaining with the group in 2021
• Recognized in the London Stock Exchange’s ‘1000 Companies to Inspire Britain 2021’ report for the seventh year running, and achieved a top 50 place in the ‘Sunday Times Top companies to work for’
• Comprehensive rebrand completed, as the business continues to ensure it is best placed and positioned to continue the successful execution of its growth strategy

Grant Reed, Chief Executive Officer and Founder at PHMG, commented:

“I am extremely pleased with the progress we made in 2021 in what was yet another year of strong growth. I would like to thank our growing number of employees for their relentless hard work and dedication both now and throughout the pandemic.

The accreditations that we have received including being honoured in the LSE 1000 companies to inspire Britain as well as achieving a top 50 place in the Sunday Times Top companies to work for are testament to the group’s success in terms of revenue, staff and client growth, as well as the innovative, forward-thinking nature of the services we provide.

The new branding supports our mission of helping every business to harness the incredible power of audio to connect with their customers. It signifies a key turning point for PHMG, as we evolve our service offer to support clients with astounding audio on every communication channel.

PHMG has continued its strong performance into 2022, with further customer growth, and we are confident that this trend will continue as we develop our core offering and extend our capability systems in order to deliver an unrivalled service to our customers.”

Audio branding industry – significant opportunities identified

Audio branding is the use of sound to define, reinforce and strengthen a company’s identity. Whenever a company uses music or spoken word as part of a customer experience, they’re practising audio branding – whether this be online, over the phone, in a podcast, at an event, in a store, or within any other auditory channel.

Operating in this marketplace for over 20 years, PHMG has already established itself as the market leader in the UK, with strong market positions in other major geographies like the US.  PHMG now has over 30,000 clients with the average client relationship of over eight years. However, the opportunity to consolidate this market position is very significant.  Across the geographies where PHMG has already established itself, analysis suggests that there are an additional 3.5million businesses that PHMG could work with. The target addressable market is further increased by the possibility of geographical expansion, leveraging that model that has been developed through the international growth to date.

Early in 2021, PHMG began a comprehensive brand refresh to ensure that it remains well positioned to capitalise on the growth opportunities ahead. Whilst the name remained the same, everything else underwent a major brand refresh, with the new identity aligning the company’s visual, verbal and sonic identities in readiness for a period of significant growth. Launching in 2022, the project was timed to coincide with the opening of new offices in Phoenix, Arizona (the business’s second US base) and an expanded space in Leeds, England.

Strong business performance – successful execution

PHMG is pleased to report another positive year for the business – both financially and operationally. Revenues increased by 9% to $70.5 million (£61.7m), driven by over 5,000 new clients wins.  This includes the year-on-year impact of foreign exchange movements, which when excluded show a growth of 13%. This momentum further strengthens PHMG’s market leadership in the audio branding market.

PHMG’s client portfolio, which now numbers over 30,000 clients, continued to perform well, with 90% of clients’ revenue remaining with the group in 2021, an increase from 88% in the prior year. Customer satisfaction is a priority for the business, and the company is proud and pleased that clients typically choose to stay with PHMG for over eight years.

Profitability returned to more normalised levels, with management deciding to increase investment in client acquisition following the end of Covid-19 restrictions. This is reflected in the reduction in gross margin to 64% (2020: 74%) and a corresponding reduction in operating profit to $19.0 million (£16.7m). Operating margin remains healthy at 27%, an increase of 1% on pre-pandemic levels in 2019.

An important differentiator and competitive advantage for PHMG is how it ensures that it delivers a creatively led service with each individual client receiving a bespoke service to meet their particular and varying demands. Post the FY21 period end, the executive team started to conduct a review of its client management process to both maintain its effectiveness and impact with clients while delivering it more cost efficiently. The business anticipates the financial benefits to come through the conclusions of this review in the years ahead.

Long term growth strategy – clear, detailed plan being executed  

PHMG’s long term vision is to consolidate its position as the world’s leading subscription-based audio branding platform/provider. This will be driven by increasing market share in some of the major economies in the world, like the UK and US – and deepening our client relationships both with regard to annual spend and tenure. There are three key strategic pillars that will deliver upon this vision.

1. Enhancing our client proposition

PHMG is strengthening its client proposition, which will allow us to increase revenues and profits from both current and new customers. There are a number of initiatives behind this strategic pillar including broadening the usage of our products within our client base, expanding voiceover and production talent, creating a differentiated client experience through tailored account management, and developing innovative technology to drive who, when, and how the business engages with clients.

2. Scaling our sales capability

PHMG is a diverse business with operations in the US, UK, Australia and Canada. The successful opening of two new offices in 2022 in Phoenix, Arizona and Leeds, UK in addition to the imminent opening of a new office in Brisbane, Australia demonstrates the significant growth available in current target markets. PHMG currently has huge scope for ongoing expansion within its established markets based on its proven ability of successfully entering new geographies. To achieve this, PHMG is looking to scale its sales capability through investing in both its management structure and academy, enabling remote/virtual Sales teams, investing in a strategic Sales Platform (Salesforce) and working to improve its marketing capabilities.

3. Investing in our people

The quality and commitment of people at PHMG plays a significant role in the business’ success so a lot of emphasis is placed on attracting and retaining talented, dedicated individuals who share the key qualities of passion and hard work. In the near term, PHMG is investing strongly in talent acquisition across Marketing, Technology and Creative to drive differentiated products and experiences. The business is also working to increase its development and support of existing employees through its revised, higher touch, management structure as well as through its improved training programme in its new academy.