Digitalbox (LSE:DBOX) — HY23 Results

0:01 Good morning, ladies and gentlemen, and welcome to the DIGITALBOX PLC Interim Results Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged. They can be submitted at any time via the Q and A tab that's just situated on the right hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all questions submitted today and publish responses where it is appropriate to so, and these will be available via your investor meet company dashboard.

0:33 Before we begin, I would like to submit the following poll, and I would now like to hand you over to CEO, James Carter. Good morning, sir. Good morning. Welcome. Welcome to the DIGITALBOX interim results 2023. We're glad you're able to join us. My name is James Carter, as just introduced, CEO of DIGITALBOX, and I'm joined by Jim Douglas, our our COO, and David Joseph, our CFO. Just a little bit about the board. It brings together significant experience to the business through success delivered within major across the media market and beyond. Companies like EMAP, Future PLC, Unilever, and Reach, all included within the experience of the board members.

1:24 In addition, the executive has experience of driving editorial strategy at the highest level and delivering VC backed roll ups to exit. And we're all well invested as an executive team with a stake of over 21% the business.

1:44 Firstly, a brief introduction to DIGITALBOX. DIGITALBOX is a pure play digital media company with a pedigree in emerging technologies. We're a 100% digital and mobile focused. And since we've been listed on AIM, we've grown through transforming acquisitions as we've built the business.

2:08 Our historical model is simple. We publish great content that drives audiences to our websites, which then we monetize through the serving of advertising solutions across all areas. And that could be branded content through video, through ecommerce, etcetera. We operate four brands, one of which looks to be blacked out on this slide as far as I can see, but I'll explain what it is. Entertainment Daily, which is our TV entertainment and showbiz celebrity news site. The Daily Mash, which is The UK's biggest news satire site. The TAB, which is The UK's leading student youth culture site driven by an army of student journalists across more than 30 campus based sites in The UK, and The POKE, which is the, I think, the blacked out logo you can see there, which is best described as a humor aggregator serving some of the funniest moments on the web.

3:13 And it's our most recent acquisition that we delivered in December '22.

3:22 So before we get into the details of the first six months, I wanted to just pull out some highlights that detail some of the challenges that we've had. So h one performance, despite the challenges we've had, is ahead of the budget internal budget and the guidance that was in the market. The The graphene ad stack has continued to deliver for us and delivered upside against a pretty challenging advertising market over those first six months. The poke has paid back 2025% to date of the acquisition price. And the Daily Mash premium, which is a relatively new approach and strategy that we're taking on that brand, has proved to be more and more successful with us approaching 3,200 paying subscribers now.

4:24 And the H1 closing cash position showed net cash of 2,300,000. And our cash position has continued to remain strong whilst we've delivered acquisitions over the past three or four years. And the post period acquisition of the social chain assets that was signed on August 31 really strengthens our position for a brighter future. So the contents of the presentation breaks down into four key areas. I will aim to provide some context to our results through the market backdrop. DJ will detail the financial outcomes before Jim and I bring more detail to what has gone well and where we plan to go into the future.

5:20 Okay. So this chart aims to explain how the year year on year comparisons may differ from previous years. You'll see from the digital advertising index for 2021 and 2022, the shaded part of the graph, that the years were very different in their shape. 2021 was what would be labeled as a traditional outcome with revenue building throughout the year, with Easter having a particularly strong peak in the first half of the year, and Black Friday in the second half, reaching the all time high for the advertising index in 2022.

6:01 As we budgeted in 2023, you can see we budgeted for a more traditional pattern to be displayed throughout this year. And for the first half of it, we're pretty much in line with that shape. And it remains open as to how the second half will perform, but there are significant challenges that we've been faced with. Those challenges have been highlighted, and we've always been clear about the risks attached to our business, and in fact, to many media businesses in general. This extract from the risk register highlights two key areas I'd like to focus on. One, the reliance on the major platforms for traffic, most notably Google and Facebook.

6:52 And this really is a general challenge for most media business businesses. And two, the risk of algorithmic changes or content strikes that can affect our business. Those two areas have had a significant impact on the trajectory of DIGITALBOX over the first six months. The challenges of sourcing traffic has become an industry issue. You will see from these extracts from CNN, DIGITALBOX, that some of the biggest players in the market are feeling the pinch. Both Reach PLC and The Independent have reported traffic drops as a direct result of Meta down ranking news. And we're all familiar with Google's attempts to keep users on their platform longer through their scraped extracts designed to satisfy your searching minds.

7:44 So similar questions being posed after you've asked your question, scraping more content directly from a publisher's website in order to keep you on their platform longer. All publishers are faced with this trend.

8:01 This table, really illustrates how that, is bearing out. So Ipsos Iris is an industry standard measurement tool that here is measuring top 12 publishers in The UK. And it's showing the minutes consumed on those publishers' websites. So for example, Reach has hundreds of websites, but you can see the time on their websites in June 2023 was down 9.64%. And you can see that pattern repeated across all of those top publishers. However, we were hit by what we'll categorize or characterize as the second area of risk in the risk register.

9:01 The previously mentioned being the first area of risk, but this being the second area of risk. And this chart shows the Google algorithm that has decided to block Entertainment Daily from getting into the Google Discover feed, which is the mobile news feed used by millions. You'll see we had around 28,000,000 visits in h one twenty twenty two, which has been reduced to just one click in the past week. This is despite digital bots conforming to all Google best practice and ensuring our core web vitals, site speed, user experience, etcetera, is as good as it can be. And in fact, our Entertainment Daily performance is ahead of many competitors that you'll see in the Google feed, like the Mirror, for example.

9:58 This slide is also part of the second point in the risk register and shows how the tab has fallen foul of a Facebook content stripe for presenting content about dangerous organizations or individuals. We published a story about the Netflix series on the cannibal Jeffrey Dahmer, which resulted in our biggest Facebook page having its reach reduced by about 95%, which cost us 10,000,000 sessions in the period. Clearly, all of this has been damaging to DIGITALBOX, whilst the previous two slides are what we should consider exceptionals, and there's always hope that these exceptional hits will be reversed by the major platforms and see upside return.

10:45 Before I go into more detail, DJ is gonna go through the financial results. Thank you, James, and good morning, everybody. I have four simple slides for you today. Slide one, income statement. This line shows extraction of income statements for the first half of twenty three and for 2022 as per the published interim statements. 2023 includes the results of all four products, so includes the poke. Results '22 do not include the poke. Like much of the world, we've been very busy navigating our way through a perfect storm. In our case, the combination of depressed global advertising spend and the restricted supply of traffic due to the algorithmic and policy changes of Facebook and Google.

11:40 The continuing turbulent conditions created by the war in Europe with its corresponding impact on global energy and food prices compounded by punitive interest rate hikes, further hitting the consumer hard has had a profound effect on advertising spend globally. And this has hit our trading numbers.

12:00 This, together with the significant traffic challenges created by the Google and Facebook platforms, has provided an aggressive trading environment, which has taken some navigating. Despite all this, the business performed slightly ahead of management's expectation, delivering revenues of £1,200,000, which is 34% down period on period and delivering an adjusted EBITDA loss of £100,000, which is a significant change in the prior period profit of 700,000. With the business that is has high operational gearing, it's inevitably impacts on the gross profit margin, which has decreased by 10 percentage points to 77%.

12:52 This is still an ultra high gross margin though and results from the market continuing to value our holdings highly, keeping our yields ahead of the market. As we move through the second half of the year, we return to profitability and to cash generation. The second slide, segmental. The headline here is revenue decline of 34%, but this needs a little unpacking. The underlying or like for like excluding the poke is a reduction of 39%. But within this, we can see ED hit hardest by the state of the ad market and the algorithmic changes at Google and Facebook.

13:40 Although the quarter on quarter rates decline slows as you can see to the right. The daily mesh is still in transition to its subscription based model, hence the sub segmental information reveals little. The impact of all these external forces on the tab worsened throughout the first half as you can see to the right. There are reassuring aspects here, though. The first one is this was a little better than we anticipated. The second one is the second half will return to profitability and to cash generation. And the third aspect is that PLC has proven once again to be a shrewd buy.

14:29 The third slide is cash generation. Despite all these challenging conditions, cash performed well as usual. I've restated the statements of cash flows in order to highlight the cash generated from operations because this is what's really going on in the business. The conversion of adjusted EBITDA into cash in the bank. You'll see that the first half of twenty three saw cash generated from operations total a negative figure of £84,000, which amounts to 60% of adjusted EBITDA loss. This is not the norm, however. And a more sensible view is to look at the aggregate performance to the right, which shows cash generated from operations averaging a 125% of adjusted EBITDA.

15:19 Now overall, I would expect this conversion rate to stabilize at around 95% of adjusted EBITDA. Let's remember as well that the only other cash outgoings essentially are tax, bank debt repayment, and CapEx. At the recent year end, gross cash at the bank was just over £2,800,000. At the end of June, gross cash was just under £2,600,000, meaning the business consumed £250,000 of cash in the first half of twenty three. Now as £180,000 of this $2.50 is down to tax, loan repayments, and a little CapEx, This leaves the business consuming only £70,000 at the trading level.

16:14 Finally, the final slide, the statement of financial position. I draw your attention to six points of note here. The largest item on the balance sheet is intangible assets, largely goodwill. Given the challenging trading conditions and despite H1 performance ahead of our expectation, we should be considering the carry value of the year end very carefully. The second item deferred tax is the deferred tax asset. And the same as point one, this will need to be reviewed carefully at the year end as this relates to utilization of corporation tax losses. The third item, trade debt reduction simply follows the reduction in revenues.

17:00 The fourth item, gross cash at the bank of 2,600,000 performing well as described already. Net cash at 2,300,000 is compared to 2,400,000 at the same time last year.

17:15 Fifth item of note is this business is highly liquid, having £3,100,000 in net current assets, which for a business of this size is very substantial. This is down from £3,400,000 in the prior year. And finally, capital and reserves, a full suite of positive numbers despite the challenging conditions. So that's it for me. Back to you, James. Thank you, DJ. Okay. Let's take a look at some of the areas that have progressed well over the first half of the year. We have continued our efforts to diversify our revenues to become less platform dependent.

18:05 Facebook has struggled with humor over the years, failing to differentiate satire from hate speech. And that has resulted in a pivot to a paid subs model on The Daily Mash. Here, you can see in January 2022, we started to progress the idea. And as you can see in June 23, we've seen a significant step up in our progress to approaching 3,200 paid subscribers today. Now this is really a result of a strategic change and introducing a metered paywall, which limits the amount of free content that people can consume on the Dailymesh website. So real progress there in delivering that model.

18:53 We also started to test a pivot towards more video outputs on the daily mesh. And as you can see from the graph, again, real progress is being made through AI assisted voice delivery of some of our standard articles via video distribution channels. This chart, shows the Facebook, performance, for video since May when we introduced the concept. And we're delivering on average between 50 and a 100,000 views a day via that channel alone and more broadly via the other channels that we're distributing the content through, which include Instagram, TikTok, YouTube, then we're up to about a million views a week in total.

19:45 So that's shown real progress and real promise for the future. We've continued with our disciplined approach to acquisitions. And you may recall, in fact, think I've already mentioned it, but if I didn't, you may recall that, the tab, paid back after fourteen months. The poke has started life well at DIGITALBOX has repaid over 25% of the purchase cost in the first six months of 2023, which has been driven significantly by improved advertising performance via the graphene ad stack. Continuing on the theme of m and a, post period, we made the decision to acquire the social chain assets at the end of August with a discount of 25 on the purchase price. So we we accelerated that deal in order to secure a significant discount on the acquisition.

20:49 This provides Digital Box with greater much greater distribution footprint with our social media followers now having moved from 8,000,000 to over 20,000,000, which will really assist in any on platform pivot we plan to make in the future. So effectively supplying a much bigger distribution list for us.

21:16 Finally, cash generation has been part of the company's success over the years since we listed. Having GBP $05,000,000 on the year we listed in 2019 and out the the outturn of H1 twenty twenty three, GBP 2,300,000 of cash in the business. So whilst the existing model continues, we also need to keep a firm eye on the future and the changing dynamics of the market. So this chart aims to illustrate global Internet consumption with the large ellipsoid shape representing global total global digital engagement.

22:07 Most consumers tend to enter into what we call the discovery zone, where they're either searching for a topic or consuming a news feed. All of the engagement time from this zone to the right of the chart is what we would characterize as on platform activity. Users tend to enter the discovery zone and go deeper into content either by visiting a publisher website to the left or consuming more information on a platform in video form. We noted earlier that the major platforms are keen to keep users on their platform to maximize their profitability. You'll also note that there is a small amount of current consumption via AI discovery tools like ChatGPT that's currently capped at around 200,000,000 users, it's certainly performing a function within that discovery zone on this chart.

23:04 The next chart is looking to the future and and looking at how the market may unravel and how we anticipate the market shaping up. AI fueled discovery will expand as users migrate to the tools that give them the most efficient solution. It's already there within Google, and they're promising more of a developed solution that effectively will take that short paragraph that we mentioned before

23:34 to a pretty well formed article for you to consume before having any need to click through to a publisher website. You're all familiar with the Google Google offering of four or five questions you may have asked, all designed to keep you on the platform for longer, and this trend will continue. Increased engagement time is the key lever both Meta and Alphabet have to pull, and you can be sure they won't ease up with it. So this leaves us with the need to pivot

24:05 to a model that benefits from increased on platform presence and engagement. And our plan is to certainly focus on a greater amount of time engaging with our audience within the walled gardens. Jim will take you through some of the ways we plan to develop this.

24:26 Okay. Yeah. Thank you, James. Yes. So I'm gonna talk through the portfolio, looking at some recent developments also our plans for the future. So we're gonna start with our satirical news site, The Daily Mash. In terms of our engagement platform, which James has just mentioned, towards the end of the period, we began stepping up our video production. And that's really taken two forms. One strand of this activity is a very straightforward

25:01 text to video AI rendering of our existing articles, and we're publishing these across Facebook, Instagram, YouTube, and TikTok. We already know that this content works because we can see how well the articles perform, and so repurposing these into video is pretty straightforward.

25:20 And now that these videos have begun to build a base of viewership, we're going to add in a more premium strand with on camera talent, like little mini segments of the Mash TV show. And you can see those on the slides there. The one on the left is an article that's delivered by AI. The one on the right is the talent driven

25:44 example. And we're gonna be stepping up more of those during the rest of this year. I mean, what's encouraging is is even though it's early days, we've seen 16,000,000 views of this video content already. And so on one hand, it feels like we're only just getting started, but it does feel like we're making really encouraging early progress. And so that will be a key focus for us through 2024. Also, as James mentioned, we've seen steady growth. We were seeing steady growth of our optional

26:15 MASH premium service. But in July, we switched on our payroll. So UK users can still access the site twice a month for free, but then after that, they need to subscribe. They get full ad free access to the insight entire site, including the premium area. So as you can see, we've seen pretty good uptick as a result of switching on the payroll. We've doubled our subscriber base to more than 3,000 active subscribers. And what was also encouraging, about 45% of those users are happy to commit for an annual subscription. So the mission going forward is to work out how we can continue and accelerate that growth. Moving on to Entertainment Daily. Entertainment Daily or ED, as you all know, is the most established brand in the portfolio.

27:03 As James said, we have faced some real challenges in terms of Google Discover distribution for ED. Work continues to try and improve that situation, but it is not yet resolved. However, social traffic was much more stable in the first half and actually 5% up year on year in the period since June.

27:23 One of the factors which has helped here is the team's strong editorial execution that delivers engagement on platform around big moments. So for example, the Phillips Scofield scandal that we covered, our stories saw more than a 100,000 comments on platform. Or this most recent post that you can see in the bottom left hand corner, which was about the salaries of the lionesses, and we saw great engagement there as well with almost 30,000 comments on that one piece

27:50 alone. And overall, we saw 25% increase in comments h one this year versus last on the Entertainment Daily Facebook page. So given that and that level of engagement, we're quite excited to be able to explore how we can exploit the social chain assets to grow ED's reach further.

28:12 Some of the social chain assets we're deploying on the tab, we'll talk about in a second. But with regards to Entertainment Daily, we've earmarked around a million followers to receive Entertainment Daily's content. We're already publishing content to them and monitoring which content resonates the best. Also on Entertainment Daily, we've begun our AI testing. We've run some published tests on evergreen and opinion content where our journalists are using it to speed some of their research or flesh out longer articles

28:42 like this piece you can just about see here, which is which ran before the return of the notorious Cindy Beale in the EastEnders. So given its training date data, AI is markedly better suited to this kind of feature content rather than trying to deliver the newest news. So adding depth and detail to reporting is where we see the primary gain in terms of its flat article content. And then in terms of where AI can benefit us elsewhere, this mock up on the right of Russell Brand shows how we can easily use AI tools to create moving content with our news articles as a starting point. So where previously this may have been cost prohibitive, we think that we can now use the tools to quickly deliver video with the same sorts of editorial punch that has served the brand so well in terms of its flat article reporting.

29:34 And then finally on ED, you'll remember at the time of the annual results in March, we talked about the success of the first Entertainment Daily Awards. We saw more than a 150,000 votes and also got the brand onto ITVs this morning. So the team are working on plans to build on that success this year, and we think that can become a real pillar of our content calendar and also contribute to this strategy of a greater level of engagement on platform.

30:02 Moving on to the tab. The team have continued growing their social following of the brand last year in terms of organic growth. And, obviously, the social chain deal takes that further and faster. So rebranding work is underway on some of the assets, which is gonna carry the tab branding. It's added a million Instagram followers. And in total, the tab has now got access to more than 13,000,000 followers, including our ownership of the 99 problems page. And the reason the reason that we've tried to allocate the allocate the users that way is there's just a better demographic fit, we think, between the tab and some of these users and the remainder of the audience where we think there's a good fit for entertainment daily.

30:49 So as I say, the team are already up weighting their social content mix with more of an emphasis on on platform engagement, like Instagram specific stories, like you can see in the bottom left hand corner here, which are the most Instagramable universities in The UK, or other content that resonates with the audience, like Barbie themed meme video content on TikTok or reporting live from festivals, which is also delivered on the brand's TikTok channel. So as with other titles in the portfolio, we think that short form video is going to be key for the tab moving forward. And, obviously, we have the benefit of a national network of 30 university teams, all with their own pages and increasingly with TikTok following. So we think that's good way of accelerating our development there. But also our London based, the core London based team are looking how they're gonna take the tab strong voice driven editorial content and how that can work more in terms of short form video.

31:54 And then finally, we have the poke whose logo was missing from the one of the earlier slides, nothing other than a technical glitch. Nothing to be nothing to be concerned about. The poke is is really flourishing, to be honest. It's as James mentioned, prepaid 25% of its acquisition costs already as a result of migrating onto the graphene ad stack. We've previously mentioned that we think the poke has an opportunity beyond just The UK. So as a step up to help here, we've shifted the site onto a .com domain. That's also brought us a further revenue uplift in terms of session values. So it's gonna be interesting to see if that settles and remains a constant. And then in terms of this this international opportunity or opportunity beyond The UK, of course, primarily, that means The US.

32:45 From an audience perspective, we're already seeing some good performance in terms of, I suppose, what you'd call culture clash humor. So for example, there was a story about an American influencer complaining that she had to walk around the Amalfi Coast in Italy because there wasn't a big enough freeway system that would have enabled her to stay in her car or stories like Americans losing their minds that we put butter on our sandwiches. And that kind of content perform increasingly is performing really, really well for us. And we think if that's the case, there must be the there must be the inverse. There must be things that the Americans would find hilarious about the way we operate. So we're increasingly going to operate our output that's gonna play into the American audience, either by freelance resource peer based here in The UK or freelancers in the in The US.

33:38 And obviously, as we're heading into 2024, we've got the US election cycle really ramping up, which gives us plenty of opportunities for dark humor. And we think that is going to be a real theme as we go through next year because we've previously seen Trump is such an accelerant in terms of, well, in terms of all things, but also in terms of performance of the site. And then finally, on on the poke, we think there's an opportunity for curating and compiling video content itself, like this clip on the left hand side where GB News anchor Martin Dobney had terrible meltdown or Haiman Holmes had his hot mic incident also on GB News, I think. And those have performed well in terms of flat articles, so we're undergoing a piece of work to try and work out how we can most effectively shift that into video content.

34:31 So that's it for the portfolio. If we if we just move on to look briefly at the conditions that are helping inform some of our approach here and what's really driving this strategy. This trend really illustrates why we're looking to focus on video as part of our pivot to a more platform existence. Video is clearly gonna become a key part of this. So depending on which stats you look at, there are variances, but the overall trend is pretty clear with significant growth in terms of video consumption as you can see here from eleven hours a week back in 2018, growing more than 70% to around nineteen hours a week in 2022.

35:18 Obviously, better phone, Wi Fi, and network capability, four g and five g have powered this growth of consumption along with the continued scale of YouTube, the main platforms themselves prioritizing video, and, of course, TikTok. So there's a huge consumer appetite for consuming video, especially short form video, which is now regularly cited as the number one most engaging content type on social. But there is also a significant change in the economics of video production, which is playing a role in our thinking, and we can see that on the next slide here. So one of the key factors which has historically acted as a real break for media owners wanting to fully serve the consumer appetite for video has previously simply been the cost of production.

36:05 It's been hugely more expensive to make than flat article content, which you can run on run on your website. Just to put this in perspective, so this chart illustrates the cost of delivering types of video content per finished minute as a as a kind of an an indication of different content types and their comparative costs. So on the left hand side, the left three bars show you the standard going rate of studio based TV production like the late night mash, which is a pretty eye watering £6,000 per minute through the going rate for channel four's digital only content, which is still around £3,000 per finished minute. Outsourced professional YouTube explainers, which are around £750 per minute if if you wanted to have a level of professionalism and outsource some of those videos.

37:02 So unless you're already funding or underwriting or monetizing this content via other means like syndication or have an absolutely enormous YouTube following, it's really difficult to generate any margin here at all. So media businesses are shifting to work out how they can cater to audiences with an appetite for short form video in an economically viable way. So just as an aside, there's a there's a good example here. So the BBC is a great example. Some of the best performing content on the BBC News TikTok channel are actually these low cost, high authenticity snackable videos where the idea is really key rather than studio based production with its concurrent costs. So this is Tube Girl, who's hugely hugely popular on TikTok, dancing to the BBC News theme tune.

37:55 And that just shows that it's really not about production values. And increasingly, even the most established media owners are needing to operate in a in a different way. So what does that mean for DIGITALBOX in this area? Well, as I mentioned earlier, right now, we're testing match premium videos where you've basically got actors delivering scripts. And those are around £350 per finished minute, which is around 5% of the cost of the TV show, really just as a result of a totally different attitude to production. And then also going back to the AI text to video articles, are really the most affordable content type of delivery, they are currently around £10 per finished minute.

38:45 So a massive reduction in terms of production costs, which gives us quite a lot of optimism that we can run these channels at a margin once we've built some scale and got monetization effectively activated. And so the next year, we go through this pivot, is to take the learnings that we've already seen, roll them out across the portfolio, and scale up as we begin to build monetization around this more affordable output. And then finally from me, stepping away slightly from video, but looking at the wider advertising trends. If we look a bit further ahead at these wider trends in terms of digital advertising spend, the overall trend remains incredibly strong.

39:31 So these are worldwide forecasts. And you can see digital advertising spending is expected to pass $800,000,000 worldwide by 2026. But I suppose the real takeout here or one of the real takeouts is as well as this overall spending being encouraging. The composition of the ad spend by channel is still heading in the right direction for us as it migrates towards mobile, which is where we focus. As you can see here, mobile's ad spend in 2026 is expected to hit $600,000,000 globally, which is eclipsing where the total ad spend was for 2022. A 43% uplift as advertising spend continues to play catch up and advertisers chase the consumers on mobile devices.

40:24 So despite the challenges that we faced along with other media businesses in the first half in terms of some of our content distribution. The wider trends here still feel very positive. That's it from me. Okay. Thank you, Jim. So moving to summarize the presentation. It was certainly a challenging h 01/2023. The combination of Google and Facebook exceptionals really did have the significant impact on the business. But equally, a depressed ad market enabled us to perform well, particularly around the poke conversion to profit pretty much immediately.

41:17 So all of that put into context, think, take the exceptionals out. It's a challenging time, but we're performing appropriately and delivering strategically appropriately in line with those challenges. The period closed ahead of budget, their internal budget with advertising performance driving that. So seeing the growth in advertising trends at the back of h one, we saw through the period, we saw the tab deliver, in fact, year on year growth of 5% on the back of a market decline of around 20% for the period for the programmatic digital ad market.

42:06 Our pivot to on platform existence really is driven by the fact that the platforms are tightening, the amount of traffic they're prepared to send off and to publish a website destinations, the tests we've delivered around this driven by AI video assisted video production have performed very well with around a million views a week at the moment. AI tools will continue to drive our efficiency, and the team are increasingly equipped to navigate this transition. And AI, in general, we see as significantly changing the market as we move forwards.

42:52 And now with the social following of over 20,000,000, having increased it from 8,000,000 to 20,000,000 through the social chain acquisition, we're set up in a really good place for both on platform distribution and a continued delivery of existing strategy for our websites that publish content directly to consumers. So thank you for listening. James, David, Jim, if I may just jump back in there. And thank you very much indeed for your presentation this morning. If I just jump back in just before we move to the questions. And I will just bring back up your cameras there as well. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab that's situated on the top right hand corner of your screen. But just while the team take a few moments to review those questions that were submitted already, I would like to remind you that a recording of this presentation along with a copy of the slides and the published q and a can be accessed via your investor dashboard.

43:55 Guys, as you can see there in the q and a tab, we have received a number of questions throughout your presentation this morning. And thank you to all of those on the call for taking the time to submit their questions. But James, David, Jim, if I could just hand back to you just to read out those questions and give your responses where appropriate to do so, and then I'll pick up from you at the end. Thank you. Okay. I'll read out the question. And, TJ, the first one, I think, I'll probably send in your direction. Why was the market not informed sooner, read the downturn in revenue and outlook? Well, so first first half was ahead of market management's expectation. On the face of it, everything's performing as the market had been informed all along.

44:46 Then into the second half, in particular, in in the month of August, there was a significant change in Facebook, and it took us a while to understand the impact of that change. So we actually informed the market as soon as we possibly could, as soon as we got some fix on what this means. So contrary to that, we did inform the market as soon as we're able. Okay. Thank you, DJ. This question, given how the business has been negatively impacted by reliance on social media platforms, is not doubling down on social media distribution channels via social chain, making the business more risky?

45:33 Well, just to to analyze the impacts we had in h one, I think we we detailed about 28,000,000 sessions lost. They weren't lost to social media. There was 10,000,000 sessions lost within social media, which was the impact on Facebook and the tab. So the 28,000,000 sessions were as a result of our exposure to Google and Google Discover. So an increased opportunity for social distribution across the platforms, which include Instagram, Facebook, and TikTok, I think does de risk the business rather than compound the risk profile.

46:27 Here, which is really a Pamir question. Have you have you considered making broker research notes available to private investors? I don't know who's best placed to answer that, but I understand that that you need to subscribe to the research note that goes out in order to get access. DJ, have you any views on that? Or Well, I think any organization like ours would would favor that, but that's really up to the broker and the research house. It's it's beyond our remit, I'm afraid. Okay. Here's another one for you, DJ, which is what interest rate are we paying, and when is it due for renewal?

47:15 So this relates to the original CBILS loans taken out in October 2020, total of 450,000. At the half year, there's only GBP 262,000 left to pay. It's a fixed interest rate of 2.43%, and it expires in October of 'twenty five. Why was the pope blacked out on the second slide? A technical glitch is the answer to that. Have no idea. Yeah. Don't worry. When do you expect TV Guide to formally complete? As everyone will understand, TV Guide has been a challenge, and it's chiefly been a challenge due due to the technology that had been created for the exist or the previous site.

48:11 So the current owners have essentially sort of built something from day one of the Internet that had grown into a kind of rather ugly monster of tangled technology, and it needed unpicking. Unfortunately, their attempts to unpick it internally on their side failed, and so it was left to DIGITALBOX to build a new platform. We've built the new platform. The new platform is live, and we're conducting testing on it as we speak and aim to make further announcements as far as what our plans are with TV Guide in the near future. Given the problems you're having with Google and Facebook, what is stopping them doing the same to to your your other media assets and putting the company out of business? Do you wanna answer that one, Jim?

49:22 Are you on mute? Yeah. Sure. No. I yeah. Sure. I I mean, I think the as we've touched on a few times that we've we've mentioned previously in the in the risk register and also James was showing kind of at the start of the presentation. I think the exposure to the biggest platforms is just the reality of being digital media business these days. And we made a decision pretty much at the outset of the business to try and be where the users are. So you can derisk yourself by only hoping that people will come directly to your website. But in reality, it's difficult to operate in that way at scale. So our approach that we are developing this year and really have developed since the beginning of the business is to try and be agile and try and respond to the way the platforms change, the demands of those platforms to try and, yes, win direct traffic from regular users like the Mash subscribers, but also really go where the largest scale of audience is.

50:35 So I think that, ideally, we'd be in a position where we'd be able to totally derisk the business, but the reality is we need to operate where the audience is. Okay. Maybe another one for you here, Jim, which is are you using AI to drive customer experiences and interim revenue? Well, yeah. Yes. So so I think yeah. So I think this I think this question maybe came in the at the beginning of the session. So hopefully, we've given a bit of a flavor of the way the way we're using AI, but but yes is is the answer. I think there's another question about what sort whether we're using internal or external tools. I think the answer there is it's a it's a mix. So we are while while we have developed our own tools in terms of graphene and graphene performs very well, I also think that we've got to be realistic that we just haven't got the development power to outpace some of the absolute monsters in the market developing AI tools. So our approach really is to look at the tools that are available and work out which is gonna benefit our editorial teams the best.

51:44 So for flat content, we're looking at we're obviously we're using ChatGPT and Bard to see how they perform as well as paid tools like Jasper. And then on video, there's a whole range of tools from Flicky in video, which is the tool that we use to make some of the Mash videos, the text to video articles. And then other tools are increasingly up weighting their AI capabilities. So Canva, which is a a very friendly graphics tool, is increasingly introducing AI as are, obviously, Adobe with the Adobe Suite. And our plan for next year is, as James mentioned, we've already equipped our teams with a number of these tools. We're gonna try and work out which ones work the best and how we can best embed them into the production process.

52:34 It may be that there is some way that we can connect AI to graphene, but that isn't our focus for now. It's more about using the emerging tools as efficiently as possible. Okay. Thanks, Jim. I'd just like to address this question, which is given that the company now has a market cap below GBP 4,000,000 loss making, and there is little hope of improvement in trading in the short term, would the company not be better off as part of a larger media group where overheads could be split across a greater number of media assets? Okay. So the the first point point to to address there is DIGITALBOX is not loss making. DIGITALBOX has made a profit every year since it's been listed on AIM, and all guidance is pointing towards that being repeated.

53:33 I'd agree the given there's over GBP 2,000,000 of cash in the business with a market cap of 4,000,000, the company is incredibly good value for sure. I can't really comment on whether or not other media companies would be interested in acquiring DIGITALBOX, but that's clearly a question that could be answered by said media companies rather than myself. I think we've exhausted all of the questions. James, Jim, David, thank you very much indeed for addressing all of those questions that came in from investors this morning. And of course, if there are any further questions that do come through, we'll make these available to you immediately after the presentation has ended just for you to review and to then add any additional responses, of course, where it's appropriate to do so. And we'll publish all those responses out on the investment company platform.

54:29 But, James, perhaps before really just looking to redirect those on the call to provide you with their feedback, which I know is particularly important to yourself and the company, I could please just ask you for a few closing comments just to wrap up with, that'd be great. Okay. Thank you all for attending the interim's results. Despite a challenging twenty twenty three h one, we remain very optimistic that our skills at delivering acquisitions and bolt ons will see us grow into the future. Social chain will provide a great opportunity for us to increase our own platform distribution and pivot, whilst our existing brands will continue to deliver through the existing strategy and recover from the exceptional impacts that they've had in H1 twenty twenty three.

55:27 Thank you for attending. James, that's great. And thank you once again for updating investors this morning. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order the management team can better understand your views and expectations? This may take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of the management team of DIGITALBOX PLC, we would like to thank you for attending today's presentation. That now concludes today's session. So good morning to you all.