Half-year Results

Dianomi, a leading provider of native digital advertising services to premium clients in the Business, Finance and Lifestyle sectors, announces its unaudited interim results for the six months ending 30 June 2024.

Financial Headlines

• Revenue decreased 4% to £14.2 million (H1 2023: £14.8 million) reflecting softer advertiser demand
• Gross margin of 26.2% (H1 2023: 20.9%)
• Adjusted EBITDA* of £0.1 million (H1 2023: loss of £1.0 million) and cash generation of £0.3m (H1 2023: cash used in operations of £3.4 million)
• Adjusted profit per share** of 0.24 pence per share (H1 2023: loss of 4.69 pence per share)
• As at 30 June 2024 the Company had no borrowings and cash of £8.1 million (31 December 2023: cash of £7.7 million, 30 June 2023: £7.1 million)

Operating Headlines

• Traffic across the Group's premium publisher base increased by 9% reaching 24 billion impressions in the six-month period through a combination of adding new publishers and increased readership of existing publishers
• Demand from premium advertiser base softened, limiting the Group's ability to monetise the increase in traffic, though some advertisers who did not spend in H1 have since returned to the platform
• In February, expanded partnership with Dow Jones, serving Dianomi direct demand ads into display format across Dow Jones properties including Wall Street Journal and Barrons
• New advertisers included PwC, the London Business School, Polen Capital and Northern Trust
• Post period end agreement with leading US financial news aggregator to test integration of bespoke format ads onto their site

Rupert Hodson, Chief Executive Officer of Dianomi, said:

"We are pleased to have recorded a small profit in the first half of the year at an Adjusted EBITDA* level but disappointed not to have been able to take more advantage of the increase in traffic across our publisher base. Demand from advertisers was soft and this has continued into the second half, though it is starting to pick up as we move into the fourth quarter and the upcoming US elections provide the opportunity for additional traffic across our base. Our publisher pipeline includes some leading US publishers with a global footprint and new advertisers continue to join our platform, attracted by the premium positioning and performance of our platform as well as its pricing transparency and being ID-free. Our focus now is on converting our pipeline as well as growing existing relationships to drive growth in 2025 and beyond."

* Adjusted EBITDA is calculated as loss or profit after tax before deducting net finance costs, tax, depreciation, exceptional costs and share based payment charges

** Adjusted to exclude exceptional costs related to the restructuring in 2023 and share based payments.

Chief Executive's Statement

Introduction

The six months to 30 June 2024 represented a positive trading period for the Group as we recorded a small profit at an Adjusted EBITDA* level due to the actions we took to reduce the cost base of the business last year. The potential to significantly improve from here is clear, principally through the conversion of our pipeline of significant new business opportunities. Alongside this, to augment the premium market positioning of our platform and to facilitate the demands of a wider client base, we continue to evolve from being a native ad platform to a full-format advertising platform through our enhanced offerings which have been or continue to be developed. These include new ad formats such as polls and content hubs, new products such as brand intelligence reports and new ways to access the platform, such as our self-serve and credit card payment capabilities.

Operating Review

Readership traffic across the Dianomi inventory base of premium publishers increased by 9%, reversing unusually low traffic levels in 2023. Unfortunately, so far in 2024, advertiser demand has been relatively soft, with many advertisers holding back from normal spending patterns, limiting the Group's ability to monetise the increase in traffic.

Reflecting this change in advertiser spend, the number of our advertisers who worked with Dianomi decreased from 288 in H1 2023 to 221 in the period under review. However, some advertisers who did not spend in the first half of the year have returned since the period end and new ones continue to join the platform. The average spend per advertiser for the top 100 advertisers in the six months to 30 June 2024 remained steady at £118k vs £119k in H1 2023.

Our publisher base reduced slightly to 289 (2023: 309), however, since the period end, this number has increased to 311. Revenue per click ("RPC") was broadly level at £0.51 (2023: £0.53).

Despite operating in a weak market, the Group welcomed 27 new premium advertisers to the platform including well-known names such as PwC, the London Business School, Polen Capital and Northern Trust.

On the publisher side, in February the Group was pleased to expand its partnership with Dow Jones with the serving of Dianomi direct demand ads into display formats on the Wall Street Journal and other Dow Jones' properties to their audience of over 100 million monthly unique visitors.

Shortly after the period end, Dianomi also signed a new agreement with a leading US financial news aggregator to test integrating bespoke format ads onto their site, which, if successful, could lead to a permanent integration. As at today's date, the test is ongoing. There is a further strong pipeline of publisher prospects which includes a host of premium brands including some US global publishing leaders with the potential to drive the Group's future growth in 2025 and beyond. The US election in November provides the potential for increased traffic and therefore monetisation opportunities in the current year, and we continue to work on increasing the spend of existing advertisers on the platform as well as adding new brands in order to maximise any additional traffic, whether from existing publishers or new partnerships.

The Group's programmatic distribution capability continues to be developed to support increased advertiser demand and enable customers to scale their ad budgets via the Company's trusted and brand safe platform. However, reflecting the reduction in advertiser demand in 2024, programmatic distribution was lower at £0.21m vs £0.36m in the same period last year, as it acts as additional distribution to the Company's direct publisher inventory. Video revenue was also lower at £0.28m in the period vs £0.45m in H1 2023.

In 2023, the Company underwent a successful re-organisation to recalibrate and reset the business. Part of this process was to reduce the cost base by £1.0m on an annualised basis. In tandem, new senior talent was brought in to support the sales and marketing team which now runs as a global unit thereby better reflecting the operational structure of our global client base.

Overall, Dianomi remains well placed. We continue to work with all the top ten largest asset managers and seven of the top ten largest wealth management companies in the US. Similarly, as at 30 June 2024, we were partnered with 289 of the world's leading publishers and this number has increased to 311 since the period end. This premium positioning with our combination of the world's leading financial publishers and financial institutions is a core strength of the business. The advantages to both advertisers and publishers of accessing our platform are clear. For publishers, our clients are all premium, aspirational companies whose ads naturally match the aspirations of our premium publishers. For advertisers, we often outperform competitors on engagement and price, plus we are ID-Free, brand safe and premium quality.

We are also working to further differentiate our performance and quality compared to our peers. A recent client testimonial from a leading US Bank stated that Dianomi was responsible for driving 74% of landing page visits for their advertising campaigns compared to the other platforms 30%, whilst being over 10x more cost efficient than their benchmark and pointed to the quality of Dianomi's audiences and contextual relevance in the wealth management space. Alongside this, we are making accessing the Dianomi platform easier. Whilst we still turn away the majority of the advertisers who ask to join us due to our desire to maintain the premium nature of our platform, for those that do meet our criteria they have more ways to work with us than ever before; either direct or programmatically, via an account managed service or via our newly launched self-service platform which provides the ability for advertisers to manage adverts independently.

We remain encouraged by the levels of interest in our platform and our focus is on converting this interest into long-term customers of the business.

Financial Review

Group revenue decreased by 4% to £14.2 million (H1 2023: £ 14.8 million) in the six months to 30 June 2024 due to softer advertiser demand leading to a small decrease in revenue per click (£0.51 vs £0.53 in H1 2023).

Gross margin increased to 26.2% (H1 2023: 20.9%) with the lower margin in the previous year reflecting the additional cost of sale incurred as a result of a contract amendment with one of the Group's largest publishers. This contract amendment resulted in a one-off cost in H1 2023 which is being recouped by way of an enhanced revenue share from 1 July 2023 until the end of 2024, the effect of which will be lower in the second half of this year. Gross profit for the period was therefore higher than H1 2023 at £3.7 million (H1 2023: £3.1 million) which, combined with the lower operating cost base of the Group following the restructuring which took place in 2023, meant that Adjusted EBITDA* was £0.1 million compared to a loss of £1.0 million in H1 2023. The restructuring in the first half of the previous year resulted in exceptional costs of £0.8 million in H1 2023, however, as the restructuring was completed in 2023, there were no such exceptional costs in the period under review.

Loss before tax was £0.1 million against a loss of £2.1 million in H1 2023. There was a net tax credit in the period of £0.01 million due to an R&D tax credit received (H1 2023: tax charge of £0.3 million). Loss after tax was therefore £0.01 million vs a loss after tax of £2.3 million in H1 2023. Basic loss per share was 0.22 pence per share compared to a basic loss per share of 7.80 pence in H1 2023. Adjusted profit per share** of 0.24 pence compared to an adjusted loss per share** of 4.69 pence in H1 2023.

Cash generated from operations was £0.3 million (H1 2023: cash used in operations of £3.4 million) and as at 30 June 2024 the Company had no borrowings and cash of £8.1 million (31 December 2023: £7.7 million, 30 June 2022: £7.1 million).

Net assets as at 30 June 2024 amounted to £8.9 million (31 December 2023: £8.6 million, 30 June 2023: £9.0 million), with the increase compared to the year-end reflecting the increase in cash.

Outlook

Trading levels from the first half of the year have continued into the second half, with the summer months being particularly slow. Demand from advertisers remains soft, however, traffic levels remain above last year and there are signs of improvement in demand alongside a more positive economic environment. There is also the US Presidential Election factor in November which is likely to increase traffic levels. Internally, we are focused on converting our pipeline of new business opportunities and maximising existing ones, with some potential partnerships capable of having a material positive impact on the Group's performance in 2025.

* Adjusted EBITDA is calculated as profit after tax before deducting net finance costs, tax, depreciation, exceptional items relating to the restructuring and share based payment charges

** Adjusted basic earnings per share is calculated using profit after tax before deducting exceptional items relating to the restructuring and share based payment charges

DIANOMI PLC

UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED 30 JUNE 2024

All operations are continuing operations.

DIANOMI PLC

UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2024

DIANOMI PLC

UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY AS AT 30 JUNE 2024

Attributable to the owners of the Company

DIANOMI PLC

NOTES TO THE HISTORICAL FINANCIAL INFORMATION

General information

Dianomi plc (the "Company") and its subsidiaries' (together the "Group") principal activity is the delivery of premium native advertising for the financial services, technology, corporate sand lifestyle sectors. The Company was incorporated on 16 August 2002 in England and Wales as a private company limited by shares under the name Data-ID Limited. On 17 December 2002, the Company changed its name to Dianomi Limited. On 17 May 2021, the Company re-registered as a public limited company and changed its name to Dianomi plc.

Basis of preparation and significant accounting policies

2.1. Basis of preparation

The financial information relating to the half year ended 30 June 2024 is unaudited and does not constitute statutory financial statements as defined in section 434 of the Companies Act 2006.

The financial information set out in this Interim Report does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. The Group's statutory financial statements for the year ended 31 December 2022, prepared under IFRS, have been filed with the Registrar of Companies. The auditor's report on those financial statements was unqualified and did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006. The interim financial information has been prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards (IFRS) and on the same basis and using the same accounting policies as used in the financial statements for the year ended 31 December 2023, subject to the introduction of any new accounting standards applicable in the period.

Whilst the financial information included in these interim accounts has been prepared in accordance with IFRS, they do not contain sufficient information to comply with IFRS. In addition, this report is not prepared in accordance with IAS 34.

This interim report was approved by the board of directors on 20 September 2024 and is available on the Company's website, dianomi.com

2.2. Measurement convention

The consolidated financial information has been prepared under the historical cost convention. Historical cost is generally based on the fair value of the consideration given in exchange for assets.

The preparation of the consolidated financial information in compliance with IFRS requires the use of certain critical accounting estimates and management judgements in applying the accounting policies. The significant estimates and judgements that have been made and their effect is disclosed in note 3.

2.3. Basis of consolidation

The consolidated financial information incorporates the financial information of Dianomi Plc and all its subsidiary undertakings. Subsidiary undertakings include entities over which the Group has effective control. The Group controls a group when it is exposed to, or has right to, variable returns from its involvement with the Group and has the ability to affect those returns through its power over the Group. In assessing control, the Group takes into consideration potential voting rights.

2.4. Going concern

The Directors have, at the time of approving the financial statements, a reasonable expectation that the Company and the Group have adequate resources to continue in operation for the foreseeable future. As at 30 June 2024 the Group had net assets of £8.9 million (30 June 2023: £9.0 million) and cash and cash equivalents of £8.1 million (30 June 2023: £7.1 million). The Group has no debt outstanding or facilities in place (30 June 2023: £nil).

The Group's forecasts and projections, taking into account reasonable possible changes in trading performance, show that the Group has sufficient working capital and available funds to honour all of its obligations to creditors as and when they fall due. Accordingly, the Directors have adopted the going concern basis in preparing these consolidated financial statements.

2.5. Principal Accounting Policies

2.5.1.1. Revenue

The Group generates revenue by charging advertisers for advertising campaigns delivered through its platform. The customer's total spend on advertising is determined by multiplying an agreed performance metric option, such as cost per mil (CPM), cost per impression (CPI), click (CPC) or action (CPA) with the volumes of units delivered.

Revenue is recognised on completion of the performance criteria which, in most cases, is when an internet user clicks through to an advertisement that has been displayed on a web page.

The Group's standard payment terms require settlement of invoices within 60-90 days of receipt.

.

2.5.1.2. Cost of sales

2.5.1.3. Foreign currency translation

Function and presentational currency

Items included in the financial information of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates ('the functional currency'). The consolidated financial information is presented in 'sterling', which is the Group's functional currency and the Group's presentation currency.

Transactions and balances

2.5.1.4. Exceptional Costs

Items which are material because of their size or nature and which are non-recurring are highlighted separately on the face of the consolidated statement of comprehensive income. The separate reporting of exceptional items helps provide a better picture of the Group's underlying performance. Items which have been included within the exceptional category are the costs relating to the restructuring undertaken by the Company during 2023.

Exceptional items are excluded from the headline profit measures used by the Group and are highlighted separately in the consolidated statement of comprehensive income as management believes that they need to be considered separately to gain an understanding the underlying profitability of the trading businesses.

2.5.1.5. Employee Benefits

Post-retirement benefits

Share based payments

2.6. Alternative performance measures

In order to provide better clarity to the underlying performance of the Group, adjusted EBITDA and adjusted earnings per share are used as alternative performance measures. These measures are not defined under IFRS. These non-GAAP measures are not intended to be a substitute for, or superior to, any IFRS measures of performance, but have been included as the Directors consider adjusted EBITDA and adjusted earnings per share to be key measures used within the business for assessing the underlying performance of the Group's ongoing business across periods. Adjusted EBITDA excludes from operating profit non-cash depreciation and share based payment charges and non-recurring exceptional costs. Adjusted EPS excludes from profit after tax, share based payment charges and non-recurring exceptional items and their related tax impacts.

Judgements and key sources of estimation uncertainty

The preparation of the consolidated financial information requires the Directors to make estimates and judgements that affect the reported amounts of assets, liabilities, costs and revenue in the consolidated financial information. Actual results could differ from these estimates. The judgements, estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant.

The judgements and key sources of estimation uncertainty that have a significant effect on the amounts recognised in the consolidated financial information are:

Estimations:

Judgements:

Revenue

Revenue arises from:

Operating segments

The Group is operated as one global business by its executive team, with key decisions being taken by the same leaders irrespective of the geography where work for clients is carried out. The Directors consider that the geographies where the Group operates have similar economic and operating characteristics and the products and services provided in each region are all related to premium native advertising. Management therefore consider that the Group has one operating segment. The Group report is presented and measured to the Board as a single segment and is consistent with the financial statements. As such, no additional disclosure has been recorded under IFRS.

Earnings per share

The Group presents non-adjusted and adjusted basic and diluted earnings/(loss) per share (EPS) for its ordinary shares. Basic EPS is calculated by dividing the profit/(loss) for the period attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.

The profit/(loss) and weighted average number of shares used in the calculations are set out below:

Share based payments

At the time of the Company's IPO in May 2021, the Company introduced share option schemes (the "IPO Option Schemes") in order to retain, incentivise and align employees with shareholders. Under the IPO Option Schemes employees were granted share options with an exercise price equal to the IPO price (or for those granted post IPO equal to the then current share price), a vesting period of 3 years and a non-market performance condition.

Therefore, it was decided that employees who were granted options in 2021 and 2022 would be given the option to have their original options cancelled (the "Cancellation"), and replacement option schemes (the "Replacement Option Schemes") would be introduced under which employees would be issued with new options with a revised performance condition, exercise price and extended vesting period but at a lower number than those originally issued.

315,950 options lapsed before the Cancellation due to employees leaving the Group as part of the reorganisation.

242,424 options were granted in April 2023 under the IPO Option Schemes with an exercise price of 82.5 pence were not cancelled.

1,405,601 options which were granted under the IPO Option Schemes were cancelled in November 2023. Simultaneously, 1,177,593 new options were issued under the Replacement Option Schemes.

The Black-Scholes option pricing model was used to value the equity-settles share-based payment awards as it was considered that this approach would result in materially accurate estimate of the fair value of the options granted.

The inputs into the model for the period were as follows:

Options granted under IPO Option Schemes

Exceptional items

Items which have been included within the exceptional category are the costs relating to the restructuring undertaken by the Company during 2023 and include settlement payments and legal costs.