Focusrite hikes dividend as strong demand continues

Audio hardware company Focusrite reported group revenue of £92.9m in its first half on Tuesday, down from £95.3m year-on-year, but in line with expectations.

The AIM-traded firm noted that its revenue was still “significantly ahead” of pre-pandemic levels in the first half of 2020, when it was £49.9m, and was also higher than the second half of 2021 at £78.6m, despite ongoing Covid-19 and component supply issues.

Focusrite brand revenue was down 11.7% to £65.4m, while ADAM Audio revenue fell 33.1% to £8.4m, with component shortages delaying a product range transition and reducing supply.

Martin Audio revenue surged 44% to £12.5m, however, benefiting from both strong installed sound sales and the start of the return of live events, while revenue from Sequential totalled £6.6m following the brand’s acquisition in April 2021, in line with the board's expectations.

Gross margins came in at 46.6%, higher than the pre-pandemic comparator at 46.1%.

Compared to the first half of 2021, Focusrite said pricing actions had more than offset material cost increases, but short-term freight cost impacts resulted in a reduction of 1.4 percentage points.

Adjusted EBITDA totalled £22.2m, representing 23.9% of sales, and “significantly ahead” of pre pandemic levels of 18.3% of sales, although lower than last year at 30.7%.

The company said the year-on-year comparator was boosted by Covid-19 savings, and now reflected a cost infrastructure supporting a larger international group.

Focusrite said it launched seven new products in the period, including Clarett Plus ranges, Circuit Tracks groovebox, Optimal Audio speakers, Prophet 5 expansion card and Ampify new features, which were all expected to contribute to its second half performance.

It said “strong” production levels of Scarlett interfaces were enabling inventory levels to begin to rebuild, while the acquisition of Linea Research on 10 March for £12.6m brought around £1m of cash in its net assets.

The board declared an interim dividend of 1.85p, up 23.3% year-on-year.

“Demand for the group's portfolio of products has remained strong, and the group's overall performance in the half year was in line with our expectations and remains on track for the full year,” said chief executive officer Tim Carroll.

“As anticipated, demand and sales volumes for home creation solutions have tapered off from the unprecedented high levels during the peak of lockdown but remain materially ahead of pre pandemic levels.

“This is further supported by many trade sources citing continued growth in streaming services and content creation.”

In addition, Carroll said the group saw the installed sound market continue to grow, with positive signs towards a full recovery of live events.

“The group's continued diversification of its portfolio, routes to market, and logistics served us well during the first half, enabling us to perform well despite many challenging global macroeconomic issues at play.”

At 1004 BST, shares in Focusrite were up 2.27% at 1,125p.