Shares in media platform Future (FUTR) slumped more than 25% after the firm warned on FY26 earnings. The company said audience shifts from Google search had negatively impacted its higher-margin programmatic advertising and ecommerce revenue.
Zero hour
In an update for the six months to 31 March, the firm said its growth strategy was ‘making good progress’. This included its ‘Google-Zero strategy’ across its leading brands, which aims to attract high-value audiences across distribution platforms.
Google-Zero refers to the point where Google evolves from a web search engine to an AI-powered ‘answer engine’. This means users receive direct answers from Google’s AI Overview, leading to fewer click searches and less traffic to external websites.
Future said the shift had not only lowered ad and ecommerce revenue but increased PPC (pay-per-click) costs. Therefore, the H1 EBITDA margin would be in the 24% to 25% range instead of 30% as previously guided.
Looking ahead, the firm expects audience sessions to remain volatile and is taking a cautious view. For H2, the group expects lower organic sales and a FY EBITDA margin of 25% to 27%.
CEO Kevin Li Ying said he was ‘disappointed with the impact of the changes in the search ecosystem’ on trading. However, the firm was ‘making good progress in executing the elements of our growth strategy that are in our control’.
We’ve already seen software stocks fall victim to fears AI will eat their lunch. Now it appears digital media companies may be in the same boat. By integrating AI into its own offering, Google has engineered a significant shift in user behaviour.
Unless we have a detailed query, most of us probably don’t get beyond the AI Overview which tops the search results. This presents a major problem to firms which rely on paid advertising and clicks through to external websites.
In its defence, Future’s direct B2C direct digital advertising business continues to perform well and will grow this year. Go.Compare, the comparison website, is also expected to show H2 growth after a weak H1 performance.
Given the choice, we would rather own a business like Eagle Eye (EYE), which focuses solely on targeted B2C marketing. By allowing big retailers to personalise their promotions, they are producing genuine results which in turn means a sticky customer base.
Read the press release here: https://futureplc.com/investor-relations/
