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Tuning up

Update | Consumer Support Services | 13 Sep 2017

Following a strong first half driven in part by known product launches, this equally strong second half appears to show a more fundamental improvement resulting from sustained sales growth and improving mix together with margin and cash management in Focusrite’s international markets. These factors underpin our conviction that the company has sustainable independent strength.


Outstanding first half

Update | Consumer Support Services | 24 Apr 2018

Focusrite has delivered an outstanding first half with substantial growth on all metrics, across all territories and in both product brand groups. Constant currency revenue growth of 26% is double that of FY17 although, after an unprecedented pre-Christmas period, it is possible that the shape of trading may be becoming more seasonal. The company has net cash of c £20m, and the share price appears to discount a return on that.


The song remains the same

Outlook | Consumer Support Services | 21 Nov 2018

The investment case for Focusrite is not so much its trading growth, impressive though that is with 19% pre-tax growth in FY18, but its ability to sustain expansion into the future. Both in category terms, with the professional and app-based products developing their markets, and geographically, with Asia taking over as the fastest growth region, management demonstrates its longer-term aspirations and capabilities. In our view, the inconvenience of US tariffs is likely to be temporary and does not affect long-term value, which we define as 457p per share.


Second-half trading as expected with higher cash

Update | Consumer Support Services | 18 Sep 2018

Focusrite ends the year with revenue as forecast, continued profit growth in the second half and revenue in line with our expected slower second-half growth. Cash of GBP 22.8m is 10% higher than we forecast and is now over half the balance sheet. US tariffs will likely apply to Focusrite’s business there and management has been considering its response, while risks associated to Brexit appear relatively minor to us. It seems the share price continues to discount a significant acquisition.


Rising scale

Update | Consumer Support Services | 09 Mar 2018

Focusrite’s trading statement indicates constant currency sales growth of over 25%, even better sales growth than the headline 19%, because of the US dollar’s depreciation. The background is a continuation of widespread demand for the full product range across all the main geographies. Although trading patterns may be shifting to the first half, we are upgrading our forecasts by c 5%.


Music therapy

Update | Consumer Support Services | 10 Jan 2018

Growth in revenue and cash is strong after four months of trading. Focusrite continues to build on its leadership positions in international markets, and to benefit from its c 85% non-UK market exposure. Further growth in cash is also encouraging as it suggests good profit conversion despite expected cost increases. If these independent growth trends continue to the half-year, we would see upside risk to our forecasts.


Results exceed, strategy evolves

Outlook | Consumer Support Services | 21 Nov 2017

Focusrite, which already has market leadership in niche product areas, is evolving its strategy, to set up new brands targeting the professional interface and app markets. Focusrite has beaten our FY17 forecasts with 30% earnings growth, and we upgrade for the third time this year. With its attractive c 85% overseas revenue structure, we believe Focusrite is well placed in the short and medium term to sustain its independent strength.


Strong delivery with further potential

Update | Consumer Support Services | 03 May 2017

A number of factors have combined to produce excellent interim results for Focusrite: strong demand for its leading products, exposure to the buoyant US market, a promising result from sales to Amazon, good margin control, and a significant increase in cash generation. We are upgrading our forecasts, cautiously in view of consumer markets, although opportunities in the Far East and online represent potential upside.


Right focus

Update | Consumer Support Services | 20 Mar 2017

Focusrite has positioned itself in a way that makes its shares a particularly attractive investment: leadership in a niche product area protected from general consumer swings; an international market structure that makes it relatively currency agnostic; a habit of profit over delivery; a strong and further strengthening balance sheet; and an undemanding valuation. This first half trading statement confirms every one of those points.


Positive momentum on trading and cash

Update | Consumer Support Services | 10 Jan 2017

Trading for the four months to end December continued the positive trend of the first two to October. We understand that both constant currency trading and exchange rates have been favourable. Cash has also grown encouragingly, reflecting net receipts from the strong sales in late FY16 as well as early FY17. Recent softness in the shares represents excellent medium-term value for a niche market leader with positive growth.


Product quality and management depth

Flash note | Consumer Support Services | 07 Dec 2016

Yesterday Focusrite held a capital markets day, designed to showcase the range and quality of products and introduce operational management, which shares a passion for music-making and has deep knowledge of the products. This contributes to excellent product support, software innovation and thus customer loyalty, which should sustain the company’s brand leadership.


Second half strength supports the strategy

Update | Consumer Support Services | 22 Nov 2016

Focusrite has beaten our FY16 estimates, resulting in forecast upgrades. More importantly, perhaps, developments in the second half support our confidence in the strategy of expanding its markets and ranges with innovative and disruptive products. These include the successful launch of the second-generation Scarlett, confirming the sustained brand strength of the products, and the growing strength of the Far East where the company has a strategic geographical focus. We increase our DCF valuation to 214p.