Music Magpie posts rise in profit after London IPO
Tech resale site Music Magpie has posted a rise in revenue and profit in its first interim results since floating on the London Stock Exchange earlier this year.
The online retailer, which allows consumers to exchange old devices such as phones and game consoles for cash, reported adjusted pre-tax profit of £4m in the six months to the end of May — up from £3.3m in the same period last year.
Revenue ticked up from £71.1m to £72.8m over the period.
However, on a statutory basis the company swung to a pre-tax loss of £17.7m, driven largely by share-based payments to management of £17.4m and IPO costs.
Shares in Music Magpie slipped almost two per cent in early trading as a result.
Music Magpie has cashed in on the rising cost of tech products, as well as an increased awareness of environmental issues among consumers.
Its UK revenue was up 6.6 per cent, which the company said was driven by increasing demand for reselling and a trend towards buying from firms with strong environmental, social and corporate governance (ESG) credentials.
The figures come after Music Magpie listed on London’s Aim market in a £208m initial public offering in April.
The float raised £15m for the company and £95m for shareholders, including substantial windfalls for founders Steve Oliver and Walter Gleeson.
Music Magpie said it had benefited from other new initiatives over the period, including its new smartphone rental subscription service, which launched in October.
The firm said this had hit consumer tech revenue growth in the short term, but said there was potential to earn higher recurring revenue and profit over the life of a device than in a one-off sale.
Founder and chief executive Steve OIiver told City PM the service provided a “more flexible and accessible offer… especially for younger people who are very used to and comfortable with paying for things on a monthly subscription and rentals — ownership is less important”.
The company has also launched a new trade-in service dubbed Smart Drop Kiosk, which allows consumers to sell their devices at sites such as Asda stores and receive instant payments.
Oliver added that this service had also been particularly popular with younger people.
Music Magpie said trading was in line with expectations and said it was well positioned for future profit growth.
Analysts at Shore Capital said: “We are pleased to see the development within the rental offering, which provides incremental margin potential, along with further progress within corporate partnership and implementation of other strategic initiatives, reaffirming the competitive circular economy solutions that musicMagpie provides to both the UK and the USA markets, reducing e-waste.”