Digitalbox PLC
LSE:DBOX
Earnings Call Analysis
Q4-2023 Analysis
Digitalbox PLC
In a year marked by significant operational challenges, the company weathered the storm to emerge with a performance that, while reflecting the global advertising downturn, still managed to deliver critical profits. While revenues saw a decline of 22%, this figure simplifies a more complex reality with an underlying like-for-like reduction of nearly 29%, attributable to both a decrease in global advertising and distribution disruptions. However, the company adapted well to these disruptions, resulting in an improving trajectory toward the end of the year.
High operational gearing is a defining characteristic of the business, with gross profit margins reflecting this at 78.3%. Such a structure means that fluctuations in revenue, like the downturn experienced, have a magnified effect on margins. Nevertheless, the company has retained an 'ultra-high gross margin,' thanks to the market's continuing high regard for its audience, suggesting resilience and a strong revenue rebound potential when market conditions improve.
The addition of new businesses like TV Guide reflects the company's strategic growth via acquisitions—a testament to the company's financial aptitude despite industry-wide adversities. TV Guide, now fully integrated with a rebuilt tech platform, already shows a performance uplift, while The Poke, another acquisition, has impressively recouped half its acquisition cost within a single year. Such strategic moves have diversified the revenue streams and bolstered the company's market position.
Amidst the challenges, cash generation remained solid with the company converting Adjusted EBITDA into cash efficiently, evidenced by cash from operations standing at 146% of adjusted EBITDA on average for the past two years. This fiscal prudence has kept the company well-capitalized with a bank balance of GBP 1.9 million, allowing it to remain highly liquid and fund further growth.
Efforts to mitigate the impact of digital disruptions, such as changes in Google's algorithm, are ongoing. These changes led to a substantial loss of sessions but did not prevent the company from adapting and maintaining profitability. Moreover, a burgeoning social media presence, with over 20 million followers, enhances the company's ability to engage with its audience, driving more traffic to its sites.
Looking forward, the company anticipates a much better economy and stronger advertising market conditions by the year 2025. By focusing on acquiring businesses that can transition from desktop to mobile-focused models, the company is positioning itself to capitalize on emerging growth opportunities and adapt to an evolving digital landscape.
There's ongoing dialogue with significant shareholders about strategic options, including possible buybacks, placing the company on strong footing to pursue value-enhancing activities. This financial stewardship shows a commitment to maximizing long-term shareholder value, which supports the company's buy-and-build strategy.
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Good morning, ladies and gentlemen, and welcome to the Digitalbox plc full year results investor presentation.
[Operator Instructions] And I would now like to hand you over to the executive management team from Digital box plc Marcus. Good morning sir.
Good morning, everyone, and welcome to the Digitalbox 2023 Annual Results Presentation. I am Marcus Rich, the Non-Executive Chairman. I will be joined by James Carter, CEO; Jim Douglas, COO; and David Joseph, CFO, who will take you through the 2023 results in detail. 2023 has highlighted the changing landscape for ad-funded digital content businesses. Audience has been squeezed by Google and Facebook has been well documented in the trade press. Has had a difficult advertising market created by external economic factors.
As the platform spike to maintain share, given the imminent growth of AI, we can expect continued programs of algorithmic updates. The good news, though, is the team at Digital box have an outstanding record of quickly finding the appropriate solutions to regain audience and with the implementation of the Graphene ad stack they monetize this audience better than their competitors. The team will show examples of how both were implemented in 2023. Next slide, please. Thank you, James. The results highlight today will show firstly how by continuing to execute on the stated buy-and-build plan Digitalbox is generating greater shareholder value over time. Secondly, after a difficult advertising market in 2023, how we see forecast improving and how the Graphene ad stack can take advantage of any advertising uptick. Thirdly, our working methodology for bouncing back from algorithm impacts on audience. Fourthly, the improving return on investment on all recent acquisitions. And fifthly and finally, the opportunity Digitalbox sees in the current disruption to make further acquisitions. I will now hand over to CEO, James Carter. Over to you, James.
Thank you, Marcus. And again, welcome to everyone. Thanks for joining us for the Digital Box 2023 results presentation. To recap, for anyone unfamiliar, Digitalbox is a pure play digital media company with a pedigree in emerging technologies -- publishing technologies. We're 100% digital and mobile focused, and we've grown through a buy-and-build strategy and transforming the acquisitions that we've made along that journey. Our historical model is simple. We published great content that drives audiences to our websites, which we then monetize through serving advertising solutions across all areas: branding, video, e-commerce and more. We operate a number of 5 brands, Entertainment daily, entertainment and TV celebrity news site. The Daily Mash, the U.K.'s leading new satire site. The Tab, the U.K.'s leading student youth culture site that's driven by an army of students across more than 30 campuses in the U.K. The Poke that we acquired in 2022 which is best described as a humor aggregator, serving some of the funniest moments to go viral on the web. And most recently, TV Guide, a linear TV guide product that was established over 20 years ago and remains as strong today as perhaps it was then. So the presentation breaks down into 5 areas. I'll take you through the market backdrop and key headlines and what the future is looking like.
Whilst David Joseph will drill down into the financial detail, and Jim Douglas, into the operational detail around our brands. And it should be complete within about 45 minutes, after which we can field questions. So the Board brings significant experience to the business through success delivered within major institutions like Emap plc, Future plc, Unilever, Reach PLCs and more. In addition, the executive has experience of driving editorial strategy at the highest level and delivering VC backed roll-ups to exit and are well invested with a stake of over 20%.
So the market backdrop. This first slide presents a chart, which is the advertising index for U.K. digital advertising, programmatic advertising over the last 4 years. A typical advertising year represented pretty much by the last 20 years within advertising in the U.K. is represented by the 2021 pattern, as you can see there. The year typically starts off at a very low point in January. Builds towards the end of H1 as a bit of a summer recess and then built heavily into Q4. And that's obviously, as you can see there, what we saw in 2021. However, if you look at the previous year, you can see the impact and the crater caused by COVID-19 and the pandemic before the 2021 recovery. And what you can see in 2022 is the year starts off in a very buoyant way before there's nervousness that hits the market and the second half of the year is actually lower than the first half. And we've seen that trend continue into 2023 as the nervousness is stuck the 2023 year is actually slightly smaller than 2022. So it's been a pretty tough advertising market to operate in over the past 12 months. The other challenges that we've been faced with and we've expressed these challenges before have been with the major platforms, Google and Facebook. I think we've discussed this at our interim results last September. Firstly, the Google algorithms that impacted Entertainment daily and basically blocked audience coming through to that site. You can see the chart to the right that is basically us unlocking the audience. And as Mark has alluded to, we've got many more skills dealing with these kind of algorithmic impacts now than we had a year ago. But you can see in November 2023, we unblocked the traffic. And part of the process that helped us achieve that was moving domains from .co.uk to a .com, which gives us much greater visibility and significant improvements that we made along the way in our core web vitals or audience consumption of the technology and how efficient and quick that is. So we did make progress there, and we continue to face challenges with Google as they will change their algorithms this year. They've got a new algorithm coming out to combat spam in May and also third-party content in May and they're also introducing an AI-driven search model, I think, from May or June onwards. So we're much better equipped than previously, and we'll face those challenges coming down the line. META, i.e., Facebook blocked about 20 million sessions on the tab as they had flagged our holy church of Netflix page for dangerous content. And effectively, all we did here was publish an article around serial killer Jeffrey Dahmer, American serial killer. And it was considered to be dangerous content. And it was potentially authorizing about a Netflix show, and that really closed off until September, our reach via that Facebook page. But as you can see there, it reemerged between September and October and the Netflix page is now doing better than at any time in the past 12 months. So our focus on delivering the strategy. We've expanded the portfolio to 5 operating brands now, which are all on the Graphene platform. We've managed to diversify, which I'll go into more detail later, our traffic sourcing and grown our social followers by over 150% to over GBP 20 million. And we remain very mobile-focused with 91% of our users coming via that channel. We delivered strategy through deploying cash that we've built up over previous years and deployed that most significantly on TV Guide and media chain assets finished the year with GBP 1.9 million of gross cash and continue to pursue a direct-to-consumer relationship via the Daily mash, growing its subs base by more than double in the past 12 months. So now for the financial detail, and I'd like to hand over to David Joseph.
Thanks, James, and good morning, everybody. Before I begin, let's be clear that we can't control or influence the global advertising markets nor the global tech platforms. I think we're all very well aware of the causes of a very aggressive trading environment everybody is operating in. These conditions have led to the global advertising market continuing to be in a deep and sustained depression resulting in a 20% year-on-year decline. The global advertising markets are down 20%, will be down 20%. Further, in order for the global tech platforms to navigate their way through the geopolitical storms in their path, they need to update their algorithms each time they do this there are unintended consequences and the temporary disruption in the distribution of our content is one of them. This is business as usual for us now and something we're factoring into our forecasting and into our operating model. Whilst we can't control or influence the global ad markets nor the global tech platforms, as stewards of this company, we are expected to navigate our way through these adverse conditions successfully, and we have 3 key aims: one, don't incur trading losses; two, conserve cash; and three, position the business in the best possible way in order to capitalize fully when the global advertising markets do recover, which they will. So on to the slides, I've got 5 for you. Number one, thank you, James, income statement. Number 23 includes the results of all 5 products, which includes TV guides for 3 months. The 22 includes only 1 month of the pop and nothing for the TV guide. I'll unpick this shortly. Despite the very aggressive trading environment and the disruption caused by the global tech platforms, the business performed slightly ahead of management's expectation. Delivering revenues of GBP 2.8 million, which is 22% down year-on-year and delivering an adjusted EBITDA profit of GBP 20,000, which is a significant change in the prior period of GBP 1.1 million. But it is not a loss. With a business that has high operational gearing, this inevitably impacts on the gross profit margin percentage, which decreased by 6.8 percentage points to [ 78.3% ]
And the converse is true when the global advertising market returns, which you will, The Tab will turn back on and 80% of the additional revenue will drop through to EBITDA. This is still an ultra high gross margin, though, and results from the market continuing to value our audience highly keeping our yields [indiscernible] 1,000 ahead of the market. The next slide, please. Thank you. Segmental, the headline here is revenue decline of 22%, but it needs a little unpacking. The underlying like-for-like, excluding the Poke TV guide than the [indiscernible] TV program is a reduction of 28.7%. This being caused by the combination of global advertising market decline, plus the distribution disruption caused by the algorithm changes. Within this, we can see that entertainment daily was hit hardest by the state of the ad market and by the algorithm changes. Although the quarter-on-quarter rate of decline slows, as you can see on the right-hand side, as the business learned to adapt to the algorithm changes. The Daily Mash is still in transition to its subscription-based model, hence the segmental information reveals very little. The impact of all these external forces on the tab worsened throughout the 3 quarters, as you can see on the right, before improving in Q4, again, as the business learned to adapt the algorithm changes. The reassuring aspects of these 2 slides are that, one, this is a little better than we anticipated. Two, the business made a small profit. Three, The Poke has proven just like The Tab to be issued by and four, we now have another addition to the portfolio in TV Guide. Next slide, please, James. Cash generation. Despite all these challenging conditions, cash performed well as usual. I restated the statement of cash flows in order to highlight the cash generated from operations because this is what's really going on in the business, the conversion of adjusted EBITDA into cash in the bank. You'll see that '23 saw cash generated from operations totaled GBP 193,000, which amounted to 965% of adjusted EBITDA. Well, that's just an anomaly of course. The more sensible view is to look at the aggregate performance to the right, taking both '23 and '22, which shows cash generated from operations averaging at 146% of adjusted EBITDA. Overall, again, I would expect this conversion rate to average around 95%. The next slide. So this is a pro forma summary. It's about cash utilization it's pro forma, but it's helpful. For the year-end, gross cash at the bank was GBP 1.9 million, which compares to GBP 2.8 million in the previous year. More importantly, at the year-end, net cash in the bank was GBP 1.7 million which compares to GBP 2.5 million in the previous year. Yes, this represents an GBP 800,000 reduction in the net bank balance, but it's important to understand how this money was used. This slide shows the business created GBP 193,000 at the trading level but spent over GBP 1 million on accretive acquisitions and paid down GBP 75,000 worth of debt. My final slide. Thank James. Draw your attention to 4 points of note here. The largest item on this balance sheet is intangible assets, largely goodwill. As hinted at the interims, we've taken the view that the carrying value of goodwill relating to entertainment daily required an impairment.
This impairment is GBP 6.3 million and this year has been formed due to 3 key factors. One, Entertainment Dailies anticipated earnings are lower than previous estimates. Two, the discount rates or WACC has increased from 10% to 20% as a result of the [indiscernible] in high interest rates plus the risk premium attached to small cap companies trading on AIM. And three, we have reduced the time horizon for DCF calculations from 15 years previously to only 10 years now. None of the other intangible assets were felt to require impairment despite the increase in WACC and despite the reduction in the time horizon. The second item is gross cash at the bank, GBP 1.9 million, performing well as described already, net cash of GBP 1.7 million as compared to GBP 2.5 million last year. The third item, the business is highly liquid, having GBP 2.3 million of net current assets which a business of this size is very substantial, down from 3.3% in the prior year. And the fourth item, capital and reserves, GBP 6.3 million impairment has taken the distributable reserves into a substantial negative. And finally, despite the aggressive trading environment and the challenges brought by the tech platforms, we have managed to see this business successfully and achieve our 3 key aims. We didn't incur any trading losses. We conserved cash. In fact, we generate cash, and we are positioning the business in the best possible way in order to capitalize fully when the global advertising markets recover. We now have 5 products, and we have improved our tech stack. That's it from me, back to you, James.
Thank you very much, DJ. Right. It's my role now to take you through some of the headlines and perhaps some of the more positive things that happened throughout last year. Firstly, Graphene. Graphene is the name that we've applied to our technology stack, and it continues to evolve to help us serve the best publishing process and best user experience on our platforms. It enables us to push content at the optimum level. Serve advertising at the best density in order to optimize our monetization and it helps deliver the best user experience, which we've recently pushed through on TV Guide, which is a huge difference on that platform since it's been rebased. Gas, as we call it, the Graphene ad stack, Gas has been driving success over the past year on The Poke. And these are, in fact, the daily session values that The Poke has delivered over the past 13 months. So you can see in December '22 the area in blue, sort of daily session values before we rebased The Poke onto the Graphene ad stack and you can see it was running at around GBP 3 or just over GBP 3. And if you move to the right of the chart, you can see how 2023 performed at around 300% or perhaps a little more at an average of around GBP 12 to GBP 14 over the whole of the December period. So significant difference made there by the Graphene ad stack being applied to The Poke and a pretty strong year that I'll go into later around repaying the acquisition costs. We also rebased our audience sourcing. And this chart or this cluster of chart helps illustrate that. So if you look at the left-hand side of the slide, you will see the blue represents typically Facebook traffic, but social traffic that was being delivered by Digitalbox plc when we first floated in December 2019. And you can see that we're running at 80%-ish traffic across our business being sourced from Facebook. If you look to the right, you can see the sourcing profile is now very, very different. You can see we've grown in the red search traffic, which is typically Google, which is much more significant now for us than it ever was and direct traffic, which is the green segments of the charts. So that's really important to the business because it gives us stability as it's inevitable that the platforms will continue to twist and change their algorithms and having diversity of audience sourcing is the best way to navigate that. We also grew our social audience space. And this chart shows again from -- the year we floated in 2019, we had around 3 million followers, social followers. And we've now got over 20 million following the social chain AG or media chain acquisition that we made last August. And the important thing here is having a bigger social footprint will enable over time, much greater audience engagement and much greater traffic to our websites. We've been disciplined in our approach to M&A. And this chart helps again to illustrate that. We paid GBP 200,000 for The Poke in December 2022 and the product made a contribution of just over GBP 100,000 for the year ending December '23. So in a difficult advertising year for an ad-funded business to repay 50% of its acquisition costs is a pretty good result. And we think it is a better ad market around the corner then that could have well been 18 months. But nonetheless, we're targeting, as we have targeted or as we have achieved on The Tab previously, an 18-month return on investment we're targeting on The Poke 24 months. And TV guide is showing signs that it will deliver in 18 months and social chain, our target is 24 months.
So pretty impressive returns around acquisitions that we've made, and that comes on the back of being very disciplined about what we have acquired. We've acquired, as we've said before, those assets out of cash. And this chart really shows how important the cash has been to us since we floated with GBP 0.5 million and finishing the year in 2023, whilst we -- with GBP 1.9 million, whilst we've made acquisitions throughout that journey. I'd now like to hand over to Jim Douglas, who will take us through some highlights on our individual brands.
Thank you, James. Yes, I'll run through our portfolio of 5 sites and to talk about some of the progress we saw in 2023. So the first brand, TV Guide, which is, as James mentioned, our most recent addition to the group with our completion of the acquisition in October of last year. As the name suggests, the core proposition here is helping users find the best shows to watch, either what's on now, later tonight or next week or allowing them to search by specific shows, by channel type of shows, movies or sports. Many of you may remember that this deal was a long time in the making. And that's really because while this brand was launched more than 20 years ago. And so over time, as published real recognition and a really valuable loyal audience the age just meant that the underlying tech needed an extensive rebuild prior to completion. So that work is now done. The site is ours. We have a progressive web app serving users, however they choose to access the site, either directly or the apps in the app store -- and we've seen improved performance as a result of that. We've seen improved search performance. And also crucially, commercially, we've seen the move on to the Graphene ad stack deliver an 18% uplift in session values. And we also have further plans for the site, which we'll touch on in a few slides' time. Moving on to The Poke. As James mentioned, the brand has just completed its first year with us, and we think it's really a great addition to the group. There's obviously a good portfolio fit with the Daily Mash but beyond that, it's really a great property in and of itself. The Poke is a curation of the funniest stuff on the Internet, whether that's reaction to breaking news, Twitter takedowns or unearth and hidden gems from the weird and wonderful depth of Reddit. As James mentioned earlier, the brand is delivering really well in terms of payback. So it's on track. It's already repaid 50% of its acquisition cost within its first year of ownership. This year, we increased editorial output. We saw hits from the likes of Aiman Homes having a hot mic meltdown on GB news. Louis Theroux making Pierce Morgan look even more stupid than normal and quite a few great moments featuring, as you can see on the right here, Comedy Legend and National Treasure, Bob Mortimer and again, it's a bit of a recurring theme. The power of the Graphene ad stack in December, session values rose by more than 300% year-on-year. So a pretty significant indication of the ability to bring a title into the portfolio and improve its performance. Next, we have Entertainment Daily, so this is our longest-standing brand, and many of us, I think, will be familiar with it but just as a reminder, the sites editorial remit is the delivery of fast-paced TV and show biz news with a strong U.K. focus. As James mentioned, we experienced a really challenging period for traffic for a significant portion of the year, but we did see a pleasing return in Q4 following our move to the dot-com domain as James mentioned. We continue to see key shows like I'm a Celebrity, the 3 big soaps strictly come dancing, performed really well. And also this year, we saw good traffic from our coverage of big ITV dramas like Mr. Bates vs. The Post Office and also the Philip Schofield Saga.
And also entertainment daily is now benefiting from a bigger social following as we've aligned and rebranded part of the media chain portfolio with entertainment daily to increase its audience by 1.3 million followers. The Daily Mash is the U.K.'s favorite satirical news site. So since we made the strategic decision to shift to a paid model, we've been seeing really good progress. We've now more than 4,000 paying subscribers. And it's this subs growth that we see as key to unlocking The Mash's return to profitability. So the next stage here will be to add more reader benefits in terms of offering free trials for existing subscribers to gift to their friends, very much like the telegraph of used to grow effect and potentially partnering with third parties like comedy streaming service, next up to include a bundle do. Also this year, we tested some video content via META and TikTok based around AI-generated videos, repurposing existing articles and pieces fronted by on-camera talent, like those you can see on the screen bottom left here. And that activity delivered us more than 25 million views. And finally, on the MASH, even though we are a digital business, we've recently partnered with a book publisher to create the Daily Mash guides to the class system, which will be out just in time for Christmas, and then rounding out the portfolio, we have The Tab, which is the U.K.'s largest student and youth culture site, and it's powered by our London hub with journalists working at 30 campuses all across the U.K. So the consistent theme here in terms of increase in session values plays out on The Tab as well. With Graphene ad stack helping elevate session value performance by 25% year-on-year as well as hit editorial stories in the entertainment space, covering new favorites like Love Island, Married at First Sight and more recently, Celebrity Big Brother. The editorial team are always finding ways to spin adjacent content from big entertainment IP. So there's an example here on the right-hand side of the slide, where the hit Netflix romance One day, which is about a couple falling in love at University that inspired the team to take that idea and create a TikTok video rundown of universities where you're more likely to find a partner. So quite a nice editorial twist in showing the innovation in the editorial team. And finally, for The Tab, as you can see on the left-hand side, the picture of The Tab's Facebook page, and The Tab's Facebook following has now grown to almost 10 million followers as a result of our integration of the largest of the media chain assets in to The Tab main page. So that means that The Tab content can now regularly reach a social audience of more than 14 million, which we think gives us great potential for the future. That's it from me.
Thank you very much, Jim. Okay. I would just like to take you through some forward-looking opportunities that we'll be focused on before summing up and then taking some questions. So the U.K. adults spend 4x as much time online by our mobile device compared to a desktop device. Mobile advertising is still playing catch-up. Digital advertising spend is forecast to grow to over $800 billion in 2026. But the mobile segment within the lighter pink part of the chart is expected to grow by over 40% over the next 3 years as it accounts for the greater share of the total digital spend.
So that's a positive place for us to be as we move forward. Can I just check because I've lost my sound. I can't tell whether or not people can hear me or.
James we can hear you, sir.
You can hear me. Okay. Thank you. Thank you. Okay. The next -- sorry, the next slide. This chart shows the growth of U.K. e-commerce over the last 4 years. What's interesting again about this is perhaps the impact of COVID-19. So if we look at the change in the volume of goods or the value of goods bought online, which is the bright pink part of the chart. You can see as we moved into Q2 2020 and Q3 and 4 and then Q1 2021. A the percentage of e-commerce that they accounted for was growing significantly. But since those days of the pandemic and lockdowns have departed us, you can see so as the reliance on the purchase of online goods. And it's normalized. And as you move to more recent times in 2023, you can see it's actually reduced since the heady days of the pandemic. But overall, e-commerce has continued to grow. And the important thing we're looking at here is the services aspect of the e-commerce pie. And this accounts for things like digital subscriptions. So Disney plus, for example, Netflix, et cetera, your subscription to the telegraph or your subscription indeed to The Daily Mash premium offering are all accounted for in this part of the graph and so really, what it's demonstrating is there's a much greater appetite to pay for services via digital devices than ever before. And we're seeing it across the media landscape as well. We've seen the mail introduced a paywall with Mail Plus. And we think we're right to be looking and continuing to look at this area as a significant future opportunity for the business. Just drilling down into what we're doing on each brand. The subscription drive, as Jim mentioned, on the Daily Mash will continue. We're now standing at a position of just approaching 4,200 subscribers today. As the Google algorithms continue to change, we think there's an opportunity really around Entertainment Daily content in very specific content verticals because these will stand for much greater levels of trust and authority, having experts writing for very specific content areas, and we'll release more information on this as we move throughout -- through the year and potentially launch more product. The Tab, we're exploring U.S. content potentially publishing around very U.S.-centric shows. We've had a very successful period in the past months or so around Mafs Australia Married at First Sight, Australia. And we will continue to explore the international opportunity around the tab. And a key reason for that or one of the key drivers for that is we had great success on tab session values last year, which were partly as a result of being visible in the U.S. ad market which is in a much stronger position than the U.K. That was certainly a contributing factor behind our growth on The Tab of 25% concession values.
The Poke, we are looking at appointing a series of guest editors. So the advantage here is potentially the guest editor has a pool of followers on Twitter or Facebook and we can tap into their pool of followers with the content that they're producing for us and they can tap into our pool of followers. So it's a kind of win-win opportunity that we're exploring there. And we think -- there's certainly room for growth and certainly around the elections in both the U.S. and the U.K. this year, there'll be further opportunity. TV guide, we're about to release a cross-linking project between TV Guide and Entertainment Daily, which we have helped hope will drive direct traffic and certainly help source more organic search traffic as well.
And we're considering at the moment moving further into the streaming market alongside the linear programming market that we're currently servicing. And there will be a further variant of Graphene released in the middle of this year as we look to build an interface that makes it a lot simpler and quicker for us to overlay our advertising technology on to acquisitions. And as far as acquisitions are concerned, really the key focus is the central part of this chart. We look at opportunities across the board. But the hotspots we've identified consistently is first wave digital media businesses that are probably struggling to evolve their models for today. So things that are probably invented products that were invented in the Northeast. Struggling to apply a mobile-first model in today's market. Examples of that are really the last 3 things that we bought. The tab certainly falls into that category, The Poke and TV Guide definitely does. So in summary, 2023 was definitely challenging through a combination of Google and Facebook algorithm changes plus depressed at markets. We managed to maintain profitable operations for the fifth consecutive year, which we are absolutely focused on doing going forward. Our social following is now over GBP 20 million, doubling the number of followers that we can push our content to, which is a big advantage. Our cash generation is funding our growth with GBP 1.9 million in the bank at the end of 2023. It puts us in a really strong position and we feel we've really set the business up to make the most of the opportunities as we move forward towards a much better economy and a stronger ad market in 2025. That's it for me. Thank you very much for spending the time listening. We'll now move towards the questions.
James, Marcus, David, Jim, thank you very much indeed for your presentation this morning. [Operator Instructions] But James, perhaps at this point, sir, if I may now hand over to you just to chair the Q&A with the team, and then I'll pick up from you at the end, that would be great.
Okay. Thank you. I'll take the first couple. But the first couple, given the challenges faced by other publishers in 2023, as Digitalbox identified potential acquisition targets and what criteria are being used to evaluate these opportunities. We continue to eye opportunities. And really, the hotspot, as I think I said on the second from last slide is looking at businesses that were engineered around desktop initially desktop publishing and really our ability to move them into a mobile focused world create very efficient editorial teams driving audience and a very efficient monetization model is the opportunity for us. So I can't tell you obviously what we're looking at, but there are increasing numbers of websites that are coming under pressure and looking for an alternative model. And if we really believe we can overlay out and are confident that we can overlay our model as we did believe on The Tab, The Poke and TV guide, then we'll move forward with the opportunity. Next question was, how significant were the impacts of Google algorithm changes and Facebook action on The Tab and what steps have been taken to prevent such issues affecting your traffic and revenue in the future. We continue to follow best practice and which by no means prevents these issues arising. But it limits the chances of these things happening. But in terms of the volumes, we estimate we probably lost around 50 million sessions in the whole of 2023. On the Entertainment Daily and around GBP 20 million on The Tab. So really, that is the difference between total session volumes that we delivered last year and the previous year. Right. There's another question. Downing Micro-Cap Trust own 19.5% of the shares and currently in wind down, representing a large share overhang. Given the current valuation of these is just GBP 900,000 and the company holds GBP 1.9 million cash. Would you consider buying these back from downing. So I pass that to you, Marcus, as a question.
So we're in regular contact with downing. And in fact, they have an observer peak on the Board. Last conversations where they're happy to hold the shares. They still see upside and value and the wind down is going to take a reasonable amount of time. Having said that, it's the Board's responsibility to maximize shareholder value. So regularly, at each board meeting, we discuss whether we should consider doing a share buyback, whether the cash which it currently is best used on a buy-and-build strategy.
So -- and we have a Board meeting to come up in the next month, and we'll discuss those options again.
Okay. Thank you, Marcus. DJ, there's one here for you. EBITDA is not a measure of profit, especially when it's adjusted EBITDA. The bottom of the income statement is the only measure of profit or in brackets, significant losses in your pace.
Okay. I would take a view of that. I think EBITDA for a business that doesn't have a high degree of working capital stock. It doesn't have a high degree of CapEx or investment needed to go into the business like how EBITDA is exactly the right metric to be looking at as a testament to how the business generates its cash below that adjusted -- adjusted EBITDA of GBP 20,000 is noncash, nonrecurring financial accounting entries. So I would disagree with that, respectively.
Okay. I have another one for you, DJ. Days sales receivables has jumped from GBP 97 million to GBP 124 million. Why the jump is the increased bad debt risk.
So Mark, thanks for the question, Mark. I think you probably made that calculation based on the annual sales and then a track back over 365 days ordinarily a perfectly sensible approach. However, when you've got a business that's got very highly seasonal sales that are very heavily skewed towards November and December, unfortunately doesn't work out very well as a calculation. The true DSO at the end of December was 59 days. So quite the converse actually when you take the seasonal revenues into account being November, big December, then that explains the result and trade debtor position at the end of the year. So this business has always enjoyed very good DSO and very good debt recovery because it only really trades with global platforms.
Thank you, DJ. One final question. The company has said they're currently trading in line with expectations. However, they've chosen a broker who doesn't make their research available to retail holders. I will discuss with our broker how we can get the note out to a broader audience, which I can see would be of value because for sure, I guess, there's no formal acknowledgment of what that guidance is in this instance. I don't think there are any more questions that I've got to answer at this stage.
Perfect. James, Marcus, David. And if I may just jump back in there and thank you very much indeed for addressing all of those questions that came in from investors this morning. And of course, if there are any further questions that do come through, we'll make these available to you immediately after the presentation has ended, just for you to review, to then add any additional responses, of course, where it's appropriate to do so and we'll publish all those responses out on the platform and James, perhaps before really just looking to redirect those on the call to provide you with their feedback, which I know is particularly important to yourself and the company. If I could please just ask you for a few closing comments to wrap up with, that would be great.
Yes. Thank you. I mean there's no hiding from the fact that 2023 was a tough year. But I think the team performed very well to navigate those challenges that were put in front of it. And the result of that hard work over the past 12 months has really set us up to be in a much, much stronger position for the future. We've now got 5 assets compared to the one asset that we were operating when we first floated. We've got a greater diversity of audience sources that gives us stability going forward. And we've got a set of skills or a toolkit to help us much better navigate the platform challenges that will be in place for all publishers. So with the ad market forecast to return as we head towards the back end of 2025 we think we're in a pretty strong position to perform better going forward. Thank you very much for attending.
Thank you, James. That's great. Thank you once again for updating investors this morning. Could I please ask investors not to close this session as it will now be automatically redirected the opportunity to provide your feedback and all of the management team can really better understand your views and expectations. This will only take a few moments to complete, but I'm sure it will be greatly valued by the company. On behalf of the management team of Digitalbox plc, we would like to thank you for attending today's presentation. That now concludes today's session. So good morning to you all. Thank you.