oOh!media’s 1H25 Earnings Beat Expectations, But $30M Impairment Raises Questions

• 1H25 revenue grew 17%, exceeding prior trading updates
• Non-renewal of Auckland Transport contract triggered $30 million non-cash impairment
• Underlying operations and cash flow remain stable and unaffected
• Operating expenses and capital expenditure guidance revised upward
• Company confirms compliance with ASX continuous disclosure rules

Context of Earnings and Market Expectations

oOh!media Limited (ASX – OML), a leading player in out-of-home advertising, has responded comprehensively to an ASX Aware Letter concerning its half-year results ended 30 June 2025. The company firmly stated that its earnings performance was materially in line with market expectations, as informed by its own trading updates and the consensus forecasts of sell-side analysts.

Despite not issuing formal earnings guidance for 1H25, oOh!media provided regular operational updates throughout the period. These updates, while not explicit earnings guidance, helped shape market expectations. The company’s actual revenue growth of 17% for the half year notably outpaced earlier quarterly pacing figures and analyst forecasts, underscoring stronger-than-anticipated top-line momentum.

Impact of Auckland Transport Contract Non-Renewal

A significant development during the period was the announcement in July 2025 that the Auckland Transport contract, representing approximately 4% of FY24 revenue, would not be renewed. This led to a $30 million non-cash impairment charge recognized in the half-year accounts. Importantly, oOh!media emphasized that this accounting adjustment does not affect the company’s underlying operations or cash flow, and targeted cost reductions are expected to partly mitigate the impact.

The impairment reflects a reassessment of expected cash flows from the New Zealand cash-generating unit following the contract loss. While material in accounting terms, the company reassures investors that the core business remains robust and that the impairment is a one-off, non-operational event.

Financial Metrics and Guidance Updates

oOh!media provided detailed reconciliations comparing actual results to consensus analyst estimates across key metrics such as revenue, EBITDA, NPATA (Net Profit After Tax Adjusted), EBIT, and NPAT. Variances were minor, all well below the ASX’s 15% threshold for material surprises, reinforcing the company’s position that its earnings were in line with market expectations.

The company also updated its guidance for operating expenses and capital expenditure. Operating costs are now expected to be between $159 million and $161 million for FY25, reflecting higher variable compensation linked to strong revenue performance. Capital expenditure guidance was revised upward to a range of $53 million to $63 million, driven by new advertising asset investments and accelerated development approvals, including projects with Transurban and Waverley Council.

Market Reaction and Forward Outlook

Following the release of the half-year results, oOh!media’s share price experienced volatility, dropping from $1.77 to a low of $1.59. The company attributes this movement to a combination of factors, including the market digesting the impairment, updated guidance, and a noted deceleration in Q3 media revenue pacing to +5%, down from the +17% growth seen in the first half.

Looking ahead, oOh!media expects second-half gross margins to improve, targeting around 46%, which would bring the full-year margin to approximately 44%, consistent with prior years. The company remains committed to transparent communication with investors, as evidenced by ongoing roadshows and broker engagement.

Compliance and Disclosure Assurance

oOh!media confirmed full compliance with ASX Listing Rules, particularly continuous disclosure obligations. The company’s responses to the ASX letter were authorized by its Disclosure Committee, underscoring its commitment to regulatory transparency and market integrity.

Bottom Line?

While oOh!media’s core performance remains solid, investors will be watching closely how the company navigates a softer Q3 and integrates its revised guidance into full-year expectations.

Questions in the middle?

• How will oOh!media offset the revenue impact from the Auckland Transport contract loss in the longer term?
• What are the implications of the decelerating Q3 revenue growth for full-year profitability?
• Will the increased capital expenditure translate into sustained growth or pressure margins?