musicMagpie, a re-commerce business specializing in refurbished consumer technology, has released a pre-close trading update for the full year ended November 30, 2023. The company expects full-year revenue to be £136.6 million, with a record Black Friday period offsetting a softer first half of the year. Consumer technology revenues for the second half of the year were up 7.5% compared to the same period in 2022. Overall gross margin increased to 27.7% as the company focused on margin expansion rather than revenue growth. EBITDA is expected to increase by 15.4% to £7.5 million.
The number of active rental subscribers grew by 21% during the year, reaching 37,100 as of November 30, 2023. Total rental revenue for the period was £8.3 million, up 57% compared to 2022. The company plans to continue segmenting the rental offering to customers with higher credit ratings and a greater propensity to renew.
Net debt as of November 30, 2023, was £13.1 million, benefiting from the company's focus on cash versus rental growth. Leverage, measured by EBITDA to net debt, was 1.7x. The company's net debt is supported by future contracted rental revenue of £3.6 million and rental assets on the balance sheet with a net book value of £7.7 million. The company also has a £30 million committed RCF facility provided by HSBC and Natwest.
Despite challenging consumer environment and inflationary pressures, the company's board remains confident in the group's strategy and medium-term prospects. CEO Steve Oliver stated, "I remain confident in the business and our ability to navigate the difficult external market conditions, especially given the outstanding level of trust that consumers continue to have in our brand."
musicMagpie operates through two brands, musicMagpie in the UK and decluttr in the US. The company's core strategy is to provide consumers with a smart, sustainable, and trusted way to buy, rent, and sell refurbished consumer technology and physical media products. The company has a strong environmental and social focus, with a trademarked "smart for you, smart for the planet" ethos. In FY22, the company resold nearly 400,000 consumer technology products and saved over 43,000 tonnes of CO2. The company has received the London Stock Exchange's Green Economy Mark.
The company offers fixed valuations to customers selling their products and provides free logistics for shipping. Customers purchasing from musicMagpie receive branded refurbished products at a fraction of the price of buying new. The company has a high number of seller reviews on Amazon and eBay and has a 4.4* rating on UK Trustpilot with over 277,000 reviews.