Informa: Where Industries Meet

Sector

MediaInformation Services

Background

Nick Shenton is a Fund Manager at Artemis Investment Management. We cover the trade show business model and how it recovered from the impacts of COVID, the advantages of operating in a capital-light manner, how Informa is navigating the shift to digital publishing, and the parallels between its capital allocation strategy and that of LVMH.

Cover

Date

November 27, 2024

Episode Number

192

Business Breakdown: Informa

Background / Overview

Informa, founded in 1998, is a global leader in B2B live events, academic publishing, and digital services, headquartered in the UK but generating 95% of its revenue internationally. The company has evolved from a mix of conferences and publishing into the world’s largest portfolio of live events, owning nearly 1,000 events—two and a half times larger than its nearest competitor. Its key segments include Informa Markets (exhibitor-paid trade shows), Informa Connect (attendee-paid conferences), Informa Festivals (mixed-revenue events like Cannes Lions), Taylor & Francis (academic publishing), and TechTarget (digital B2B services). Under CEO Stephen Carter, who joined in 2013, Informa has transformed through strategic M&A, notably the 2019 UBM merger, scaling its live events portfolio from 10 to about 600 trade shows. The company employs a capital-light model, leveraging intellectual property (IP) and brand equity without owning venues, and has demonstrated resilience through crises like COVID-19, which accelerated its digital transformation.

Ownership / Fundraising / Valuation

Informa is publicly listed on the London Stock Exchange with a market capitalization of approximately £10 billion and an enterprise value of £12 billion. The company has a history of disciplined capital allocation, including high-multiple divestitures (e.g., data assets sold at 27-28x EV/EBITDA in 2022) and acquisitions of event portfolios like Tarsus and Ascential at lower multiples (10-14x EV/EBITDA). Its permanent equity structure supports portfolio diversification and long-term growth, unlike leveraged private equity models. The business trades at roughly 10x EV/EBITDA, a discount to the 15-16x EV/EBITDA transaction multiples for top-tier live events assets, suggesting potential undervaluation relative to its asset quality.

Key Products / Services / Value Proposition

Informa operates three economically separable units, each with distinct value propositions:

1. Live Events (75% of revenue):
• Description: Nearly 1,000 B2B events, including trade shows (Informa Markets), conferences (Informa Connect), and festivals (Informa Festivals). Examples include World of Concrete, SuperReturn, and Cannes Lions.
• Value Proposition: Provides mission-critical platforms for industries to connect, transact, and acquire knowledge. Events are “winner-takes-most” due to strong brand equity and network effects, ensuring high attendance and exhibitor loyalty.
• Economics: High-margin (32-33% operating margins), capital-light model with negative working capital dynamics, as customers pay upfront while venue payments are staggered.
2. Taylor & Francis (15% of revenue):
• Description: One of the world’s leading academic publishers, producing journals, books, and databases under brands like Routledge and CRC Press.
• Value Proposition: Curates and disseminates proprietary, user-generated academic content, serving researchers and institutions with subscription (pay-to-read) and open-access (pay-to-publish) models.
• Economics: Stable, subscription-driven revenue with 35%+ operating margins and 4% annual growth, driven by global R&D spending.
3. TechTarget (10% of revenue):
• Description: A digital B2B platform leveraging first-party data for lead generation and content marketing, including assets like Industry Dive, Omdia, and NetLine.
• Value Proposition: Connects buyers and sellers digitally using proprietary data on buyer intent, targeting high-value enterprise markets like software and healthcare.
• Economics: Emerging segment with double-digit growth potential, lower margins than events or publishing but significant optionality due to data-driven scalability.

Segments and Revenue Model

• Informa Markets (45% of revenue): Exhibitor-paid trade shows (e.g., LEAP in Saudi Arabia). Revenue comes from booth rentals (80%) and sponsorship/advertising (20%), with exhibitors paying $50,000-$200,000 per event for space and related costs.
• Informa Connect (15% of revenue): Attendee-paid conferences, where delegates pay for knowledge-sharing and networking. More cyclical due to later bookings.
• Informa Festivals (15% of revenue): Mixed-revenue events like Cannes Lions, blending exhibitor, attendee, and sponsorship income.
• Taylor & Francis (15% of revenue): Subscription-based (pay-to-read) and open-access (pay-to-publish) academic publishing, with 80% digital delivery.
• TechTarget (10% of revenue): Digital services monetized through lead generation, subscriptions (e.g., Omdia), and content marketing, leveraging 50 million first-party data points.

Splits and Mix

• Revenue Mix:
• Live Events: 75% (£3 billion)
• Taylor & Francis: 15% (£600 million)
• TechTarget: 10% (£400 million)
• Geographic Mix: 95% international, with low single-digit exposure to China, minimizing regional concentration risk.
• Customer Mix: B2B focus, targeting industry professionals, exhibitors, and academics. No single customer dominates due to fragmented supply chains.
• End-Market Mix: Diverse industries (e.g., concrete, pharmaceuticals, marketing, tech), reducing cyclicality.
• EBITDA Mix: Live events contribute the majority of EBITDA due to high margins (32-33%), followed by Taylor & Francis (35%+). TechTarget’s margins are lower but improving as it scales.
• Historical Trends: Shift from volume-led conferences to exhibitor-paid trade shows since 2013, with increasing digital revenue in Taylor & Francis (80% digital) and TechTarget’s emergence as a growth driver.

KPIs

• Revenue Growth: 5-6% industry growth, with Informa targeting above-market growth (6-8%) driven by live events and TechTarget.
• Operating Margin: Group-level at ~30%, with live events at 32-33% and Taylor & Francis at 35%+. Margin expansion expected as fixed costs are leveraged.
• Cash Conversion: High (near 100%) due to negative working capital and low capex.
• Event Bookings: 40% of next year’s event revenue secured at the current event, with waitlists for top shows indicating strong visibility.
• Digital Penetration: Taylor & Francis at 80% digital; TechTarget fully digital, with 50 million first-party data points.

Headline Financials

• Revenue CAGR: Historically 5-6%, with potential for 6-8% driven by TechTarget and geographic expansion.
• EBITDA Margin: ~30%, with incremental margin expansion as fixed costs (50% of total costs) are spread over growing revenue.
• FCF Margin: ~17%, supported by high cash conversion and low capital intensity.

Value Chain Position

Informa operates midstream in the B2B knowledge economy, curating and monetizing connections, content, and data. Its primary activities include:

• Event Production: Organizing trade shows, conferences, and festivals, renting venues, and managing exhibitor/attendee logistics.
• Content Creation: Publishing academic research (Taylor & Francis) and digital B2B content (TechTarget).
• Data Aggregation: Collecting and analyzing first-party data for lead generation and market insights.

Informa’s go-to-market (GTM) strategy leverages its IP and brand equity to attract mission-critical attendance, with events acting as industry hubs. It is backward-integrated into content creation (publishing, digital media) but not forward-integrated into venue ownership, preserving capital-light economics. Its competitive advantage lies in proprietary event brands, academic content, and first-party data, which are difficult to replicate.

Customers and Suppliers

• Customers: B2B professionals, exhibitors, academic institutions, and enterprises. Exhibitors (e.g., at World of Concrete) spend $50,000-$200,000 per event, representing 0.4% of a $500 million company’s marketing budget but deemed mission-critical. Academic customers include libraries (subscriptions) and researchers (open-access fees).
• Suppliers: Venue owners (e.g., convention centers), who benefit from Informa’s events driving local economic activity (e.g., $2 billion for Fort Lauderdale Boat Show). Other suppliers include marketing agencies, event staff, and tech providers.
• Dependency: Low supplier power due to abundant venue supply and Informa’s ability to negotiate favorable terms. Customers have high switching costs due to event brand loyalty and network effects.

Pricing

• Live Events: Exhibitors pay $50,000 for raw space, plus $50,000-$100,000 for stand costs and travel. Pricing is value-based, reflecting mission-criticality and ROI (e.g., deal-making at SuperReturn). Sponsorship and advertising add 20% of revenue.
• Taylor & Francis: Subscription fees for libraries and pay-to-publish fees for researchers, with pricing tied to content prestige and validation services.
• TechTarget: Subscription-based (Omdia) and performance-based (lead generation), priced on data quality and buyer intent insights.
• Contract Structure: Event contracts require upfront payment, ensuring negative working capital. Publishing contracts are annual (subscriptions) or per-article (open-access). TechTarget contracts vary by service (e.g., subscriptions, campaigns).
• Pricing Drivers: Brand equity, network effects, mission-criticality, and data exclusivity. Informa has avoided aggressive post-COVID price hikes, maintaining customer goodwill.

Bottoms-Up Drivers

Revenue Model & Drivers

• Live Events:
• Model: Exhibitors pay for booth space (80% of revenue), supplemented by sponsorship/advertising (20%). Attendees pay for conferences (Informa Connect) or festivals (mixed).
• Price: $50,000-$200,000 per exhibitor, driven by event brand, industry relevance, and ROI (e.g., deal-making, networking). Stable pricing with modest increases due to value perception.
• Volume: Driven by industry growth (5-6%), geographic expansion (e.g., Money20/20 in the Middle East), and new event launches (e.g., LEAP). Waitlists and 40% pre-bookings ensure visibility.
• Mix: Shift toward exhibitor-paid trade shows (Informa Markets) from attendee-paid conferences, increasing margins and stability.
• Taylor & Francis:
• Model: Subscription-based (pay-to-read, 60%) and open-access (pay-to-publish, 40%), with 80% digital delivery.
• Price: Stable subscription fees and growing open-access fees, driven by prestige and global R&D spending.
• Volume: 4% growth from increasing researcher numbers and content demand.
• Mix: Shift to open-access and digital formats, enhancing margins.
• TechTarget:
• Model: Lead generation, subscriptions (Omdia), and content marketing, monetizing first-party data.
• Price: Premium pricing for high-intent leads, driven by data exclusivity.
• Volume: Double-digit growth potential from enterprise software and healthcare markets.
• Mix: Increasing focus on high-margin lead generation.

Cost Structure & Drivers

• Variable Costs:
• Live Events: Venue rental (£20 per £100 revenue), utilities, and agency staff (£10 per £100). Total variable costs ~30% of revenue, yielding 70% gross margin.
• Taylor & Francis: Content validation and hosting costs, minimal due to user-generated content.
• TechTarget: Data processing and platform costs, moderate but scalable.
• Fixed Costs:
• Live Events: Salaries for event organizers (~£30 per £100 revenue), marketing, and overhead. Fixed costs ~50% of total, creating operating leverage.
• Taylor & Francis: Editorial staff and platform maintenance, fixed but low relative to revenue.
• TechTarget: Tech development and content teams, fixed but amortized over growing revenue.
• EBITDA Margin: ~30% group-level, with live events at 32-33% and Taylor & Francis at 35%+. Margin expansion driven by fixed cost leverage and digital scalability.
• Cost Trends: Fixed costs (50% of total) decline as a percentage of revenue with growth, enhancing margins. Variable costs are manageable due to venue partnerships and digital efficiencies.

FCF Drivers

• Net Income: £750 million, supported by high operating margins and low interest/tax expenses.
• Capex: Minimal (<5% of revenue) due to capital-light model (no venue ownership). Primarily maintenance capex for tech infrastructure.
• Net Working Capital (NWC): Negative due to upfront customer payments and deferred venue payments. Cash conversion cycle is short, enhancing FCF.
• FCF: ~£700 million, yielding 7%, stable due to diversification and low capital intensity.

Capital Deployment

• M&A: Strategic acquisitions (e.g., UBM, Tarsus, Ascential) at 10-14x EV/EBITDA, focusing on high-growth categories (e.g., cybersecurity, tech). Divestitures (e.g., data assets at 27-28x EV/EBITDA) fund reinvestment.
• Organic Growth: New events (e.g., LEAP), geographic expansion, and TechTarget scaling.
• Buybacks: Moderate, with 40% payout ratio and 60% retention for reinvestment.
• Synergies: Revenue synergies from M&A (e.g., tech integration, cross-selling), not cost synergies, due to fragmented industry structure.

Market, Competitive Landscape, Strategy

Market Size and Growth

• Live Events: Global B2B events market is ~$30 billion, growing at 5-6% annually, driven by rising wealth, trade complexity, and venue supply. Informa’s portfolio grows at 6-8% due to market share gains.
• Academic Publishing: $20 billion market, growing at 4% annually, driven by R&D spending and open-access adoption.
• B2B Digital Services: $50 billion market, growing at 10%+, driven by data-driven marketing and lead generation.
• Industry Drivers: Technology complexity, shifting trade patterns, digitization, and venue supply growth.

Market Structure

• Live Events: Fragmented, with Informa as the clear leader (2.5x larger than the nearest competitor). High minimum efficient scale (MES) due to network effects and brand equity limits competitors.
• Academic Publishing: Oligopolistic, with Taylor & Francis competing with RELX (Elsevier) and Springer Nature. High barriers due to proprietary content and prestige.
• B2B Digital Services: Fragmented, with TechTarget differentiated by first-party data. Competitors rely on third-party data, creating a moat.
• Cyclicality: Live events are moderately cyclical, mitigated by portfolio diversification. Publishing and digital services are less cyclical.

Competitive Positioning

• Live Events: Premium positioning due to brand equity (e.g., Cannes Lions, World of Concrete) and network effects. Mission-critical for industries, ensuring loyalty.
• Taylor & Francis: High-end academic publishing, competing on prestige and content quality.
• TechTarget: Differentiated by first-party data, targeting high-value enterprise markets.

Market Share & Relative Growth

• Live Events: Informa holds ~10-15% of the global market, growing faster than the industry (6-8% vs. 5-6%) due to scale and M&A.
• Taylor & Francis: ~5% of academic publishing, growing in line with the market (4%).
• TechTarget: Small but growing share in B2B digital services, leveraging data moat.

Competitive Forces (Hamilton’s 7 Powers)

1. Economies of Scale: Informa’s 1,000 events create a large revenue base to amortize tech and marketing costs, outpacing smaller players. High MES in live events limits competitors.
2. Network Effects: Events like SuperReturn benefit from winner-takes-most dynamics, as attendees and exhibitors flock to the leading event, reinforcing Informa’s dominance.
3. Branding: Iconic event brands (e.g., Cannes Lions) and Taylor & Francis’s prestige command premium pricing and loyalty.
4. Counter-Positioning: TechTarget’s first-party data model disrupts competitors reliant on third-party data, creating a superior value proposition.
5. Cornered Resource: Proprietary event IP and academic content are unique, non-replicable assets.
6. Process Power: Informa’s expertise in event execution and data curation creates operational efficiencies competitors struggle to match.
7. Switching Costs: High for customers due to event mission-criticality and publishing prestige, reducing churn.

Strategic Logic

• Capex: Minimal, focused on tech infrastructure to enhance events and digital services. Defensive to maintain competitive edge.
• M&A: Offensive to consolidate fragmented markets, targeting high-growth categories. Disciplined pricing (10-14x EV/EBITDA) avoids overpayment.
• Scale: Achieved MES in live events, enabling tech investment and portfolio diversification. Avoids diseconomies by maintaining entrepreneurial culture.
• Vertical Integration: Backward-integrated into content creation (publishing, digital media), enhancing control over IP. No forward integration into venues, preserving capital-light model.
• Geographic Expansion: Targets high-growth regions (e.g., Middle East, Saudi Arabia) to leverage venue supply and tourism strategies.
• BCG Matrix: Live events are “stars” (high growth, high share), Taylor & Francis is a “cash cow” (low growth, high share), TechTarget is a “question mark” (high growth, low share), with no “dogs.”

Valuation

• Current Valuation: £10 billion market cap, £12 billion EV, 10x EV/EBITDA, 7% FCF yield.
• Comparables: Top live events assets transact at 15-16x EV/EBITDA, suggesting Informa’s portfolio is undervalued. Academic publishers (e.g., RELX) trade at 15-20x EV/EBITDA, and digital B2B firms at 12-18x.
• Upside Drivers: TechTarget’s growth, margin expansion, and M&A could close the valuation gap. Market recognition of live events’ resilience may lift multiples.
• Risks: Geopolitical exposure (e.g., China, low single-digit revenue), cyclicality in live events, and execution risk in TechTarget scaling.

Key Takeaways and Dynamics

1. Winner-Takes-Most Live Events:
• Informa’s 1,000 events create unmatched scale, leveraging network effects and brand equity to dominate fragmented industries. Events are mission-critical, ensuring high exhibitor spend ($50,000-$200,000) and loyalty, with 40% of next year’s revenue booked in advance.
• Unique Dynamic: The capital-light model (no venue ownership) and negative working capital (upfront customer payments, deferred venue costs) drive high cash conversion and 32-33% margins. A 40x economic multiplier (e.g., $2 billion for Fort Lauderdale Boat Show vs. $50 million revenue) enhances Informa’s value proposition to partners and governments.
2. Stable Publishing Cash Cow:
• Taylor & Francis’s 35%+ margins and 4% growth provide stable cash flow, funding M&A and tech investments. Its 80% digital delivery and dual revenue model (subscriptions, open-access) align with global R&D growth.
• Unique Dynamic: User-generated content minimizes costs, while prestige and proprietary IP create high barriers, mirroring RELX’s model but with Informa’s entrepreneurial edge.
3. TechTarget’s Data Optionality:
• TechTarget’s first-party data (50 million users) disrupts third-party data competitors, targeting high-growth enterprise markets. Double-digit growth potential and scalability make it a high-upside bet.
• Unique Dynamic: Informa’s live events data (e.g., buyer intent at Arab Health) feeds TechTarget, creating a flywheel where physical and digital assets reinforce each other, a rare synergy in B2B media.
4. Disciplined Capital Allocation:
• Informa’s M&A strategy (e.g., UBM, Tarsus) and divestitures (27-28x EV/EBITDA) reflect LVMH-like discipline, targeting fragmented, high-growth categories. Reinvesting at 10-14x EV/EBITDA drives value creation.
• Unique Dynamic: Balancing scale with entrepreneurial culture (“little big company”) avoids diseconomies, enabling rapid growth from 10 to 600 trade shows in a decade.
5. Portfolio Diversification:
• Diverse industries (e.g., concrete, pharmaceuticals, tech) and revenue streams (events, publishing, digital) mitigate cyclicality. Taylor & Francis and TechTarget provide stability and growth, respectively, complementing live events.
• Unique Dynamic: Informa’s scale enables tech investment, outpacing smaller competitors, while its permanent equity structure supports long-term portfolio building.
6. COVID Resilience and Digital Pivot:
• COVID highlighted the irreplaceable value of face-to-face events, with minimal cancellations (£20-25 million) and strong post-COVID attendance. The crisis accelerated Informa’s digital transformation, birthing TechTarget’s data-driven model.
• Unique Dynamic: Informa’s ability to pivot to digital during COVID, then reinvest in physical events, showcases operational agility and strategic foresight.

Conclusion

Informa’s business model is a masterclass in leveraging IP, scale, and data to dominate fragmented B2B markets. Its live events benefit from winner-takes-most dynamics, high margins, and capital-light economics, while Taylor & Francis provides stable cash flow and TechTarget offers high-growth optionality. Disciplined M&A, portfolio diversification, and a tech-enabled strategy position Informa for 6-8% revenue growth and margin expansion, with a 7% FCF yield suggesting undervaluation at 10x EV/EBITDA. The company’s ability to balance scale with entrepreneurial creativity, as evidenced by its rapid ascent to global leadership, makes it a compelling case study in value creation through strategic execution and customer-centricity.

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