UK-based music software company Focusrite has reported that while demand for its products remains strong, shipping and logistics challenges are squeezing its bottom line.
Revenue is expected to come in around £157m, in line with current market expectations, as overall demand for its suite of audio tech products has “remained resilient”.
But the company now expects earnings before interest, tax, depreciation and amortisation (EBITDA) for its financial year 2024 to be around £25m, a drop from the £38.6m recorded in 2023, when revenue reached £178.5m.
The company put this decline down to ongoing shipping and logistics issues, as well as mounting pressure on product margins.
“Product introductions were planned for the final quarter,” the company said, “but the benefit of these has been offset in August by a significant reduction in stocking policy by a major reseller.
“In addition, port congestion in a number of regions has impacted logistics at the end of the year,” it added.
Focusrite said that global shipping and freight costs have increased further in the second half of 2024, driven by greater global demand and ongoing disruptions in the Red Sea. The company expects this trend to continue into 2025.
In April, shares fell as much as eight per cent after Focusrite reported that its half year revenue dropped to £77m, down from over £86m the prior year.
The company’s Scarlett amplifiers are popular among hobbyists starting at-home audio projects like Youtube channels and podcasts.
This meant the London-listed stock boomed during the Covid-19 lockdowns, but it has since tumbled to below pre-pandemic levels, sliding 41 per cent year to date.
Positively, Focusrite’s net debt has improved to around £15m, compared to £27.3m in February 2024. It has £50m of credit facilities.