Informa Partners with Microsoft in $10 Million AI Deal, Shares Rise 3%

Key Takeaway

• Informa announces a transformative $10 million AI partnership with Microsoft, aiming to enhance AI capabilities through 2027.
• The deal boosts Informa's shares by nearly 3%, signaling strong investor confidence and leading to a £500 million share buyback program.
• With robust global performance and strategic expansions, including a merger with TechTarget, Informa forecasts revenues near £3.5 billion for the current year.

Informa Strikes Deal with Microsoft

Informa, a prominent UK publishing and exhibitions company, has announced a significant partnership with Microsoft, valued at over $10 million for its initial year. This collaboration, spanning from 2024 to 2027, aims to enhance Microsoft's artificial intelligence (AI) capabilities by providing access to Informa's extensive data and intellectual property. Informa's Chief Executive, Stephen Carter, emphasized the "unique value" of their intellectual property and how this deal underscores the potential of AI within their operations. This agreement marks another instance in the growing trend of media groups collaborating with AI developers to both leverage new technological tools and contribute to the refinement of AI models with specialized data.

Financial Implications and Market Response

The partnership with Microsoft is expected to bolster Informa's financial performance significantly, aligning the company to meet, if not exceed, the upper echelons of its market guidance on revenues, adjusted operating profit, and free cash flow. Analyst Thomas Singlehurst from Citi highlighted the deal's demonstration of the intrinsic value of specialized data and its recurring revenue potential, which has been well-received by investors. Following the announcement, Informa's shares experienced a nearly 3% increase, reaching £8.50 on Wednesday morning. The company has also announced a 50% increase in its 2024 share buyback program to £500 million, reflecting its strong financial standing and ongoing commitment to shareholder returns.

Operational Performance and Strategic Moves

Informa has reported robust performance across all major regions, including North America, Asia, India, the Middle East, and Africa, buoyed by the success of key events like Arab Health, World of Concrete, and MRO Americas. The company has seen consistent growth every quarter since the pandemic's nadir, which had severely impacted the global events industry. With revenues expected to hit nearly £3.5 billion in the current financial year, up from £3.2 billion in 2023, and adjusted operating profits anticipated to be close to £970 million, up from £853.8 million the previous year, Informa's strategic direction appears to be on a solid trajectory. Additionally, Informa is exploring further acquisitions, leveraging its strong financial position, and has plans to merge its digital businesses with US group TechTarget, creating a separate Nasdaq-listed affiliated group, with Informa retaining a majority stake post-merger.

Street Views

• Thomas Singlehurst, Citi (Bullish on Informa):

  "Investors would be encouraged by the deal with Microsoft, which showed the value of relevant data in specialist areas, and highlighted the recurring nature of the Microsoft payments."

Management Quotes

• Stephen Carter, CEO of Informa:

  "The data access agreement... will extend the use of AI within our business and underlines the unique value of our intellectual property." "We have a significant body of data and content that renews annually." "The company had grown every quarter since hitting a low point during the pandemic, which shut down the global events industry for many months." "The events business was performing extremely strongly." "[Informa has] boosted its 2024 share buyback programme by about 50 per cent to £500mn as a result. The company would also continue to look at using a strong financial position to consider further acquisitions." "[He was] still comfortable with the wider Informa group being listed in London despite shareholder pressure on rivals such as Pearson to move to the US."