Final Results

RNS Number : 6355S

Audioboom Group PLC

18 March 2021

 

This announcement contains inside information as stipulated under the UK Market Abuse Regulations ("MAR").

18 March 2021

Audioboom Group plc

("Audioboom", the "Company" or the "Group")

Final audited results for the year ended 31 December 2020

Audioboom (AIM: BOOM), the leading global podcast company, is pleased to announce its final audited results for the year ended 31 December 2020.

HIGHLIGHTS FOR THE YEAR ENDED 31 DECEMBER 2020

Financial and operating highlights

·   2020 revenue of US$26.8 million, up 20% on 2019 (US$22.3 million). Year-on-year growth outpaced the predicted wider industry average growth by 93% ⁽¹⁾

· Adjusted EBITDA ^{( 2)} loss of US$1.7 million represents an improvement of 42% on 2019 (US$3.0 million loss)

· Brand advertiser count of 311 as at 31 December 2020, up 11% on December 2019 (280)

·   Global revenue per 1,000 downloads (eCPM) for December 2020 increased to US$38.99, up 32% (December 2019: US$29.60)

· Continued strong improvement in performance related to our ad technology, with revenue from our automated ad network in 2020 of US$2.5 million, up 258% on 2019 (US$0.7 million)

·     Access to capital of US$6.6 million as at 31 December 2020, representing Group cash of US$3.3 million and US$3.3 million of the SPV loan facility remaining undrawn. US$0.7 million of the previously drawn non-revolving SPV loan was repaid to SPV Investments Limited in November 2020

Key commercial developments

· Continued expansion of the Audioboom Originals Network with the launch of Raising A Pro, Crime Weekly (a co-production with Main Event Media) and RELAX! with Colleen Ballinger and Erik Stocklin

· Enhanced our premium sales network through new commercial partnerships with leading podcasts including The Fantasy Footballers, Strange & Unexplained, Hoot and a Half, That Gaby Roslin Podcast, Meditation Minis, and Team Never Quit

·   Entered or renewed several strategic partnerships focused on enhancing distribution, data and monetisation. With the impact of Covid-19, these partnerships became even more important in bolstering Audioboom's operations and maximising resilience to the global pandemic

Post year end highlights

· Extended co-production and commercial partnership with Formula 1 until 2023. Audioboom will produce the F1: Beyond The Grid and F1 Nation podcasts, and provide exclusive advertising sales services

· Climbed to 5th largest US podcast publisher, and retained position as largest international podcast publisher in Australia, in January 2021's Triton Digital Podcast Report

· Strong start to 2021 having already signed advertising bookings representing over 80% of the current market forecast for 2021 Group revenue - further details will be provided in Q1 trading update which is expected to be released on 14 April 2021

1)  eMarketers August 2020 Podcast Advertising Revenue Report states that US podcast advertising revenue was expected to grow by 10.4% in 2020 relative to 2019

2)  Earnings before interest, tax, depreciation, amortisation, share based payments, non-cash foreign exchange movements and material one-off items 

Stuart Last, CEO of Audioboom, commented: " In 2020 Audioboom strengthened its position as one of the largest independent podcast companies in the world, delivered record revenue and EBITDA performance and put profitability in sight. The business has delivered this growth despite the challenges we faced as Covid-19 disrupted global media, but our resilience and continued progress in the face of the pandemic is testament to the strength of our business model and operations.

We have expanded globally through strategic regional partnerships, seen impressive growth in revenue from our advertising tech, and launched creatively impactful Audioboom Original programming. Most importantly, our combination of content, monetisation and technology is unique amongst our peers and is the driving force behind our growth.

2021 is set to be a breakthrough year for Audioboom as we move the business towards the milestone of positive EBITDA. I am delighted with the start we have made towards our goal with the Company already signing advertising bookings representing more than 80% of the current market expectations as to revenue for the full year, and I look forward to providing an update  on further progress in our Q1 trading update in April. "

Enquiries

Audioboom Group plc	Tel: [phone]
Stuart Last, Chief Executive Officer Brad Clarke, Chief Financial Officer
Allenby Capital Limited (Nominated Adviser and Broker)	Tel: [phone]
David Hart /Alex Brearley/Asha Chotai (Corporate Finance) David Johnson (Corporate Broking and Equity Sales)

About Audioboom

Audioboom is a global leader in podcasting - our shows are downloaded more than 85 million times each month by 25 million unique listeners around the world. Audioboom is ranked as the fifth largest podcast publisher in the US by Triton Digital.

Audioboom's ad-tech and monetisation platform underpins a scalable content business that provides commercial services for a premium network of 250 top tier podcasts, with key partners including 'Casefile True Crime' (US), 'Morbid' (US), 'True Crime Obsessed' (US), 'The Morning Toast' (US), 'No Such Thing As A Fish' (UK), and 'The Cycling Podcast' (UK).

The Audioboom Originals Network is a slate of content developed and produced by Audioboom including 'Baby Mamas No Dramas', 'Covert', 'It's Happening with Snooki & Joey', 'Mafia', 'Huddled Masses' and 'What Makes A Killer'.

Audioboom operates internationally, with operations and global partnerships across North America, Europe, Asia and Australia. For more information, visit audioboom.com. The platform allows content to be distributed via Apple Podcasts, Spotify, Pandora, Amazon Music, Deezer, Google Podcasts, iHeartRadio, RadioPublic, Saavn, Stitcher, Facebook and Twitter as well as a partner's own websites and mobile apps.  For more information, visit audioboom.com.

 

CHAIRMAN'S STATEMENT

I am pleased to present this Chairman's Statement which reflects upon a particularly strong performance in 2020 and a very promising start to 2021, and looks forward to a bright future for your Company.

Against the inescapable backdrop of Covid-19, the Company proved the strength of its business model with a robust response to the global pandemic resulting in impressive growth in all KPIs, a material increase in revenue, a substantially reduced EBITDA loss, and market expectations exceeded for the second year in succession. 

It is testament to the efforts of the management team and all staff that growth in the year once again outpaced - almost doubling - that of the wider podcasting industry (which itself continues to expand materially), leading to increased market share and further cementing the Company's position as one of the world's largest independent podcast companies in an industry that is rapidly maturing into mainstream media.

In his CEO Review, Stuart Last provides further detail around the Company's strategy and focus, component parts of the business, operational and financial performance, the strong start to 2021 and the outlook for the future. 

I was pleased, personally, to be able to further support the Company, along with Candy Ventures sarl (our largest shareholder) and via SPV Investments Limited, through the provision of a US$4 million loan facility early last year.  In the circumstances, only US$0.7 million was required to be drawn down and has since been repaid, and the balance remains available should it be required until the expiry of the facility in February 2022.  In addition, following the conclusion of the formal sales process in October, the Company secured a further £3.15 million in equity growth funding at a significant premium to the then prevailing share price following an approach by a new investor.  The funding and available facilities have enabled, and will continue to allow, the Company to acquire and retain high revenue producing, established podcasts and talent, and to develop the Group's higher margin Audioboom Originals Network, all of which will further drive performance. Not only does this access to capital provide the headroom to fund Audioboom through to sustainable positive cash flow generation, the Board is increasingly confident, in light of the strong start to the year, that it will reach that position during 2021 with expectations for positive EBITDA for the year as a whole.  At this point the Company will have successfully taken control of its own destiny.

I would like to take this opportunity to thank the entire Audioboom team for their continuing professionalism and commitment, and also to thank our shareholders and partners for their loyalty and vision in supporting Audioboom as it continues to grow. 

Michael Tobin OBE

Chairman

17 March 2021

 

CHIEF EXECUTIVE OFFICER'S REVIEW

Introduction

I am pleased to provide this report with the business in such a strong position as our growth in 2020 once again outpaced that of the wider podcast industry. In the year under review, we enhanced our position as one of the biggest independent podcast companies in the world, delivered record revenue and EBITDA performance and profitability is now in sight.  

The business has delivered this growth despite the challenges we faced in 2020. Covid-19 disrupted global media, impacting audience habits, advertising budgets and production operations throughout the year, but our resilience and continued growth in the face of the pandemic is testament to the strength of our business model, operations and the wider industry.

We have expanded our global operations through strategic regional partnerships, seen impressive growth in revenue from our advertising tech, and launched creatively impactful Audioboom Original programming. Most importantly, our combination of content, monetisation and technology is unique amongst our peers and is the driving force behind our growth.

The momentum we regained in the second half of last year has continued into 2021, and the traditional seasonal drop-off in Q1 advertising demand has not materialised. We are sharply focused on taking the Company to a position of positive EBITDA this year and have made a very strong start towards achieving that objective. I am pleased to offer an update on 2021 performance later in this report, as a transformative year for Audioboom begins to take shape.

Strategy

Between 2014 and 2018 Audioboom created a scalable technology and monetisation platform for podcasting. The platform includes: a hosting and distribution content management system; dynamic ad insertion advertising tech; bespoke Salesforce-based revenue and inventory management systems; an analytics toolset; and a premium advertising sales unit.

The Audioboom platform is fully scalable. In 2020 it controlled more than 9,000 podcast channels, delivering more than 85 million downloads each month to more than 25 million unique users. The scalability of the platform will drive the expansion of these numbers without any material investment into technology being required in the near term.

Audioboom's growth strategy is clear - scale monetisable content on top of this platform. Over the past 18 months our team has embraced this strategy and have executed it successfully, leading to continued upward revenue and KPI trends. All near term investment will be used to expand our content footprint.

Scaling content on to our platform is achieved in three ways; acquiring content, creating content and accessing content.

1. Content Acquisition.  Audioboom develops commercial partnerships with existing independent podcast talent and content networks, where we provide a full slate of professional services, including exclusive advertising representation in our core US and UK markets.  Opportunity for accelerated content acquisition comes via the Company's strong working relationships with the major Hollywood talent agencies, including UTA, WME and CAA. Content acquisition of high-quality Tier One podcasts (which may involve payment of advances or minimum guarantees) delivers fast revenue growth for the Company, through the sale of high-value, high-engagement, embedded host endorsement advertising and increasingly a second window of monetisation through ad tech and dynamic ad insertion.

2. Content Creation. Audioboom's production and creative arm develops original content through the Audioboom Originals Network, and provides production services for major media and entertainment brands like Formula 1. Audience and sales-trend data from our wider business informs our show development strategy, with insights into key growth genres and strong sales verticals. Content creation requires up-front investment through content production costs, facilities and audience acquisition spend, but creates strong revenue growth at a higher gross margin, as well as further revenue potential through IP opportunities, including television adaptation, touring and merchandise sales.

3. Content Access. The Sonic Influencer Marketing platform enables brands to connect with audiences across the entire professional-level podcasting landscape. Sonic utilises top-tier talent both within the Audioboom network and at all major podcast networks globally, to deliver premium host endorsement advertising campaigns to engaged audiences on behalf of their clients. Sonic Influencer Marketing provides fast revenue growth to the Group, albeit with a lower gross margin than Content Acquisition and Content Creation.

 

Accelerated Revenue Growth

While we are focused on achieving a positive EBITDA position in 2021 through revenue growth and cost control, we have also identified three key areas for investment once we reach self-sustainability. This investment will build on our content growth plans and provide accelerated revenue generation to the Company:

Ad Tech Monetisation

Audioboom is a market leader in the sale of premium, high value podcast advertising in which ad spots take the form of host endorsements and are embedded into each episode during the recording or editing process. CPMs for these premium units range from US$20 to US$50, but this model does not utilise our ad-tech for delivery.

Our Dynamic Ad Insertion (DAI) capabilities, whereby ad spots are served to the listener at the point of download or playback, have thus far been focused on monetising the long-tail of podcast channels, relying on low-value programmatic advertising at CPMs between US$5 and US$12.

We have identified an opportunity to develop a new second window sales model, which sits between the premium and the programmatic. In this model, embedded advertising is removed from an episode after 90 days and is replaced by new ads through DAI. More than 40% of Audioboom's downloads are from back catalogue content older than 90 days, with the potential to create more than 100 million new available advertising impressions per month. Direct sales utilising this approach yield CPMs ranging from US$10 to US$25.

We began exploring this model in 2020 with monetisation from our ad tech growing 258% across the year. We will focus on new international sales partnerships, ad technology development, audience data access and growth of sales relationships to develop this offering further and deliver increased value to our podcast partners.

UK Production Arm

Since launching in 2018, Audioboom's production arm has been focused on producing content for US-based audiences through its studio complex in New York City. The nascent nature of the UK podcast advertising market has, until recently, carried too much risk for investing in content creation and audience acquisition. However, we believe the market and sales model is now of a size and strength to support investment in original content.

Furthermore, Audioboom has a unique capability to utilise audience and sales data from its wider business to develop podcasts with strong audience engagement. The UK podcast market is uncrowded in comparison to the US, making discovery less challenging and audience acquisition through paid marketing more efficient. 

There is a gap in the UK market for a leading end-to-end commercial podcast publisher - Audioboom will take advantage of this opportunity through the creation of a new production unit.

Subscription Platform Growth

Audioboom's subscription platform, in which hobbyist and enthusiast-level podcasters pay US$10 or US$20 per month to utilise our professional hosting platform and toolset, provides significant upside revenue opportunity.

Currently, more than 100,000 new podcasts are launched every month globally, and each podcast needs a hosting platform in order to publish content to listening apps. To date, Audioboom's subscriber growth has been fully organic with no paid marketing or investment in user acquisition. 

Gross margins for our subscription platform are greater than 90%, and the lifetime value of a user is above US$250. We believe there is strong potential to grow our subscription revenue through targeted paid marketing.

Overview of the Market

The launch of Triton Digital's Podcast Reports in 2020, alongside Podtrac's Podcast Ranker, highlighted the strong market position Audioboom has established:

· In May 2020 Audioboom entered Triton's report as the 6^th largest podcast publisher in the US, a position we maintained across the year before rising to 5^th position in the January 2021 report

· Audioboom consistently ranked as the largest international podcast publisher in Triton's Australian Podcast Ranker report throughout the year

· Audioboom would rank as the 4th largest podcast publisher on a Global Downloads basis if the Company took part in Podtrac's industry ranker

Audioboom has also continued to outpace the wider podcast industry's rate of expansion. The Interactive Advertising Bureau initially projected US market growth in 2020 of 29.6%, however this was downgraded in an eMarketeers study as a result of Covid-19 to 10.4%. Audioboom expanded at almost twice the rate of the industry, growing in 2020 by 20.2%.

Audioboom has outperformed the wider industry's growth in each of the past three years. Since 2017 Audioboom has grown 80% faster than the wider market. Our compound annual growth rate during this time is 63.9% versus 35.7% for the industry.

Continued outperformance of the industry would see Audioboom's market position and standings in the Triton Digital and Podtrac rankers improve further, cementing our place as a global leader in podcasting.

The podcast industry is expected to rebound quickly from Covid-19. eMarketeers' revenue study projects market growth in 2021 of 45%. This growth will be chiefly driven by the increase in consumption of podcast content in the US as highlighted in the most recent Edison Research Infinite Dial study, with key audience data points including:

· A 17% yearly increase in the number of US adults who listen to podcasts each week

· A 14% increase in the average number of episodes consumed by podcast listeners each week

Audioboom is well placed to take maximum advantage of industry tailwinds.

2020 saw further consolidation across the industry, with notable M&A activity including:

· Spotify's acquisition of The Ringer and Megaphone

· Sirius XM's acquisition of Stitcher

· iHeartMedia's acquisitions of Voxnest and Triton Digital in 2021

· Amazon's acquisition of Wondery

Acquisition strategy has been centred on the combination of technology, content production and monetisation. These are elements which we have already built into the Audioboom business and which we are currently using to scale growth.

Operational Review

I am pleased to report a strong year of monetisation and operational progress across all areas of the business.

KPIs

Our three Key Performance Indicators are drivers of growth in our most important income stream - premium advertising sales:

1. Brand advertiser count of 311 as at 31 December 2020, up 11% on 31 December 2019 (280)

Brand advertiser count measures Audioboom's active customers. Key drivers of this KPI growth include: addition of new content genres to widen brand appeal; overall market growth and expansion of brands advertising in podcasts; optimal campaign performance with agency campaigns resulting in new agency clients being added.

2. Revenue per 1,000 downloads (eCPM) for December 2020 increased 32% to US$38.99 (December 2019: US$29.60)

e-CPM is a measure of the value we extract from every 1,000 downloads on the platform, and how we optimise the supply of available advertising inventory. Growth drivers for this KPI include: increasing fill rates; increasing ad rates; developing a second-window revenue model to monetise back-catalogue content.

3. Total available premium advertising impressions for the 12 months to 31 December 2020 up 2% to 1,674 million (1,644 million to 31 December 2019)

Total available premium advertising impressions measures the growth in supply of live read or host endorsement inventory. In January 2020 Audioboom adopted version 2 of the IAB's Podcast Measurement Standard, which placed stronger filtering and restrictions on download counting. The new measurement methodology reduced our count of premium advertising impressions by approximately 30%, therefore minimising perceived growth in this KPI between 2019 and 2020.

For 2021, we will replace the Premium Advertising Impressions KPI with a Global Downloads metric. This new data point is an industry standard metric, enables more accurate comparisons to be drawn with other podcast networks, is measured using the Interactive Advertising Bureau's Podcast Measurement Standard V2, and is verified by Triton Digital - a leader in audio measurement.  

Content Acquisition 

Audioboom's publisher network saw strong growth in 2020, as we delivered significant value to our independent podcast partners through our premium sales model, and - materially for the first time - through our advertising technology.

We brought new leading independent publishers to the Audioboom network, with opportunities to create commercial partnerships with Tier One podcasters increasing over previous years as a result of our continued work to develop relationships with talent agencies, management groups and creator networks.

Key new podcast partnerships formed in 2020 and post-period end included The Fantasy Footballers, Tiny Meat Gang, Mile Higher, Rotten Mango and Coffee Convos.

Audioboom's premium-first sales strategy, in which we focus on high-engagement, high-CPM, host endorsed ads that are embedded into the content for 90 days followed by a second monetisation window utilising ad-tech, has enabled us to optimise revenue generation for our partners. Combined with best-in-class client services via our US and UK content teams, we have a strong record of partnership renewals that was seen again in 2020.

Key podcast partnership renewals in 2020 and post-period end included Casefile True Crime, Morbid: A True Crime Podcast, The Morning Toast, No Such Thing As A Fish and The Duncan Trussell Family Hour. As Audioboom deepens its relationships with partners, we extend the length of renewals, currently averaging between 24 and 36 months on top performing shows. 

Monetisation of our premium publisher network accounted for 66% of the Group's 2020 revenue and on an absolute basis is expected to continue to grow significantly in 2021.

Our premium network includes around 200 shows, but in the wider publisher network more than 8,500 shows utilise the Audioboom platform for technology or non-premium monetisation. 4,000 podcasts use Audioboom's technology toolset through our subscription platform, paying us US$10 or US$20 per month for access. Revenue from this content group accounted for 2% of Group revenue in 2020, but has been identified as an area of future growth through targeted paid marketing.

Sales against the long-tail and archive content on our network was a key driver of our strong ad-tech revenue growth, which delivered US$2.5 million in 2020, up 258% on 2019 (US$0.7 million). We expect continued significant future growth of this area as we build new sales channels and partnerships through our ad technology.

Content Creation

During 2020 we expanded our production arm with the launch of eight new Audioboom Originals, developed and produced by our in-house creative team. We also extended our production services offering, in which we are engaged to produce content on behalf of talent or brands.

Production plans were disrupted by Covid-19 during the second quarter of the year, with a number of launches delayed until the advertising environment had rebounded enough to ensure effective monetisation. Additionally, shows in development experienced delays as our production unit adapted to the challenges of remote recording caused by the pandemic. 

Despite these challenges our production business delivered a strong year, growing revenue by 57% to US$1.1 million (2019 US$0.7 million). Shows produced by Audioboom were downloaded 34 million times during the year.

New Audioboom Originals launched in 2020 included: Raising A Pro, Huddled Masses, Baby Mamas No Dramas, Crime Weekly, Truth Vs Hollywood, For All Moms, Here's The Sitch and Because Mom Said So.

Mafia, What Makes A Killer, Never Thought I'd Say This and An Hour Or So With Sue Perkins all returned for successful new seasons, while It's Happening, Blank Check and The 45th continued to deliver weekly episodes.

As well as the Audioboom Originals Network, our production arm produces a number of podcasts for brands and publishers. Our flagship production project with Formula 1 was extended earlier this year until 2023, with Audioboom's role expanding to the production of F1 Nation in addition to the globally successful F1: Beyond The Grid.

Investment into Audioboom's production arm is a key part of our accelerated growth strategy, with a goal of delivering 15% of Group revenue by 2024.

Content Access

In its second full year of operation, Sonic Influencer Marketing, our platform that enables brands to purchase advertising inventory across the entire podcast landscape, reinforced its strategic role within the Group and once again contributed materially to our growth.

More than 30 brands utilised the service, with key clients including Article, Outerknown and Instacart all increasing their marketing budgets due to the success of campaigns executed through Sonic.

To support the growth of Sonic we focused on the development of a bespoke Salesforce inventory management platform that will enable the business to scale and provide new levels of intelligence around audiences, pricing and campaign performance. The platform launched in early 2021 and is now powering Sonic's booking and campaign execution process. 

Sonic has experienced a strong start to 2021, with four new clients joining the platform during Q1 including Keeps - a major podcast advertiser over recent years - highlighting the industry's recognition of Sonic Influencer Marketing as an emerging leader in the space.

Key commercial and strategic partnerships

Audioboom's strategic partnerships are focused on enhancing distribution, data and monetisation. During 2020, with the impact of Covid-19, these partnerships became even more important in bolstering our operations, ensuring we were fit for business and maximising our resilience to the global pandemic.

Australian Radio Network (ARN)

Audioboom engaged ARN as our exclusive advertising sales partner in Australia in 2020 as we stepped up efforts to monetise our content outside our core US and UK markets. Australia is our third largest market for downloads and Audioboom is the largest international publisher in the country. Until 2020 revenue derived from Australian consumption was minimal, but our partnership with ARN presents significant upside opportunity with no additional investment needed. We expect significant growth in Australian revenue in 2021 as a result of the partnership.

Rogers Media

Canada is Audioboom's fourth largest market for downloads, and our partnership with Rogers Media is focused on building revenue from that consumption. Similar to our work in Australia, this expansion requires no additional investment from Audioboom as Rogers Media will provide exclusive advertising sales representation in the region.

Triton Digital

Our partnership with Triton Digital provides the Company with verifiable consumption data, a ranking service that highlights our industry leadership position to advertising agencies and brands, and access to a programmatic marketplace that bolsters our monetisation efforts. Post-period, Audioboom and Triton Digital have renewed the partnership for a further two years.

Podsights

Audioboom utilises the Podsights attribution toolset to identify the true reach and performance of our advertising campaigns, allowing us to deliver enhanced value to our brand advertisers. Podsights enables our brand partners to directly link product sales across a family of IP addresses to an individual advertising campaign, thus proving the value of podcasting as a medium, and the strength of Audioboom's ability to deliver campaigns impactfully to an audience.

 

Nielsen

Audioboom renewed a data partnership with Nielsen during 2020, further utilising their Podcast Listener Buying Power Service to add qualitative audience information to our dataset. This rich audience profiling tool enables the Company to explore new sales opportunities, and creates stronger engagements between our brand advertisers and listeners.

Amazon Music and Pandora

Early in 2020 Audioboom signed new distribution partnerships with two major audio platforms - Amazon Music and Pandora. Through these partnerships the entire roster of Audioboom podcasts were made available to the 146 million monthly active users across Amazon Music and Pandora. The Company continues to explore opportunities to ensure our podcasts can be heard by the maximum number of consumers.

Voxnest

Our partnership with ad-tech and data platform Voxnest began in September 2019 and expanded across 2020 to deliver increased levels of analytics, audience insight, ad campaign management tools and programmatic monetisation. This partnership is at the core of our second window content monetisation strategy and programmatic revenue expansion.

Financial Review

In 2020, the Company recorded revenue growth that almost doubled the expected wider podcast industry growth, it proved its resilience to a global pandemic and in Q4 recorded its highest revenue quarter to date. The Company continued to build on its strong operation and financial foundations and did so with an average headcount of 37 staff, making it an extremely efficient and focused organisation. 

Revenue increased by 20% to US$26.8 million for 2020 from US$22.3 million in 2019.  In 2020, 94% of Group revenue was generated in the United States, which is the largest and most developed market for podcasting, up from 90% in 2019 due to the continued growth in that territory as well as the second full year of trading at Sonic Influencer Marketing.

Gross margin increased slightly to 23% in 2020 (2019: 22%) and Audioboom continues to have a mix of revenue streams, contributing different gross margins. Direct revenue, where advertising is placed on third party podcasts via the Audioboom sales teams, yielded a 22% gross margin in 2020. The Audioboom Originals Network contributed a 40% gross margin in 2020 and, due to the higher associated gross margin, is a key area of focus going forward for the Company. Sonic Influencer Marketing typically contributes a gross margin of between 12% and 15% and therefore, despite the growth of this business, it does impact the overall Group gross margin.

The Company continued to control overheads and we have aligned staff globally to ensure that every employee contributes to the growth of the business. We continue to monitor the cost base closely and align it to the Company's operational demands and this will continue into 2021 as we increase focus on areas that we believe can drive further revenue growth, in the Audioboom Originals Network, subscription revenue and further ad network monetisation.

The Company's overall trading for the period, as measured by adjusted EBITDA (earnings before interest, tax, depreciation, amortisation, share based payments, non-cash foreign exchange movements and before exceptional items) recorded an improvement of 42% to a loss of US$1.7 million from a US$3.0 million in 2019. 

The total comprehensive loss for the year demonstrated a 57% improvement to a US$3.1 million loss from a US$7.1 million loss in 2019. The cash outflow from operating activities fell to US$3.3 million from US$5.2 million in 2019, a 37% reduction.

The improvements in the working capital cycle that the Company has recognised over the last two years have been achieved via continued good debtor collection while also reducing average payable days. The implementation of the bespoke podcast advertising booking system in 2018, continued improved cash collection and sustained revenue growth has led to 2020 debtor days of 87 being in line with the 86 reported in 2019. It should be noted that a record revenue quarter in Q4 of US$8.5 million contributed to the year-end debtor day total being above the 58 days that was recorded at the half year. Average payable days reduced from 72 days in 2019 to 65 days in 2020.

During the period, the Company raised a total of £3.15 million (before expenses) from the issue of ordinary shares to a new investor, One Nine Two Pte Limited. The Company will use these funds to continue to invest in generating organic growth.

On 17 June 2019, the Company agreed a content funding facility with SPV Investments Limited ("SPV"), a special purpose vehicle established by Michael Tobin, the Company's Chairman, and Candy Ventures sarl, the Company's largest shareholder, pursuant to which SPV provides minimum revenue guarantees to certain leading content partners of the Company. To date, three leading podcasts have been retained via the SPV guarantee facility, in June 2019, January 2020 and December 2020. As at 31 December 2020, US$1.1 million of the SPV content funding facility was available (increasing to US$1.7 million as at the date of this report).

On 7 February 2020, the Company announced that it had entered into a two year US$4 million secured loan facility arrangement (the "Facility") with SPV. To date, US$0.7 million of the Facility has been drawn down, and subsequently repaid in November 2020. As at 31 December 2020, and as at the date of this report, US$3.3 million of the Facility remains undrawn and the Company has no debt. Net cash at the period end was US$3.3 million (31 December 2019: US$2.0 million).

The financial results shown above illustrate that the drive to increase revenues whilst maintaining strong cost management is working and should deliver significant shareholder value as the Company continues its journey towards sustainable positive EBITDA.

Trading Update and Outlook

2021 is set to be a breakthrough year for Audioboom as we move the business towards the milestone of a positive EBITDA position. Proving we have created a self-sustainable business model should provide confidence to shareholders in our ability to deliver long-term value.

I am pleased to provide an update on our recent progress, highlighting an impressive start to the year, with the Company already signing advertising bookings representing more than 80% of the current market expectations as to revenue for the full year. 

Additionally, in the first quarter of 2021, we have added significant scale through our content-focused growth strategy, recognised in Triton Digital's January 2021 Podcast Report where Audioboom moved up to 5^th position on their ranker of the largest podcast publishers in the US. This additional scale will support the continuation of our positive revenue growth across the year. 

RELAX! With Colleen Ballinger and Erik Stocklin - our first Audioboom Original launch this year - has already made a strong impact, hitting number one on the Apple podcast chart in January 2021. Due for release on 1 April is our boldest Audioboom Original to date - Dark Air, a 14 episode serial written by and starring Rainn Wilson from The Office (US).

Sonic Influencer Marketing has already accessed inventory in more than 150 top tier podcasts outside the Audioboom network for its brand clients this year, including at Pod Save America, The Sarah Silverman Podcast, Crime Junkie, and Conan O'Brien Needs A Friend. 

We have also strengthened our premium sales network through the renewal of key shows (Astonishing Legends, Two Girls One Ghost), and new commercial partnerships (The Fantasy Footballers, Strange & Unexplained, That Gaby Roslin Podcast, Meditation Minis and Team Never Quit).

I am delighted with the start we have made towards our 2021 goals, and I am looking forward to updating you on further progress in our Q1 trading update in April.

Stuart Last

Chief Executive Officer

17 March 2021

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2020

		2020	2019
	Notes	US$'000	US$'000
Continuing operations
Revenue	2	26,782	22,310
Cost of sales		(20,581)	(17,414)
		-----------------	-----------------
Gross profit		6,201	4,896
Administrative expenses		(9,288)	(12,339)
		-----------------	-----------------
Adjusted operating loss		(1,720)	(2,970)
- Amortisation and impairment of intangible assets		-	(2,420)
- Share based payments	9	(715)	(1,429)
- Depreciation		(60)	(60)
- Corporate transaction costs	5	(167)	-
- Depreciation - leases		(319)	(331)
- Operating foreign exchange (loss) / gain		(106)	110
- Restructuring costs		-	(343)
		----------------	----------------
Operating loss		(3,087)	(7,443)
Finance costs	4	(210)	(97)
		----------------	----------------
Loss before tax		(3,297)	(7,540)
Income tax credit		-	221
		----------------	----------------
Loss for the financial period attributable to equity holders of the parent		(3,297)	(7,319)
		----------------	----------------
Other comprehensive loss
Foreign currency translation difference		61	193
		----------------	----------------
Total comprehensive loss for the period		(3,236)	(7,126)
		========	========
Loss per share
from continuing operations
Basic and diluted	6	(23) cents	(55) cents
		============	============

All results for both periods are derived from continuing operations.

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2020 

		As at 31 December 2020		As at 31 December 2019
	Notes	US$'000	US$'000	US$'000	US$'000
ASSETS
Non-current assets
Property, plant and equipment		90		140
Right of use asset		822		1,300
		---------------		---------------
			912		1,440
Current assets
Trade and other receivables		8,028		7,120
Cash and cash equivalents		3,257		1,992
		---------------		---------------
			11,285		9,112
			-------------------		-------------------
TOTAL ASSETS			12,197		10,552
			-------------------		-------------------
Current liabilities
Trade and other payables			(5,667)		(5,861)
			-------------------		-------------------
NET CURRENT ASSETS			5,618		3,251
			-------------------		-------------------
Non-current liabilities
Lease liability			(636)		(1,029)
			-------------------		-------------------
NET ASSETS			5,894		3,662
			=========		=========
EQUITY
Share capital	7		-		-
Share premium	7		60,822		56,210
Issue cost reserve			(2,048)		(2,048)
Foreign exchange translation reserve			(276)		(337)
Reverse acquisition reserve			(3,380)		(3,380)
Retained earnings			(49,224)		(46,783)
			----------------		----------------
TOTAL EQUITY			5,894		3,662
			========		========

The accompanying accounting policies and notes form an integral part of these financial statements.

 

CONSOLIDATED CASH FLOW STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2020

		2020	2019
		US$'000	US$'000
Loss from continuing operations		(3,297)	(7,319)
		----------------	----------------
Loss for the period		(3,297)	(7,319)
Adjustments for:
Taxation credit		-	(221)
Interest payable		210	-
Amortisation and impairment of intangible assets		-	2,420
Depreciation of fixed assets		60	60
Effect of retranslation of fixed assets		-	(11)
Share based payments		715	1,429
Increase in trade and other receivables		(906)	(2,952)
Increase in trade and other payables		301	1,846
Decrease in lease liability		(411)	(433)
Foreign exchange gain / (loss)		76	(17)
		----------------	----------------
Cash flows from operating activities		(3,252)	(5,198)
Taxation received		28	106
		----------------	----------------
Net cash used in operating activities		(3,224)	(5,092)
		----------------	----------------
Investing activities
Purchase of property, plant and equipment		(10)	(36)
		----------------	----------------
Net cash used in investing activities		(10)	(36)
		----------------	----------------
Financing activities
SPV loan interest and fees	4	(113)	-
Proceeds from SPV loan	4	700	-
Repayment of SPV loan	4	(700)	-
Proceeds from issue of ordinary share capital (net of issue costs)		4,612	5,539
		----------------	----------------
Net cash generated from financing activities		4,499	5,539
		========	========
Net increase in cash and cash equivalents		1,265	411
		----------------	----------------
Cash and cash equivalents at beginning of period		1,992	1,581
		----------------	----------------
Cash and cash equivalents at end of period		3,257	1,992
		========	========

The Group had no borrowings at the end of either financial period and therefore no reconciliation of net debt has been provided.

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2020

		Share capital	Share premium	Issue cost reserve	Reverse acquisition reserve	Foreign exchange translation reserve	Retained earnings	Total equity
		US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000
		-------------------	-------------------	-------------------	-------------------	-------------------	-------------------	-------------------
At 31 December 2018		-	50,883	(2,048)	(3,380)	(530)	(40,893)	4,032
		-------------------	-------------------	-------------------	-------------------	-------------------	-------------------	-------------------
Loss for the period		-	-	-	-	-	(7,319)	(7,319)
Issue of shares		-	5,327	-	-	-	-	5,327
Equity-settled share-based payments		-	-	-	-	-	1,429	1,429
Foreign exchange gain on translation of overseas subsidiaries		-	-	-	-	193	-	193
		-------------------	-------------------	-------------------	-------------------	-------------------	-------------------	-------------------
At 31 December 2019		-	56,210	(2,048)	(3,380)	(337)	(46,783)	3,662
		-------------------	-------------------	-------------------	-------------------	-------------------	-------------------	-------------------
Loss for the period		-	-	-	-	-	(3,297)	(3,297)
Issue of shares		-	4,612	-	-	-	-	4,612
Equity-settled share-based payments		-	-	-	-	-	856	856
Foreign exchange gain on translation of overseas subsidiaries		-	-	-	-	61	-	61
		-------------------	-------------------	-------------------	-------------------	-------------------	-------------------	-------------------
At 31 December 2020		-	60,822	(2,048)	(3,380)	(276)	(49,224)	5,894
		-------------------	-------------------	-------------------	-------------------	-------------------	-------------------	-------------------

Share premium

Share premium represents the consideration paid for shares in excess of par value (nil), less directly attributable costs.

Issue cost reserve

The issue cost reserve arose from expenses incurred on share issues.

Reverse acquisition reserve

The reverse acquisition reserve relates to the reverse acquisition of Audioboom Limited by Audioboom Group plc on 20 May 2014.

Foreign exchange translation reserve

The foreign exchange translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign operations.

 

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2020

1.  GENERAL INFORMATION AND BASIS OF PREPARATION

Audioboom Group plc is incorporated in Jersey under the Companies (Jersey) Law 1991. The Company's shares are traded on AIM, the market of that name, operated by the London Stock Exchange.

The Group prepares its consolidated financial statements in accordance with International Accounting Standards ('IAS') and International Financial Reporting Standards ('IFRS') as adopted by the EU. The financial statements have been prepared on the historical cost basis, except for the revaluation of financial instruments. The consolidated financial statements have been prepared in accordance with and in compliance with the Companies (Jersey) Law 1991 and were approved by the Board on 17 March 2021.

These results are audited, however the financial information set out in this announcement does not constitute the Group's statutory accounts for the period ended 31 December 2020, but is derived from the 2020 Annual Report. The auditors have reported on those accounts; their report was unqualified.

The preparation of financial statements in accordance with IFRS requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statement and the reported amounts of revenue and expenses during the reporting period. Although these estimates are based on management's best knowledge of current events and actions, actual results may ultimately differ from those estimates.

The accounting policies used in completing this financial information have been consistently applied in all periods shown.

Going concern

The financial statements have been prepared on the going concern basis, which assumes that the Group will have sufficient funds to continue in operational existence for the foreseeable future. The Group ended the year with access to US$6.6 million of capital, being US$3.3 million of cash and US$3.3 million of the loan facility arrangement with SPV Investments Limited announced in February 2020. The Board's forecasts for the Group, including due consideration of the business forecasting positive EBITDA in 2021, projected increase in revenues and decreasing cash-burn of the Group and taking account of reasonable possible changes in trading performance including changes outside of expected trading performance, indicate that the Group will have sufficient cash available to continue in operational existence for the next 12 months from the date of approval of the financial statements and beyond. No additional funding is considered to be required and based on the Board's forecasts, the Group considers that it will not require additional funding for the foreseeable future for the purposes of meeting its liabilities as and when they fall due. The Board believes that the Group is well placed to manage its business risks, and longer-term strategic objectives, successfully.

Management has carried out sensitivity analyses of the Group's cash flow models to assess the impact of a range of possible outcomes, including lower than anticipated revenues, and the mitigations that the Group has available to it, including a reduction in overhead costs, active working capital management and the availability of finance from SPV Investments Limited. In addition, management continue to assess any ongoing impact of Covid-19 on Group performance, albeit that the Group proved resilient to the challenges posed by the pandemic in 2020. Accordingly, the Directors are satisfied that the Group will continue to be able to meet its ongoing liabilities as and when they fall due in reasonably foreseeable circumstances.

Therefore, the Directors consider the going concern basis of preparation of these financial statements appropriate.

2.	REVENUE			2020	2019
				US$'000	US$'000
	Subscription			463	327
	Advertising			26,319	21,983
				--------------	--------------
				26,782	22,310
				=======	=======

The Directors consider the Group to operate within one operating segment, content related revenue, and consequently expenditure and balance sheet analysis is not presented between subscription and advertising services.

Geographical information

The Group's operations are principally located in the UK and the USA. The main assets of the Group, cash and cash equivalents, are held in Jersey.

The Group's revenue from external customers by geographical location is detailed below:

				2020	2019
				US$'000	US$'000
	United Kingdom			1,638	2,137
	Rest of the World			36	57
	USA			25,108	20,116
				--------------	--------------
				26,782	22,310
				=======	=======

The Group invoiced 39% of its income to three customers who represented more than 10% of the reported revenues.

The Group currently has three geographic revenue regions, however, as the Group's controlling operations are primarily based in the UK, there is no separation of income, expenditure and sections of the balance sheet for the purposes of segmental reporting.

3.	STAFF COSTS			2020	2019
				Number	Number
	Average number of production, editorial and sales staff			31	32
	Average number of management and administrative staff			6	8
				--------------	---------------
				37	40
				=======	=======
				US$'000	US$'000
	Wages and salaries			4,613	4,597
	Social security costs			362	348
	Pension costs (defined contribution scheme)			206	21
	Share based payments			600	976
				--------------	---------------
				5,781	6,142
				=======	=======

4.	FINANCE COSTS			2020	2019
				US$'000	US$'000
	Depreciation - lease interest			97	97
	SPV loan interest and arrangement fee			113	-
				------------	-------------
				210	97
				=======	=======

  On 7 February 2020, the Company announced that it had entered into a two-year US$4 million secured loan facility arrangement (the "Facility") with SPV Investments Limited. To date, US$0.7 million of the Facility has been drawn down, and subsequently repaid in November 2020. As at 31 December 2020, US$3.3 million of the non-revolving loan facility remains undrawn and the Company has no debt. The Facility attracted an arrangement fee of US$80,000 and the Company incurred 8% interest annualised on amounts drawn (US$33,000).

5.  CORPORATE TRANSACTION COSTS

On 19 February 2020, the Company announced that it had commenced a formal sale process ("FSP") under the Takeover Code as part of the Board's strategic review. On 14 October 2020, the Company announced that the FSP had ended and that it would focus on further organic growth. The Group recognised US$167,000 of costs in relation to corporate fees incurred during the FSP.

6.  LOSS PER SHARE

Basic earnings per share is calculated by dividing the loss attributable to shareholders by the weighted average number of ordinary shares in issue during the period.

IAS 33 requires presentation of diluted EPS when a company could be called upon to issue shares that would decrease earnings per share, or increase the loss per share. For a loss-making company with outstanding share options, the net loss per share would be decreased by the exercise of options. Therefore, as per IAS33:36, the anti-dilutive potential ordinary shares are disregarded in the calculation of diluted EPS. 

The Company completed a 100:1 share consolidation on 21 June 2019 and the calculations set out below reflect this. Reconciliation of the loss and weighted average number of shares used in the calculation are set out below:

			Weighted average	Per
		Loss	number of shares	share amount
		2020
		US$'000	Thousand	Cents
	Basic and diluted EPS
	Loss attributable to shareholders:	(3,297)	14,276	(23)
	- Continuing and discontinued operations	=========	=========	=========
		2019
		US$'000	Thousand	Cents
	Basic and diluted EPS
	Loss attributable to shareholders:
	- Continuing and discontinued operations	(7,319)	13,385	(55)
		=========	=========	=========

 

7.  STATED CAPITAL ACCOUNT

  On 21 June 2019, the Company consolidated every 100 existing ordinary shares of no par value into one new ordinary share of no par value and the numbers below are adjusted to reflect this.

			No. of	Share	Share
			shares	capital	premium
				US$'000	US$'000
	At 31 December 2018		11,732,910	-	50,883
	Shares issued in the period
	Shares issued at 130p each		1,152,847	-	1,931
	Shares issued at 250p each		1,120,000	-	3,396
			----------------------	-------------------	---------------------
	At 31 December 2019		14,006,757	-	56,210
			----------------------	-------------------	---------------------
	Shares issued in the period
	Share options exercised		267,737	-	539
	Shares issued at 225p each		1,400,000	-	4,072
			--------------------	---------------------	-----------------------
	At 31 December 2020		15,674,494	-	60,821
			===========	===========	===========

There is no authorised share capital and all shares rank pari passu. All issued share capital is fully paid up. All ordinary shares have no par value.

8.  RELATED PARTY TRANSACTIONS

Content funding facility

On 17 June 2019, the Company agreed a content funding facility with SPV Investments Ltd ('SPV), a special purpose vehicle. SPV was established and is owned equally by Michael Tobin, the Company's Chairman, and Candy Ventures sarl, the Company's largest shareholder. The SPV was established to provide minimum revenue guarantees of up to US$4 million to certain leading new and existing content partners of the Company. Audioboom pays the SPV 8% of the net advertising revenue (after paying the content partner its share) received by Audioboom, in relation to those podcasts. The underlying providers of the guarantees were to be granted 25,000 warrants to subscribe for ordinary shares in the Company for every US$1 million of guarantee provided, subject to a maximum of 100,000 warrants. The exercise price of all warrants associated with the SPV content funding facility is £3.30 per ordinary share each, with such warrants being exercisable for five years from grant. The initial use of the content funding facility was to provide a guarantee of US$1 million in June 2019. The second guarantee provided by the SPV in January 2020 of US$1.75 million led to a grant of an aggregate of 43,750 warrants split equally between Michael Tobin and Candy Ventures sarl. The third guarantee provided by the SPV in December 2020 of US$2.2 million led to a grant of 31,250 warrants split equally between Michael Tobin and Candy Ventures sarl. In the prior year, a guarantee by the SPV in June 2019 led to a grant of an aggregate of 25,000 warrants split equally between Michael Tobin and Candy Ventures sarl. A total of 100,000 warrants have now been issued pursuant to the facility, which is the maximum number of warrants being capable of issue in this regard. Following the third use of the content funding facility, as at 31 December 2020 the amount remaining available under the facility was approximately US$1.1 million.

US$4 million loan facility

In February 2020, the Company announced a US$4 million secured loan facility arrangement (the "Facility") with SPV. The Facility attracts interest at a rate of 8 per cent. per annum on drawn down funds, together with a US$80,000 arrangement fee payable on the first draw down, equivalent to 2 per cent. of the full US$4 million available under the Facility. The accrued interest is payable at the date of repayment of the principal amount outstanding. The latest date for repayment is 24 months from the commencement of the Facility, however it may be repaid earlier at the Company's election. Any amounts repaid will not be available for subsequent drawdown. The Facility is secured against the assets of Audioboom Limited and contains events of default which are customary in nature for this type of loan facility. To date, US$0.7 million has been drawn down under the Facility and this was repaid in full in November 2020 (including interest and loan arrangement fees amounting to US113,000). As at 31 December 2020, US$3.3 million of the non-revolving Facility remained undrawn.

9.  SHARE-BASED PAYMENTS

On 21 June 2019, the Company consolidated every 100 existing ordinary shares of no par value into one new ordinary share of no par value and the numbers below are adjusted to reflect this.

The Company has share option schemes for employees of the Group. Options are exercisable at the price agreed at the time of the issue of the share option. The vesting period and/or any performance conditions vary between employees. If the options remain unexercised after a period of 10 years from date of grant the options expire. Options are typically forfeited if the employee leaves the Group before the options vest. Details of the share options granted during the period are as follows:

		2020		2019
			Weighted		Weighted
			Average		Average
		Number of	Exercise	Number of	Exercise
		Share options	Price (£)	Share options	Price (£)
	Outstanding at beginning of period	1,212,643	1.759	563,644	1.937
	Granted during the period	271,500	1.840	809,600	1.613
	Forfeited/lapsed during the period	(177,669)	1.533	(160,601)	1.610
	Exercised during the period	(267,737)	1.464	-	-
		--------------------		---------------------
	Outstanding at end of period	1,038,737	1.822	1,212,643	1.759
		=============		=============
	Exercisable at end of period	547,379	1.845	631,960	1.837
		=============		=============

The options outstanding at 31 December 2020 had a weighted average exercise price of £1.82, and an average remaining contractual life of 8 years.

The Group recognised total expenses of US$600,000 related to equity-settled share-based payment transactions for the 12-month period ended 31 December 2020 (12 months to 31 December 2019: US$976,000).

		2020	2019
		US$'000	US$'000
	Share option charge	600	976
	Warrant charge	115	453
		--------------	--------------
		715	1,429
		========	========

At the period end, the Company had in issue outstanding share warrants for a total of 520,000 shares (2019: 445,000 shares) with a weighted average exercise price of £3.12 (2019: £3.08). 320,000 (2019: 245,000) of the warrants were exercisable at the period end, and the balance may become exercisable subject to performance conditions.

10.  CONTENT PARTNER MINIMUM GUARANTEES

In order to attract and retain leading podcast partners, the Group offers certain partners minimum revenue guarantees ("MG") over the life of the agreement between the parties. The MG offers guaranteed revenue over the life of the agreement in the form of monthly payments and/or an upfront advance payment, which is then recouped over the life of the agreement, thus reducing future expected payments proportionally. The MGs provided secure the right of access to future content and therefore the expenditure in relation to these guarantees is recognised over the term of the contract. The content providers' obligations are discharged to the Group over the term of the contract in line with when the Group consumes the benefit of these obligations. In accordance with IFRS 9, no liability is recognised at the date of the contract as the MG relates to future performance obligations of the content provider.

		2020	2019
		US$'000	US$'000
	MG expenditure committed in 12 months or less	6,585	3,946
	MG expenditure committed in more than 12 months	1,226	73
		-----------------	-----------------
	Total MG amount committed to expenditure	7,811	4,019
		========	========

		2020	2019
		US$'000	US$'000
	MG amount that is backed by the SPV content funding facility	2,881	500
	MG amount available in SPV content funding facility	1,119	3,500
		-----------------	-----------------
	Total SPV content funding facility	4,000	4,000
		========	========

11.  POST BALANCE SHEET EVENTS

On 17 February 2021, 7,665 new Ordinary Shares were issued to satisfy the exercise of existing share options under the Company's Share Option Scheme 2014 by an employee. Therefore, the total number of Ordinary Shares and voting rights in the Company is 15,682,159 at the date of this report.

On 17 February 2021, Audioboom Inc received a US$373,615 Paycheck Protection Progam loan from HSBC Bank USA operating under the US Small Business Administration where financial support is given to US domiciled companies during the Covid-19 pandemic. The loan will be forgiven should Audioboom Inc not reduce headcount during the loan period.

 

END

 

 

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