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Audioboom Group plc

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

Half-Year Report

Audioboom (AIM: BOOM), the leading global podcast company, announces its unaudited half-year results for the six months ended 30 June 2024.

Financial and operational KPIs

·    H1 revenue of US$34.1 million, up 7% on H1 2023 (US$31.8 million)

·    Adjusted EBITDA⁽¹⁾ profit of US$0.3 million (H1 2023: US$0.3 million) - Q2 represented the third successive quarter of positive adjusted EBITDA

·    Record average quarterly eCPM (revenue per 1,000 downloads) in Q2 of US$60.09, up 38% (Q2 2023: US$43.55). Audioboom continues to maximise the value it extracts from downloads versus its peers

·    Average Q2 brand advertiser count of 8,062 (Q2 2023: 8,042). Strategic pricing increases in our Showcase advertising product have limited access to lower-value brands, continuing our focus on high-quality monetisation

·    Average Q2 global monthly downloads of 94.8 million (Q2 2023: 125.9 million). While Audioboom has added a number of new tier-1 podcasts to the creator network in the past year, Apple's iOS17 update in late 2023 has reduced and rebased download reporting materially across the wider podcast industry - decreasing by an average of 32% ⁽²⁾. We expect the impact of the iOS17 update to create more favourable long-term commercial conditions in the podcast industry due to the increased levels of return-on-investment that more accurate download data will deliver to advertisers 

·    The Company has in excess of US$65 million revenue for 2024 booked - more than total revenue for 2023 with more than five months of the year remaining

·    Group cash at 30 June 2024 of US$3.5 million (31 March 2024: US$3.1 million), with a further US$1.9 million available via an undrawn overdraft

Commercial highlights

·    Record H1 revenue from Showcase, our global advertising marketplace, reflecting the Company's continued progress in building key, scalable advertising technology. H1 2024 Showcase revenue of US$9.3 million, up 37% on H1 2023 (US$6.8 million). Showcase now contributes more than 27% to Group revenue (H1 2023: 21%)

·    Audioboom consolidated its position as the fifth largest podcast network in the US on both the Triton Digital Ranker and the Edison Research Ranker.  Since the start of the year Audioboom has moved from 2.2 million downloads behind the next ranked network Audacy, to 0.7 million downloads ahead of them in the June 2024 ranker - highlighting the performance of the Company relative to our competitors

·    Key contracts renewed with leading podcasts in our creator network including: The Broski Report, Serialously, National Park After Dark, Nateland and Minds of Madness. These shows were downloaded more than 42 million times in H1 2024

·    Further restructuring of creator contracts in this period has reduced Audioboom's annual minimum guarantee obligations by more than US$3 million

·    New, top-tier podcasts signed to the Audioboom Creator Network including: Cancelled with Tana Mongeau, 13^th Juror and Stavvy's World. These podcasts are expected to contribute more than 4 million monthly downloads or YouTube views to the network

·    The Board continues to examine opportunities to maximise shareholder value including, amongst other initiatives, transactional opportunities and the option of Audioboom also being publicly listed in the US

¹ Earnings before interest, tax, depreciation, amortisation, share based payments, non-cash foreign exchange movements, material one-off items and onerous contract provisions and losses incurred

² Podnews analysis of Apple iOS17 impact utilising Triton Digital download data

Stuart Last, CEO of Audioboom, commented:

"I'm pleased to report that Audioboom has continued to record positive results, with our third successive quarter of year-on-year revenue growth and our third successive quarter of adjusted EBITDA profitability. Our record eCPM - the value that we extract from every 1,000 downloads across our network - is market-leading, and highlights the work we have done to optimise our monetisation engine in order to extract maximum value from our podcasts.

We have delivered these results despite the double-whammy of the advertising market recession now being followed by deep cuts to our advertising inventory due to Apple's iOS17 update, which changed how listeners download content. These external impacts are frustrating - with the iOS17 change restricting our revenue in the first half of the year by an estimated US$9 million.

Our revenue growth for H1 is in line with the Interactive Advertising Bureau's Podcast Revenue Study forecasts for the industry, and we do expect our growth rate to substantially improve across the second half of the year. We have more than US$65 million of advertising bookings in place - the same level as the entirety of last year's revenue - which means, with more than 5 months of the year remaining, all future bookings will translate directly to growth.

Showcase - our ad-tech driven marketplace - continues to build impressively. In June we delivered more than US$2 million of revenue through the product for the first time, and it now contributes more than 27% of our Group revenue. This performance is fuelled by our technology innovation as well as the early-stage work of our recently launched brand awareness sales unit.

I'm pleased to welcome hit shows like Cancelled and Stavvy's World to the Audioboom Creator Network, while we have also continued to build-out our political programming ahead of the US election - in the coming months podcasts like The Bulwark, Hacks on Tap and The Politics War Room will play an important role in guiding listeners through the campaign season.

I remain extremely optimistic about our future, and believe that the Company continues to be significantly undervalued. As such the Board are actively working to understand the benefits and requirements of listing Audioboom in the US in order to increase the valuation of the business, as well as assessing transactional opportunities to give the Company greater scale. I would like to express my appreciation to the Audioboom team for building our business so efficiently, and to thank shareholders for their continued support and belief in the future of the Company."

Enquiries

About Audioboom

Audioboom is a global leader in podcasting - our shows are downloaded 100 million times each month by 38 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, distribution, marketing and production services for a premium network of top tier podcasts. Key partners include the official Formula 1 podcasts 'F1: Beyond the Grid' and 'F1 Nation', 'Casefile True Crime' (US), 'True Crime Obsessed' (US), 'The Tim Dillon Show' (US), 'No Such Thing As A Fish' (UK) and 'The Cycling Podcast' (UK).

Audioboom operates internationally, with global partnerships across North America, Europe, Asia and Australia. The platform distributes content via Apple Podcasts, YouTube, Spotify, Pandora, Amazon Music, Google Podcasts, iHeartRadio, Facebook and Twitter as well as a partner's own websites and mobile apps. 

For more information, visit audioboom.com.

Chief Executive's Report

Strategy and Business Model

Audioboom powers podcasting - connecting creators, brands and audience to create value across the industry. Since 2018 we have generated more than US$250 million in revenue for our podcast creators and helped thousands of brands deliver more than US$300 million of advertising campaigns.

Creators are the heartbeat of the platform. Our technology enables more than 8,000 podcasters to manage their content publishing process, grow their audience, distribute to all major listening apps, and see insights into the consumption of their content with our data and analytics dashboard.

Brands can access unique advertising options, including the Premium Network, our high-value product in which the host of the podcast delivers campaign messages for the brand and endorses the product directly to their engaged audience. Showcase - our highly automated marketplace - enables brands to pinpoint their target audience at scale and with great efficiency through our ad-tech stack, while Sonic - our platform for brands - helps advertisers develop and execute campaigns across the podcast landscape.

Audioboom delivers strong global scale, with monthly downloads of around 100 million. More than 38 million unique users consume content from Audioboom each month, and in 2024 we will create around 15 billion available advertising impressions.

Audioboom is the fifth largest podcast publisher in the US - the world's largest podcast market - on Edison Research's publisher ranker. We also rank third in Australia, second in New Zealand and fourth in Canada.

A global advertising recession emerged in 2022 and lasted across 2023, creating extremely challenging operating conditions. To combat this, we launched an in-house team focused on developing partnerships with 'brand awareness' advertisers to diversify our customer base and ensure we were less reliant on the traditional podcast advertisers who are susceptible to weaker economic conditions. This unit has seen excellent early traction, with new partnerships beginning with blue chip brands from 10 of the world's largest 15 advertising agencies.

This traction has flowed into the continued success story of Showcase, our advertising marketplace, where these blue chip brands can execute their advertising campaigns efficiently and at scale through our advertising technology. During H1 2024, Showcase contributed 27% of Group revenue (up from 21% in H1 2023 and 12% in H1 2022). In June 2024 Showcase delivered record monthly revenue of US$2.2 million.

In H1 2024 we have experienced our second external challenge of recent times. In late 2023 Apple updated their podcast listening app in the iOS17 release which changed the way users downloaded content. With this change, the Apple podcast app - which historically has contributed around 40% of total podcast consumption - no longer automatically downloaded newly released episodes from podcast channels that the user had not listened to recently. This eroded consumption measurement across the entire podcast industry by approximately 32% according to a Podnews analysis. At Audioboom we have seen net downloads decrease in our network by around 23%, which restricted our revenue growth materially but were pleased to have been less affected overall in comparison to the industry. We are working hard to reverse the impact of Apple's iOS17 change through the signing of top tier shows. During H1 2024 we added podcasts including: Cancelled, The 13^th Juror, Stavvy's World, Basically Unfiltered, Soder and George Conway Explains It All.

Financial Review

Group revenue in the first half of 2024 increased by 7% year on year to US$34.1 million (H1 2023: US31.8 million) with Q2 2024 representing our third successive quarter of year-on-year revenue growth. Adjusted EBITDA profit (earnings before interest, tax, depreciation, amortisation, share based payments, non-foreign exchange movements, material one off items and onerous contract provisions and losses incurred) was US$0.3 million (H1 2023: US$0.3 million), with Q2 representing the third successive quarter of positive adjusted EBITDA. The total loss before tax in the first half of 2024 decreased by US$9.3 million to a loss before tax of US$1.3 million (H1 2023: US$10.6 million loss before tax) with the prior year loss before tax being driven by the recognition of an onerous contract provision and the onerous contract net loss in the first half of 2023.

As detailed further in Note 9, an onerous contract provision was created in relation to two specific partner contracts in the prior period. The ad rates that have been commanded, and the future ad rates that are likely to be commanded, are lower than those modelled when the contracts were signed in early 2022 due to advertising markets being more challenging for longer than anticipated. In light of revenue growth being lower than projected it is now assumed that it is unavoidable that the contracts will generate a net loss through to their conclusion in January 2025 and December 2025 respectively. The contracts recorded a net loss of US$2.6 million in H1 2024 and this loss was offset by the provision created in the prior period.  The provision held on the balance sheet for future estimated net losses of the two contracts is US$4.9 million.

Group gross margin, excluding the impact of onerous contracts, improved to 18% (2023: 17%) due to the reduced impact of the Company utilising its share of advertising revenue to satisfy a small number of podcaster minimum guarantees. The Company continued to control overheads very well during the first six months of 2024 despite inflationary pressures, with the Company maintaining opex (excluding interest, tax, depreciation, amortisation, share based payments, non-cash foreign exchange movements and material one-off items) of US$5.4 million (H1 2023: US$5.4 million). Average headcount increased to 42 (30 June 2023: 39) due to the Company investing in its sales operation to drive increased revenue performance. Total salary and commission costs increased by 14% (US$0.3 million) vs H1 2023 to US$3.4 million. This increase was offset due to savings across all other cost categories, with the main reduction occurring within technology costs, with hosting and bandwidth costs decreasing by US$0.2 million to US$1.3 million due to the impact of iOS17.

Cash collections continue to perform well thanks to our efficient internal processes and good relationships with our customers.  We report a debtor day figure of 71, in line with 30 June 2023 (72) and lower than 31 December 2023 (81). Total cash collected in H1 2023 of US$35.4 million was 104% of revenue reported and US$2.5 million higher than H1 2023 (US$32.9 million). Operating cash outflow, before working capital movements, totalled US$3.1 million (H1 2023: US$1.3 million cash outflow) largely due to the impact of the contract net loss provision as detailed in note 9 (US$2.6 million). Cash held at 30 June 2024 of US$3.5 million increased by US$0.4 million from 31 March 2024 and decreased by US$0.2 million from 31 December 2023 (US$3.7 million). The US$1.9 million overdraft with HSBC was renewed in H1 2024 and remained undrawn at 30 June 2024, giving the Company access to capital of US$5.4 million at the period end.

Outlook

Q2 2024 was our third successive quarter of revenue growth against prior comparable periods and adjusted EBITDA profit, and it highlights how well the business has recovered from the global advertising recession of 2022-23. Unfortunately, that recovery has been restricted by a new external impact - the changes Apple made to their podcast player in the most recent iOS update. This change reduced download measurement across the podcast industry and restricted our revenue in H1 2024 by an estimated US$9 million.

Although the Apple change will continue to limit our performance upside, we do expect our growth rate to significantly accelerate in Q3 2024 and beyond.

We have made progress in a number of key operational areas that have improved our business and resulted in record e-CPM during the last quarter of more than US$60 - this is a measure of how much value we create from every 1000 downloads on our network. Our work to widen our customer base and attract robust, reliable brands is working well. Showcase, our global ad marketplace, goes from strength to strength - now contributing more than 27% of Group revenue - and we continue to sign new top tier podcasts to expand our network.

While frustrated that our work has been made more challenging by a second external issue that is out of our control, we do believe that our positive momentum will continue, and we are well placed to strengthen our position as the biggest independent podcast network globally. Additionally, we are now actively investigating the opportunity for Audioboom to be publicly listed in the US as the Board believes the Company continues to be under-valued and this route will create a fairer reflection of value for shareholders.

Stuart Last

Chief Executive Officer