Audioboom Group (LSE:BOOM) — 2022 Trading Update

0:01 Good afternoon, ladies and gentlemen, and welcome to the AUDIOBOOM GROUP PLC investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged. They can be submitted at any time via the Q and A tab that's situated on the right hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all of the questions submitted today and publish responses where it's appropriate to do so. Before we begin, I would like to submit

0:33 the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful. And I'd now like to hand you over to CEO, Stuart Last. Good afternoon, sir. Thank you, Jake. Hi, everyone. Thank you again for joining AUDIOBOOM to get the the latest updates. It's good to see some familiar names and faces and also lots of of new names here today as well. So welcome. And and as I said, thank you for joining us. For those of you that are familiar with the way we we present this each quarter, we'll start off with a section on our business model, the industry that we work within, how that the the company operates, and I think that will be a really good way to to look at things for for those that are are new to AUDIOBOOM or a good recap for for those of you that haven't been with the company too long.

1:26 Section two, we'll we'll dive into the to the numbers and look at the information from the trading update that we released this morning, go a little deeper on the KPIs and and the financials of the business. And then the the third part of this, we'll look ahead at 2023, and we'll talk about where the company is focused, what we are are working on, what we're planning, and how 2023 is is looking. And then as Jake said, right at the the the end of this, we have time for a q and a session. So we had some questions that that came in in advance. We have those, and we're also very happy to take some some questions so you can add your questions

2:07 in that area on the right hand side of of the screen as we go. So we will now get started with the the the presentation. And as I said, first thing to do, I think, is to introduce ourselves to to those of you that are new to AUDIOBOOM. I'm Stuart Lass. I'm the the chief executive officer. I've been the CEO of AUDIOBOOM for the the past three years, and it's been a fantastic run of of growth for the company. Before I was CEO, I ran operations for AUDIOBOOM based here in New York City, and I've been with the company since 2014. Before AUDIOBOOM, I worked at another podcast ad tech company now called VoxNest, and that was a company based in in New York, a very successful podcast ad tech company.

2:56 And before that, was at the BBC working on their digital audio plan. So I'm, you know, fifteen years deep in podcasting at at this point and and and really excited, I think, to to keep leading this business forward taking it to to new levels.

3:17 Hi, everyone. I'm Brad Clark, CFO here at AUDIOBOOM. I've been in this position since March 2018, so it'll be five years very shortly. I've got around fifteen years of experience in financial roles at three other organizations before AUDIOBOOM, all focused on on finance within within media. So prior to AudioBoom, I was at another AIM coated company called Brave Bison. Prior to that, had various financial roles at at News UK, publisher of The Sun and The Times Newspapers. I qualified as a chartered accountant with with Grant Thornton. As you say, it's it's great company that we work for here. Great industry. Good good trading update that we put out this morning. So, yeah, I look forward to speaking to you in a in a short while on some of the detail around the finances of the company. So back to you, Stuart.

4:09 Thank you, Brad. So, yeah, let's dive into the the business model and the the operations of the business. And really, this first slide that I wanna show you really just highlights what AUDIOBOOM does and the mission behind the the business. This is actually the the the front page of our website. So if you ever go to audioboom.com, our mission is is really out there for for you all to see. We power podcasting for creators and and brands. So we deliver value to to podcasters so they can continue doing their work and growing their audience. And we deliver value for for for brands, those advertisers and and companies that that wanna connect to audience, they wanna connect to to talent and execute their their advertising campaigns across across podcasting. And we've been very successful with this mission. To date, we've delivered more than a $150,000,000 of of value to our podcast create creator partners, and we've delivered and executed more than $200,000,000 of of brand campaigns since 2018. So our mission is front and center of everything the team at AUDIOBOOM is doing. We've been very successful in that, and we think there's a great future ahead in the fastest growing and the fastest part of the media industry.

5:23 How AUDIOBOOM delivers that value is is is really key, and it's that value is is delivered through our platform, which does one very important thing. Our platform connects audience, creators, and advertisers. So those are the three key parts of any media organization. Creators, working with advertisers is great, but unless there is audience connected to that for the advertisers to to reach, then there is very little value. Creators may have strong audience, but if they are not able to access advertisers and brands, again, there's very little value there. So AUDIOBOOM is an integral to bringing these important parts together. We sit in the middle of that. Our platform connects them. So wherever that audience is, whether the audience is listening through Spotify or YouTube, Apple Apple Podcasts, we're able to connect them to the 8,000 plus creators and podcasts on AUDIOBOOM, and then we connect them with the advertisers to to deliver value across all three parts.

6:24 And this business model is is is really born out of three core beliefs. One is that podcasting is a creator medium, so it's independent creator focused. It's not being taken over by major media businesses and and producers of content, and and that is being proven out. We've seen just over the the past year that many of the larger media organizations that have stepped into podcasting have either prove have either paused their work in podcasting or have made layoffs such as at at CNN recently, and the focus really has been on independent creators. It's a very open medium. Those independent creators are very authentic, very organic. They can connect to large audiences, and AUDIOBOOM does a fantastic job of delivering value for them. Our second belief in this business model is that this is an advertising funded medium. And, again, that's being proven out.

7:17 Very little use of subscription or or payments for content. Audiences are used to having podcast content available for free and supported by advertising, and they are happiest using and consuming podcasts in in that way. There's very little driver for audiences to pay for content at at this moment in podcasting. And then thirdly, our core belief is that this is a distributed form of media. So AUDIOBOOM content and our partner content is available everywhere the audience exists. Again, whether that's Spotify, YouTube, Pandora, iHeartMedia, a host of listening apps. Our content will be in all of those. We believe that this is not a a kind of a ring fenced medium that that the content should be out there. It should be reaching audience wherever they are consuming. So those three core beliefs drive the business model. The business model is about delivering value to to the audience, to creators, and to advertisers.

8:20 We are delivering that value in making those connections between the three through the AUDIOBOOM platform. So to give you an overview of what that platform is, it's vertically integrated. It's it's a cloud based engine, and it's very, very scalable. At the the the core of this platform is a content management system. That's where our creators will upload their podcasts. We will host that audio. We would distribute that audio with one click out to all of those listening endpoints that I mentioned earlier. And then we gather the analytics from each of those listening apps back into AUDIOBOOM. We consolidate those in a analytics dashboard. The podcaster, the creator, they can use those analytics to understand their audience and to get insights how that that consumption is happening to improve the quality of their content.

9:10 And then our sales and our revenues t revenue teams can use that analytics dashboard to inform their their sales strategy. So that's the the core part of that platform is is the the CMS. On top of that, we have developed an advertising technology stack so that when we are distributing distributing all of that content, our ad tech is finding the best pricing and and delivering and executing that advertising very seamlessly and and, again, very much at scale. So we've we've developed an ad server that actually fires in ads in in real time into the into and around that content seamlessly. We have a yield up system. That yield up system is is, as I said, finding the best pricing. So it's looking at all of the best all of the the buyers for that piece of advertising inventory.

10:01 In a split second that will decide where the best offer for that for that that piece of advertising inventory comes from, and we'll sell it at that highest price. We have a tool called AdRip. This is a creator tool so that the the creator can add new advertising inventory in their back catalog. We can continue to monetize the back catalog of content for creators. And then we have Showcase, which is our marketplace, our advertising marketplace. We make all of our advertising all of our content supply available to advertisers all around the world, the biggest advertisers in the world through Showcase, our advertising marketplace. So that ad tech stack sits on top of our content management system and begins the monetization process for us.

10:47 And then lastly, on on top of the ads tech stack is a a system that we have called Lyrical. It's a Salesforce based, a bespoke Salesforce based build, and that's an inventory management system. It runs the ad execution. It automates the billing process. It's a business and sales intelligence tool so we can understand our inventory levels, the the the fill rates across them, the pricing that we should be using to sell our content. As I said, it automates the whole billing process, so we we're very lean on the the finance side of the the business. And that really just gives us really great intelligence into everything else that we do. So those are the three core parts of of the AUDIOBOOM platform that's so integral to delivering value to our creators. And, really, that is now driving some significant scale. So running through that platform are more than 8,000 podcasts or 8,000 podcast channels.

11:42 That content being created in those 8,000 podcast channels is being downloaded a 130,000,000 times every single month. Obviously, the more downloads that are happening through that, through our platform, the more ad inventory there is available for us to sell. And we're currently reaching more than 34,000,000 unique listeners around the world. So some really great scale developing in that platform, and that's building every single month. This chart is really showing you how we view our creators and and and the content model in AUDIOBOOM, but, really, this also represents podcasting in general, I think, which is to say that to the left hand side of this chart, you're you're seeing, you know, a very few podcasts delivering huge audiences and a very kind of quick drop off as you move to the right, a long tail of of content effectively, more podcasts each delivering much smaller individual audiences, but coming together to to to to put some very strong volume in place. So at AUDIOBOOM, we have our premium network. This is our biggest 200 podcasts that you'll see here on the the left hand side of this chart. 200 podcasts.

12:57 Each one of them will deliver somewhere between 30,000 downloads to 2,000,000 downloads per episode. So some huge individual shows within that premium network of of podcasts. These are the the shows that we focus on mostly through our advertising teams. We work with them on a on a revenue share basis. And the business development to sign those those top tier podcasts, those those big podcasts, that that comes through our relationships with the Hollywood talent agents, WMA, UTA, CAA, the biggest three of those Hollywood talent agents. So they bring us opportunity to to work with their clients and and and the large podcasts that they represent. We put together a partnership deal with those large podcasts, and and they come in and they come in as part of our premium podcast network.

13:50 We also have AUDIOBOOM Studios, a smaller part of of our business, just around 30 podcasts. Those shows deliver between thirty thousand and and two hundred thousand downloads per episode. A lot of that work in AUDIOBOOM Studios is to coproduce podcasts. Now one of the biggest partnerships that you'll know about that we have there is with Formula One. So AUDIOBOOM is the is the official partner of the Formula One podcast. We work with the team at f one to coproduce two of their podcasts, Beyond the Grid and f one nation, and we provide recording and and and engineering of that that audio, the co the the post production and the distribution and also the commercial services there. So it's a very successful partnership and really represents what we do within AUDIOBOOM Studios.

14:43 And then we have our long tail our long tail network. That's the the rest of the 8,000 podcasts that that sit on our platform. These are much smaller shows. They have up to 30,000 downloads per episode. They actually many of them pay us a subscription fee of 10 or $20 a month in order to use our platform and to use our toolset, but they also take advertising within their their their content as as well. We don't focus too much on the the acquisition of those shows. That's happening organically. Those those shows are finding out about our platform and coming to us and signing up for accounts with us. We're adding their ad inventory to our to our platform to monetize as well. So, yeah, again, just an overview there, I think, that's helpful of our creative network and our content model.

15:37 So this is our our revenue model within the business. This breaks down each of those key revenue strands. At the top, you're gonna see the contribution that each of those revenue strands makes to our overall group revenue. And at the bottom, you are seeing the gross margin on on each one of those revenue lines. So I'll just walk you through those. AUDIOBOOM Studios, part I just talked about where we're coproducing or or producing content in house, thirty thirty shows, as I said. And obviously, because of of the small number of shows, it's a relatively small contribution to our overall revenue, 4% of our of our revenue contribution. And you can see there that that's remained steady over the the past two years.

16:22 We do have a a stronger gross margin on our AUDIOBOOM Studios work of 27%. That's because in many cases, we are controlling the production costs there. If we are working on a revenue share basis because we are adding the production as a service, we can we can create those relationships in a on more favorable terms than than we can in in other parts of of the business. So that's AUDIOBOOM Studios. Our premium network, those top 200 shows, they are always a big driver of of of AUDIOBOOM revenue. Over 60, 61% of our revenue came through those top 200 premium shows in 2022. That's down a little on on 2021.

17:08 As you'll see, we we have a great successful year with showcasing Sonic that that began to deliver more of our revenue contribution. But premium sales, premium network, top 200 shows just remains the core part of our business going forward. Comes with that slimmer gross margin, 17% last year. Now that that's slimmer than it has been before as we have in the in the weak ad market. We have had to pay some costs for minimum guarantees that were were not achieved, and that's brought the the gross margin down. So what I mean by that is for a handful of our our bigger shows, we deliver them an annual minimum revenue payment in this down ad market, which I'll talk to a little bit later in the the presentation.

18:02 We have,

18:04 on occasion, missed some of those minimum guarantee payments. So we still make the payment to them of that minimum guarantee amount, but we haven't hit the the the required revenue. So that's weakened that gross margin on the premium premium ad model. But as the ad market improves over this coming year, we expect very quickly to get back to a place where we are delivering the the full obligation on those on the revenue needed for those minimum revenue guarantees. Showcase is our automated ad tech part of the business. That is the advertising that is is delivered automatically through the ad tech. We open up all of our ad inventory into a marketplace, and then buyers on the other side of that marketplace are buying and bidding to buy that ad inventory at scale very, very efficient.

19:00 And it's a really successful part of the AUDIOBOOM business over the past two to three years since we since we launched. Showcase revenue is now making up for 14% of the group revenue, up from 11% in in 2021 and a minimal percentage in in 2020. So Showcase is is growing fast, and we're very excited about the the future of Showcase within the business. It also comes with a a much stronger gross gross margin than our premium network. This is because we are using showcase across the entire roster of 8,000 podcasts, not just those those top 200. So what that means is that the the top 200, those shows are being signed to AUDIOBOOM via those Hollywood talent agents of UTA and CAA and WME.

19:54 They are able to to to deliver more favorable terms for their clients. Whereas in Showcase and for the remaining 8,000 podcasts that that use the platform, AUDIOBOOM has more favorable terms in in in in those agreements. So that's why Showcase comes with that higher higher gross margin, and I'm pleased that that is becoming a bigger part of the AUDIOBOOM business. Sonic is our platform for brands. It allows advertisers and brands to use a toolset to advertise in podcasts directly. So the work at Sonic is done directly with the brand and with the advertiser. Again, it's been a fast growing part of the AUDIOBOOM business over the the past three years, launched really in 2018 and is now at 20% of our overall revenue. So very pleased with the progress at Sonic, 14% gross margin on Sonic. And those of you who who have joined us on previous presentations will have seen that gross margin lower in and around the 11 or or 12% mark. So we worked really hard, I think, at improving that gross margin in Sonic, and we we feel like we're in a much better better and happier place with with the gross margin at Sonic. Gross margin will always be a little lower than the the creator side of the business. We because we're working directly with brands and giving the brands a platform and and a toolset to utilize podcasting.

21:19 We are aligning the the the gross margin there with a traditional ad agency commission or or gross margin structure. So the the gross margin there will always be a little lighter than the the rest of the audio group business, but very, very pleased with the growth of of Sonic over the past few years. And then for subscriptions, that's that's not subscriptions for audience to pay to listen to content. This is a subscription for a podcaster, a creator to use the AUDIOBOOM platform and the AUDIOBOOM toolset. Again, very small part of our business in terms of the revenue that it generates. Just 1% of of revenue comes through those those subscriptions. We're not actively marketing that platform. As I said before, the sign ups, the podcast, the sign ups for that subscription platform that's happening organically.

22:12 But it does have a high gross margin, 91% gross margin, very few costs associated with that subscription model apart from some some bandwidth and and and distribution costs there. So, hopefully, that gives you a good overview of each of the the revenue lines and some of the changes that that are taking place across those revenue lines, particularly the the growth of Showcase and and Sonic and and those two parts of the business becoming a bigger part of everything that we do.

22:43 So that's a a good overview, I think, of the business model where we sit in the industry, and and everything that that that we do internally. Next, we will take a look at the performance over the the past year and focus down on some of the detail that that we put out in our trading update this morning. So I will start off by walking you through the the key numbers in in that trading update. Firstly, $75,500,000 of revenue in 2022. This was a record revenue performance for the company, growth of 25% over 2021, where we delivered just over $60,000,000. So that 25% annual growth was a significant outperformance of our competitors.

23:33 We outperformed the wider podcast industry by 67%. The the wider podcast industry was projected by PWC to to grow at 15%. So once again, we've we've outperformed the wider industry. Now that that growth, that 25% annual growth and that $75,500,000 revenue number, we did see a significant impact on that by the ad market downturn caused by global macroeconomic conditions in the second half of the year. So we believe that the the the ad market downturn impacted our revenue potential by around 20% for for 2022. Looking at the adjusted EBITDA profit for 2022, that profit stands at $3,600,000, so that's record adjusted EBITDA profit for the business.

24:27 16% annual growth over 2021 when we delivered 3,100,000 in in profit. And that EBITDA, again, impacted by the the ad market and the the the revenue impact that we we saw because of the the downturn in the ad market. But, obviously, that growth in the EBITDA is is lower than the revenue growth, so we're not seeing any type of gearing, and we're not seeing a full flow through of of that that adjusted EBITDA growth. And Brad will talk a little bit more about that later on in the presentation. But, obviously, EBITDA is is impacted by the lighter revenue, but also those partner minimum guarantee payments that I I mentioned before. So where we are paying the obligations that we have on their minimum guarantees, that's a direct impact on the adjusted EBITDA.

25:22 And then also we're obviously coping and and managing inflationary pressures on our operating costs as well across particularly across the second half of the year. So 3,600,000 of adjusted EBITDA is still a record number for for for us, but impacted by some of those factors. And then finally, $8,100,000 of cash at the end of of twenty twenty two, which is a significant step forward from a year earlier. So we generated $5,100,000 of cash during 2022, up from about 3,000,000 a year ago. That's the highest cash position reported by the company. Obviously, critical at this time in an uncertain world to have strong cash on hand. So very pleased to report a record cash position of 8,100,000.

26:15 It goes without saying that we're fully funded at this point for for the current growth plans, and we have a further $1,800,000 available to us in an facility as well. So access to around $10,000,000 of cash puts us in a strong position to cope with anything that that's thrown at us going forward. So let's talk about some of the the key points around that 2022 performance, both in terms of revenue and and just overall operations. I think the first one to to highlight, which we talked about a little earlier, was the the the showcase performance. The revenue growth of of showcase, that automated ad product, was 70% in 2022.

27:01 So while the wider business grew at 25%, Showcase on its own grew at 70% in in 2022, which is a fantastic result. That is growing because of two things. One is the the supply that we're putting into that marketplace. So last year, we made 4,100,000,000 ad impressions available within that marketplace. That number was enhanced really by two things. One, our tool called AdRip that we launched just over a year ago and how our creators are now using that AdRip tool to create new ad inventory in their back catalog so that we can continue to monetize content that is five or ten years old, and that's adding to to the the volume of of ad in inventory that we make available there.

27:49 And secondly, we are upgrading our our creator contracts to ensure, a, that they use AdRip as

27:56 a tool. We contract them now to to use ad rep as a tool to make more ad inventory, and also to use showcase alongside the premium live read ads that the shows that the shows take. So Showcase is becoming something that our creators love to use. They see the the benefits of of of using Showcase. We're now contracting our creators to use Showcase. We're having them utilize our tools to create more ad inventory all the time. So that's the the first driver of that Showcase performance. The second driver of that Showcase performance is what we do on the demand side and the the buying side and the advertiser side. So we add new demand side partnerships in there, and we've added a host of new demand side partnerships this year from Amazon to Spotify to The Trade Desk to some international partnerships as well. That improves our fill rates to above 55% for the year. So on one side, on the supply side, we're adding inventory, and then on the demand side, we are adding monetization partners to to buy that inventory from us.

29:09 Second part and second key point, I think, is the the further expansion of our creator network. So that's that premium creator network, those top 200 shows. We are continuing to add, firstly, add new shows into there. So just last week, we announced five new top tier shows that are joining our Creator Network. The the Tim Dillon Show is a is a kind of a monster of a show, one of the top comedy podcasts in in The US and delivers millions of of of downloads every single month. Myths and Legends, Nateland podcasts, Minds and Man of Sinisterhood, all top tier podcasts that come with a a built in audience that we can monetize from from day one. And then our second announcement just last week for that creator network was the renewal, the multiyear renewal of some of those key partnerships that we already have there, Micro, Relax, two Hot Takes, three big shows, all in our top 15 biggest shows. We've now renewed those partnerships, and we'll continue to work with those shows for for many years to come. So just expanding and consolidating that create creator network remains a a key focus for the business.

30:20 And then finally, just on this section, I wanted to just mention the the growth of Sonic, our brand platform as as well. Again, has grown faster than the the wider AUDIOBOOM business, growth of 37% in terms of of revenue in in 2022. And Sonic is doing a fantastic job of of of scaling that that business. So we're scaling through a a focus there on premium clients, bigger brands that can come in and use that platform, brands who are spending more than a $100,000 a month in in podcasting and now utilizing that platform to access

30:58 ad inventory in in in podcasts globally. And the other thing that we're really doing with Sonic, which is is making some good strides, is to align Sonic and AUDIOBOOM more through our ad tech. So Sonic are able to to utilize the same ad tech the AUDIOBOOM utilizes to to scale campaign reach. They're able to increase automation that just helps with the the growth of of of Sonic and and improve the ROI for their clients so that those clients' budgets can can increase, and we can just drive more revenue through the Sonic platform. So a great year for Sonic, a great year for Showcase, and I'm that the the creator network continues to grow quickly.

31:42 I wanna put some of the the the performance in those numbers into into perspective. We know that they were impacted and restricted somewhat by the wider ad market conditions in in 2022. But this chart on the left is is showing AUDIOBOOM's growth over the past five years against the wider podcast market growth. And I I touched on it before, but growing at 25% in in 2022 was a significant outperformance against our competitors and against the the wider industry. The wider industry only grew at 15%. So that's the the fifth straight year that we have outperformed the the the industry, and we believe we will outperform the industry again in in 2023 to do six years in in a row of of outperformance.

32:34 In that time, we have taken market share, the AUDIOBOOM market share from less than 2% to greater than 6% across that that time, which is something we are very immensely proud of, I think. And our target is to get to 7% over this next year. So continued outperformance of of of the industry despite those weak ad market conditions, I think, is a big achievement. And on the right hand side here, this is a ranker of the largest podcast publishers in the in The US. That's a key market for us. As you'll see here, AUDIOBOOM is the fourth largest podcast publisher in in The US. This this ranker is from Edison Research. This is not an opt in ranker. Some of the podcast rankers that are out there, the the podcast companies need to opt in for, but this Edison Research ranker measures all podcast consumption and all podcast businesses that that are out there. So AUDIOBOOM very firmly here, the the fourth largest podcast publisher in The US for for the the past year.

33:39 And, again, look if you look at the names that we're competing here with here, we are doing something very special to to be forth around SiriusXM, Spotify, iHeartRadio Radio, NPR, which is the BBC of The US, Wondery, which is an Amazon company, The New York Times. These are the huge media companies with with billions of dollars to to spend. So the work that we are doing is, I think, is, as I said, very special, and super proud of the team here for for putting us into that fourth position in terms of US podcast publishers. Let's drill down on those three KPIs that we update each quarter. These are are are really KPIs that are really focused on the the core part of the AUDIOBOOM business. The first of them is global downloads.

34:26 Obviously, global downloads equals equals ad inventory. So the more downloads, the more ad inventory we have to sell, the more revenue that that that we can drive. This chart look looks a little different. You'll see two two lines on the on this chart. The the green line is is the overall line. The pink line is the line that we have here measuring downloads when we remove Morbid. Morbid was a a big show that was on the AUDIOBOOM platform until May of this year. It's one of the biggest shows in the world. Unfortunately, Morbid left the AUDIOBOOM network when its contract came to an end in May. And so I wanna show this chart with that that pink line in place because that really focuses the underlying growth of of audio boom. Obviously, the delta between the two lines is is what Morbid was delivering every single month.

35:16 But if you focus on that that pink line and then the route forward, you can see the underlying growth in in AUDIOBOOM is good. That would be 2020% year on year growth q four to q four with morbid removed there. Also, wanna highlight, I think that q four had 9% growth over q three of twenty of twenty twenty two. So download growth is heading in the right direction. The underlying growth has always been there. We would expect those new signings, those five new signings that I talked about on the the last slide, to add around 8,000,000 monthly downloads to to this chart once they are fully up and running and and fully in place on the AUDIOBOOM platform. And in total, across twenty twenty three, we're expecting somewhere around 1,600,000,000 downloads of of AUDIOBOOM content across the year. So pleased with the the continual uptrend of that global downloads KPI.

36:17 Brand count measures the number of customers that we have, the number of advertisers that are buying ad inventory through the AUDIOBOOM platform. And we have changed this this metric a little since you last saw it. So because of that success of of showcase, we are now including showcase advertisers in this brand count number. Previously, we were only showing the advertisers, the customers that we dealt directly with through through our in house sales team. Now this KPI will include the brands and advertisers that buy our content through the showcase marketplace. That's you'll why see the change there. But I think the the, you know, the best thing about this is the sharp increase in the number of those of those customers, 47% annual growth in the number of brands advertising across AUDIOBOOM. Now we will likely see a seasonal dip in in q one of twenty twenty three. That's to be expected.

37:15 You can see that actually on that that chart last year, that dip from 4,000 to to 3,700. But but we'll we'll get that this year again. But all in all, just, you know, very fast growth on that on that brand count number there on that KPI. And then finally, ECPM. That's our optimization metric. ECPM is the value that we are able to extract from every 1,000 downloads on on our network. So really looking at optimization and and value. We are extracting currently in the the in q four, we extracted $55 for every 1,000 downloads. So if you focus in really, I think, on the the right hand side of this chart, you'll see, you know, really strong growth through to the end of last year when we hit that number of $56 per 1,000 downloads.

38:11 You then saw the q one seasonal drop off as to be expected down to $51 per thousand downloads. Q two of last year was a record number, $57 per thousand downloads. And then the ad market downturn kicked in in q three. It reduced that number to 50, but I'm really pleased that things are heading back in that right direction at $55 for for q four, and that's because of that increment not incremental. Sorry. That sequential revenue growth that we've seen from July onwards each month that grew in in terms of of revenue across the the second half of of last year, and that's reflected there with the the $55 ECPM number.

38:56 Like brand count, we'll see that drop off again in in in q one, that's seasonality, and then we'll head back in the right direction in in in q two onwards in in 2023. Also worth noting, I think, that just on the ECPM number, we really are a premium business. We are extracting almost double the value from each 1,000 downloads that that some of our competitors are extracting. We see that in in from from a couple of those companies that are public publicly traded. They release similar stats, and and we see that we are extracting almost double the value per thousand downloads than our than our competitors. So I'm really pleased with the the KPIs across this this quarter and and this past year apart from some seasonality in there and, obviously, the impact in in q of last year or or the of the of the weaker ad market, those key KPIs all heading in the right direction and setting us up for for good growth in 2023 also.

40:01 Brad, I'll I'll let you pick up for a few slides here. Okay. Thanks, Stuart. Hi, everyone, again. So, yeah, next few slides focus on some financial information just to update everyone on on on the full year. Obviously, done this through throughout last year, every quarter as well. But the first one here, we can see our revenue revenue and EBITDA progression over the last five years. So we've positioned ourselves among the leading podcast companies in the world, recognized revenue growth, which is above the wider podcast industry for a a fifth year in a row and increased our market share. We've transitioned this company from a loss making position to one that now has recurring adjusted EBITDA profitability, and that's all been achieved with access to fairly limited resources, which is, you know, good good performance from everyone in the company.

40:50 2022 is our strongest year yet. Revenue increasing by 25%, adjusted EBITDA increasing by 16%, cash grew by over $5,000,000. So to be able to say that we're growing faster than our competitors to be profitable when many other tech based entities and many of our competitors are are loss making to say that we're cash generative. We have a very healthy balance sheet, especially in this economic climate. There's some very good messages to be able to deliver to investors today. We said the results aren't initially what we expected when we came in into this year, we set our expectations for this year. But it's a smart business that we've built. So when that top line doesn't quite get to where we expect it to, there's a cost base that flexes below it. We can come on to come on to costs, you know, very shortly.

41:40 So, you know, working to ensure 2023 will be another record breaking year for for the company, and we've announced today that we've made another strong start with our forward pipeline of of advertising bookings as well. Going on to on to revenue and costs, we can see the revenue trend over the last couple of years, and we it's, you know, it's encouraging that we've seen that recovery that we mentioned in q three that started in August and August and September that flowed through to the final quarter where revenue increased by 14% quarter on quarter. In terms of growth across the revenue mix, well, there's been impressive growth statistics across that revenue mix, the categories that Stuart took you through earlier on. The premium network growing by 16% year on year, 70% growth really good on on on marketplace, and 37% growth within Sonic. And that entity has actually trebled its top line revenue in twenty four months going from $5,000,000 to $15,000,000 in a couple of years, which is really good performance.

42:47 Revenue grew at 25%, as we know, year on year, but OpEx increased at a slower rate of 8% year on year. Q4 twenty twenty two was 25% lower than q four of twenty twenty one, 32% lower than the first two quarters of the year. So why you're asking why. You know, how how have we how have we done that? Well, there's, as I've mentioned before, there's flexibility in that cost base. So material costs within AUDIOBOOM being staff and technology costs, those are the material cost categories within the business. They do vary dependent on performance. So lower tech costs are incurred. If there's lower bandwidth being utilized, which we saw in the in the second half of the year versus the first. Staff costs flex as well. So a lower revenue equals lower sales staff commissions and and, you know, for for non sales staff remuneration as well. That also varies depending on results delivered in the year. So we've seen that that cost reduction in the in in the final quarter of the year. So if you're new to this business, it's not a business that's lumbered with high high recurring costs or stock, for example.

43:55 It doesn't have a high headcount. So when there when there are those macroeconomic challenges, which we've seen this year, we are we're we're well placed to to weather those. I think as well, the benefit, if we were to go back to the previous slide, but the benefit of, you know, the company being in a loss making position up until 2021 is that we've had to make this company work with constrained resources. We've implemented excellent financial discipline within the company, good financial processes as well that are able to support that growth. So as we go through that growth phase, that discipline in terms of in terms of cost control, those things are well instilled within the company. But we you know, with with OpEx, we don't stand still. We're we're constantly reviewing that.

44:40 Stuart will give a bit more detail on that, those small staffing changes that we we made last week. But our headcount as of now is 39 versus 45 as as at the end of December. Those decisions those type of decisions that we make, they're always done to to make sure that our available resources are allocated to the areas that we expect will drive maximum growth for for the business. In terms of working capital, so this is my favorite slide of the deck. The finance team our finance team in the business are relentless in their work to ensure we get maximum benefit out of the working capital cycle. Again, another function of being that lost making company a few years ago. That's installed really good discipline into the company as we go through that growth phase now, which is great.

45:29 So this is the fifth successive quarter where I've said we've increased our cash reserves. At the end of December, we held $8,100,000 in cash, dollars 100,000 up on Q3, dollars 5,100,000 up a year ago. And the majority of our cash reserves are held in dollars. The company recognizes over 95% of its revenue in The US. We invoice and receive the majority of our billings in dollars. That £8,100,000 excludes a 1,500,000 multi currency overdraft that we have available to us as well. So we've got around $10,000,000 available to utilize within the company as well. In terms of collections, particularly in December, last two weeks of the year, very, very strong. So it took us to £17,600,000 for the quarter. Total collections were 52% up year on year. We averaged £6,400,000 a month.

46:24 And over the last three years, we've collected an average of 94% of revenue booked in the year. So all those statistics are really good, really pleasing statistics. And it's really good as well that the growth we're recording has come without taking any any unsustainable credit risk as well as a very low level of bad debt write offs, very small relative provision for bad debts within the company as well. In the in the quarter, collections were 600,000 higher than our than our payments. So in the quarter, material podcast payments were settled up to the end of November. Commissions were paid. Advances totaled point one in the quarter, taking us to 2,100,000 for recoupable advances in the year. That was up from 1,900,000 in in 2021.

47:12 The strong collections enabled the debtor days to decrease to 68, six eight for December. So that's 26 lower than the 94 we reported in December of of last year. That's particularly pleasing given we've invented a new accounting system in the year. We're now a three person finance team, so that implementation was was was challenging. But it's pleasing to see that has had an immediate positive impact with those process improvements immediately coming through with an AUDIOBOOM, and we'll roll out those automated data chasing processes and a quicker payment runs into our subsidiary, Sonic, in in in in 2023 as well. So, overall, when you're looking at this business, you know, in summary, working capital cycle, that continues to function very well as it has done over over the last few years, but even more so now.

48:05 Company has more cash reserves than any other point in its history, fully funded for our for our growth currently. Cost base flexes in part to the to the revenue and our impressions that we that we recognize grew faster than the wider podcast market. You know, in in summary, we're we're as well positioned that we could be heading into heading into 2023. So I'll leave it there, and then I'll hand back to you, Stuart, for the final few slides. Thanks, Brad. I think that also answered a few of the questions that have have come in. But if there are any more questions, probably now is the time. I've got two more slides left, and then we'll we'll get to a few questions just before we we end here in in about twelve minutes. Future focus then, I think let's just talk about the the the I can think the ad market trends. Obviously, the ad market trends have played a big part in our performance of of of the past six months. We saw a very kind of quick weakening of the ad market back in in June of last year.

49:05 July was our revenue low point, and then we saw, you know, month to month revenue growth across the the the rest of of the year with with December individually having the the highest revenue since since May. So revenue per month heading back, obviously, in the right direction. Q four of of last year, seasonality in the ad market, q four was buoyed by the NFL season, World Cup, Thanksgiving on Black Friday here in The US, and and also Christmas. As I said before, q one is always seasonally softer. We we see it every year. AUDIOBOOM, the the q one is seasonally softer. So we will we will see that in in q one again this year. In terms of the wider trends, I do expect The UK advertising market to to be slower in 2023.

49:58 That has a bit of a lag, I think, over The US market that was impacted first by by global economics. But only 5% of the AUDIOBOOM revenue is exposed to the The UK advertising market. I I think the the the positive part is that The US advertising market will steadily recover over the years. It's not gonna be an immediate early year recovery, but I expect to see steady recovery in the The US ad market across the year. And then just as a reminder, 90% of our revenue is exposed to to that market. Podcast industry outlook, PwC are projecting that US podcast revenue will grow 8.1% in in 2023.

50:44 So, again, we are targeting to outperform the industry for the the sixth straight year, targeting that growth in market share to to 7%. And in terms of progress, we are making good progress there despite operating this year in a in a much weaker advertising market. So our current advertising bookings for 2023 are above $44,000,000 at this point. You can do the math on this, but over the past five years, we've we've averaged at the end of January. Bookings number has been 53% of the final revenue number at the at at the end of the year. So I've seen a couple of questions just come in on that. So, yeah, we usually average 53% of the of the full year's final revenue number at the end of January.

51:36 Right now, at at this point, we're at $44,000,000. I think also just so I think that that is that is good progress to to where we're going for for this year and is is certainly showing a route to some some good growth again within the business. One discussion I saw on the on some of the message board bulletin boards this morning was suggesting that that 44,000,000 that we have booked is actually a red flag because we had 44,000,000 booked at this point last year. So they were there was a suggestion that that wasn't focused on on growth. Well, if you think about last year, we had $44,000,000 booked, but the second half of the year decelerated and and showed very little, you know, bookings growth in the second part of the year. This year, we are coming off that base of 44,000,000 now, and we are seeing improvement in the ad market across the year. So we expect to see an acceleration in those in in in those bookings, you know, across the year. So that is a part to to to to growth and is certainly not a a red flag in in in any way. So I believe that progress at this early stage of the year, operating in a a weaker ad market where brands are being more conservative and are not planning as far into the future, as far into 2023 as they have done previous years, I think that's a a good position, a very pleasing position to to be in at the end of January.

53:04 In terms of operations, the focus for for this year, well, Brad kind of touched on it, but we are very focused on the management of our operational costs costs this year mainly to make sure that the resource that we do have is is is pushing in the right areas. So last week, we did implement a headcount reduction. Six heads left the the company, as Brad said. We are down to to to 39 heads, which is the the lowest point in the company for some time, but certainly doesn't impact operations in in any way negatively. We've built a lot of automate automation into the company in that time. We've we've figured out how to scale this business. So we continue to to work with a a lean headcount, much leaner than many, many, many of our competitors who have headcounts in in in in the hundreds. So that was one step that we took last week. And I think the other kind of big one is really this the the renegotiation of some of our third party technology costs that we have, like like ad ad service, some ad tech, IT platforms.

54:10 Those those were were successfully renegotiated, and the savings across those two those two points there are more than $500,000. So we have definitely a focus there on on our operational costs. Part of that headcount restructure, I think, is is giving us the ability to reinvest into one key part of our business, which is our sales organization. So AUDIOBOOM has a a very small sales department, again, in compared compared to our competitors. We have a seven person sales team split across The The US and and The UK. And they are very much focused on one particular type of advertising for podcasting. That's a direct response advertising with direct to consumer brands that can measure the ROI and the impact of their ad campaigns.

55:07 They tend to be smaller, more disruptive brands with with with smaller budgets, but have been a real core part over the last five or six years of of podcast advertising revenue. The the the restructure allows us to to to refocus what we do on on the sales side. So we will invest into that sales team, add to that that sales team, and build out a new sales unit that will now be focused on on brand awareness. And when I talk about brand awareness, these are generally bigger, more established brands and and advertisers, much bigger budgets, much more blue chip organizations. They are working with larger advertising agencies, and they are budgets that we have not been accessing to to to this point. We haven't had the sales team focused on that type of of advertising sell. So we will develop that brand awareness sales team, and they will be tasked with capturing budgets from those larger brands and and and larger agencies.

56:12 And to to to make that that that restructure work and to refocus what we do on the sales side, I'm kind of pleased to to to let you all know that Jenny Skog, who was previously launched and was leading at Sonic and has grown Sonic from a, you know, a $0 business to a $16,000,000 business over the the past three or four years. She will be promoted to chief growth officer, and she will lead all of our revenue driving activity across across Sonic and AUDIOBOOM in the future. So Jenny's worked very closely with me over over the the past three or four years, and she's fantastic at what she does in in podcasting. And I think what we'll also be able to do is have Jenny have a a much kind of, you know, closer relationship with investors and shareholders, and we can have her join one of these these meetings in the future to talk about sales strategy and revenue growth strategy, which I think will be will be a a great thing for us to be able to to do. So we're restructuring, and we're we're reinvesting into our sales organization to to to make the revenue driving part of the business even stronger.

57:24 Another kind of core focus is is around the opportunity to increase our signings of tier one podcast creators. We announced a slate of new signings last week. But I think in this current market, there are fewer competitors that are able to offer the the best creators out there guaranteed financial support and strong financial packages. So I think we are able to to to offer offer those shows, the the talent, those creators, you know, good good strong financial packages. We'll be able to sign a higher number and a higher level of tier one podcast creators than we have been able to during the kind of upmarket of 2020 and and the early part of 2021. So I expect to see some really strong growth this year in our creator network because of of that opportunity.

58:16 And then finally here, I think just to to to say that one of those kind of cost cost management focuses is is really the refocus of AUDIOBOOM Studios. We're gonna shift our approach around AUDIOBOOM Studios. We have been developing original content and original IP that comes with higher up front investment costs, very risky high marketing costs to market and to launch those podcasts. We will shift the focus of AUDIOBOOM Studios to be a a production as a service unit for AUDIO Boom. So if you think about the way that we work with Formula One, we are offering production to Formula One as part of a wider partnership with them. We produce their content, but we're also distributing that content and monetizing that content for them. So that will be the shift in focus of of AUDIOBOOM Studios to remove those upfront higher risk development and and marketing costs in AUDIOBOOM Studios.

59:15 So I think just to to summarize, on on 2023 and beyond, we expect steady improvement in the ad market in The US. We expect to outperform the wider podcast market once again for the sixth year in a row. We've made great progress there with $44,000,000 booked booked today, and that's given us a a good path to to strong growth again this this year, focused on operational costs, restructuring, investing into sales to to drive that revenue. And we think there's a a great opportunity there as well to to sign more and more top tier podcast creators to the network. And I know we've done our full hour, but we haven't had a chance to do any questions. So, Jake, if possible, can we still fit in a a couple of questions at the end here? Stuart, absolutely. And Brad as well, thank you very much indeed for your presentation this afternoon. And, Stuart, Brad, as you can see, we have had a number of questions throughout today's presentation, and thank you to all of those on the call for taking the time to submit their questions. So Stuart, if I may just hand back to you just to respond to those where it's appropriate to do so, and I'll pick up from you at the end. Thank you. Yeah. I think we'll we'll I think maybe we'll just focus on four or five of the the most popular ones that have have come in perhaps as I know we're up against it with time. But first one is how do investors assess the value of the new shows that that you announced last week?

1:00:39 Yeah. So it's a good question to to to think about the value that they would deliver. I think the simplest way to answer that is to look at our eCPM KPI, the value that we extract from a thousand downloads. That figure for q four was $55. So I guess as in that example, know, if I tell you like I did earlier on that those new signings will start to deliver around 8,000,000 downloads per month to the AUDIOBOOM network, if you take that $55 ECPM number across those those 8,000,000 downloads, I guess that's giving us somewhere in the region of $400,000 a month, so maybe $5,000,000 a a year in terms of revenue attached to those five shows that we talked about earlier.

1:01:33 So that's probably the best way, I think, to understand the value of any of our signings is to look at any download data or information that we give alongside those and then kind of put that ECPM number across that. Next one, Jack C has asked this. I saw it from a couple of others as well. It kinda relates to the last one, but it says, how do you improve the eCPM as that appears to be one of the keys to to faster growth? What factors go into to that eCPM? Yeah. So, yeah, obviously, the the it's operational leverage when you think about that eCPM. So you could have the the same number of shows with the same number of of downloads.

1:02:21 But if if we are able to really extract value from that through operational leverage, the three things that we are are talking about and that go into making that eCPM number, one is the the number of ad slots in each piece of content, Two is the price we can sell each ad slot for. And three is how many of those ad slots we do sell. That that would be our our our fill rate. So improvements to each one of those compound, and they will lift that that ECPM number. So out of the the three that I talked about, pricing is the one that we don't we won't improve greatly. You know, I think the market is deciding that that the pricing there, and our pricing is already pretty strong versus the market. So we're gonna improve that pricing greatly. So we're really more focused on increasing the number of ad slots in each episode and then also improving fill rate.

1:03:22 How do we do that? Well, I think the the first one when it comes to increasing ads ad slots is something I talked about earlier, which is when we're renewing those contracts or or making new contracts with our creators, we stipulate a higher number of ad slots within their content. We're not just limiting those to mid roll ads anymore. We are contracting pre roll ads and and post roll ads. We're we're contracting people to use ad rip to create more ad slots within their their content anyway. So our medium term goal in number of ad slots is is to, I guess, have a six to one ratio, so six ad slots for every piece of of content. In 2021, that number was below four, so that would be significant kind of step up and, again, speaks to that that operational leverage point there.

1:04:11 And then fill rate is really gonna be improved by increasing our sales resource, which I I just talked about. So we invest in our expanded sales team in in 2023 and be strategic about who they're selling to. So as I said, our current sales team is focused on one set of customers, direct response brands. The the team that we invest into, the team that we build will be focused on selling to larger, more established blue chip brands that will be accessing a whole new type of customer, and that will be incremental fill rate over what we already do. So those three things together, improving two of them through that focus and investment, that will compounds. That will lift the the ECPM number so we start to deliver more value for every 1,000 pieces of every 1,000 downloads.

1:05:02 Brad, I'll I'll give this one to you. Tony f and a couple of others asked this. What are your plans for utilizing the cash that you now have available in the business? Yeah. Yeah. So that one coming from Jack as well. So, yeah, on on the cash, obviously, is something that I'm absolutely obsessed with. I think today, we've we've highlighted the efficiency of our working capital cycle. We spent the last five years trying to perfect that working capital cycle as as best we can. We've obviously made that transition from cash conservation when we were loss making into now being cash generative and and profitable. And, obviously, they present different kind of requirements and and and challenges, if you like. So I think in terms of resource that we have available to us, obviously, we've mentioned the the changes we made structurally. So we, you know, we we funnel our resources to the areas in the business that are gonna drive the most growth. Outside of that, there are things that we, as a company, continually monitor as well. So, obviously, the signing of new new agreements with with podcast partners and the financial commitments that that come with some of those some of those tier one partners.

1:06:11 That's an important part of our our growth going forward and capital utilization. There's a lot of m and a in in podcasting as as well. You know, is is that something that that we can ourselves benefit from? We continue looking at opportunities on that side. I think, you know, third area is, you know, assuming we have a sufficient level of cash reserves and that they continue to grow, we continue to have a healthy balance sheet. You know, are we gonna be in a position to be able to pay dividends to to shareholders as well? That's something that we we we're going to review as well in in in the future. But, yeah, overall, number one priority is obviously to make sure we have the healthiest balance sheet that that we can. And at this point in time, we we do have that. Yeah. And should there be any other areas to exploit, you know, given the things I've just mentioned, then, you know, as and when we do those, we'll we'll update the market as as we always do.

1:07:05 Thanks, Brad. Quick one here. It says, you've included subscriptions as a revenue stream for the first time. Is Is there a reason for doing this? Are you planning on growing this part of the business? You know, not really. I it was really included for the first time because that chart otherwise always adds up to 99 percent, and we're always left with the question as as to why that adds up to 99%. So we just added that subscription model into there at 1% so that so that it looks a little clearer. I don't think there's any major focus on on on growing that at at this point, mainly because there are many other podcast toolset companies out there that offer their tool sets for for free. So it's not really an area that we would focus on or or or look to grow.

1:07:52 Maybe one final one here just says on the Triton Podcast Ranker, downloads for The US appear to decrease in recent months. What's the reason for that? Should we be concerned? I've also actually, I've always also seen this as a a discussion point over the last few weeks, I think, on on some of the the bulletin boards, so it's worth answering. So I I think no nothing to be concerned about. There's a strong level of of seasonality in our download numbers, especially in in four. And particularly with that number, which is a US number. November in The US is affected by the extended holiday for Thanksgiving. So content creators will often use that as a week to take a break, so there's less content to listen to. Plus around holidays, listening is is generally soft also.

1:08:39 And then, again, we see that same thing happening in in December, although it's more of a global trend around Christmas. So if you then look at November and December and compare it to September and October, when the maximum number of people are back at work after the summer holidays and school after the summer holidays, you're, of course, gonna see a seasonal change in that time. So I would just recommend recommend not looking at individual months, and that's why we do our downloads KPI as a quarterly number. It smooths out any individual months. And in that KPI, just a reminder, you can see that that q four did grow against q three, so it was up 9% against q three. And then also the the best comparison to make is an annual one because of of the seasonality look at the whole quarter versus a year earlier. That will always give a true reflection on growth. So, no, don't be concerned that, you know, downloads are heading in in the right direction and continue to head in the right direction, And the new content signage will will add to that as well. So so we're we're all good there.

1:09:50 Back to you, Jake. I think I think we've we've overrun significant Stuart. Thank you. Thank you very much. And Brad as well, thank you very much for addressing all those questions that came in from investors this afternoon. And, of course, if there are any further questions that do come through, we'll be able to give these back to you immediately after the presentation has ended for you to review. To then add any additional responses, of course, where it's appropriate to do so, and we'll publish all those responses on the investor meet company platform. Stuart, perhaps before redirecting those on the call to provide you with their feedback, which I know is particularly important to yourself and the company. If I could please just ask you for a few closing comments to wrap up with, that'd be great. Yeah. Thank you, Sai. I've taken out a lot of your time today already, and we've overrun. But I do appreciate you you all joining us today. Appreciate the continued so so support of of this business.

1:10:37 It is a it is a really great business. We have a a really good future ahead of us. Yes. We've been working in a challenging environment in the the second half of of of last year. But when you look at the the fundamentals in the business, the model that we have, the progress we've we've we've made on that mission to deliver value for creators and brands, and the understanding that we are continuing to add new revenue products and grow each of those revenue products and add creators and and shows at at scale to AUDIOBOOM. I hope you can see that we we have a a kind of, you know, a path of growth ahead of us, and we think momentum in the wider ad market will begin to pick up again across 2023. We'll continue to outperform our competitors.

1:11:25 This is a real special business. The the the team here are fantastic. And I I I think 2023 is is gonna be a positive one. Stuart, that's great. And Brad as well, thank you once again for updating investors this afternoon. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order the management team can better understand your views and expectations? It's going to take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of the management team of AUDIOBOOM GROUP PLC, we would like to thank you for attending today's presentation. That now concludes today's session. So good afternoon to you all.