Audioboom Group (LSE:BOOM) — Interim Results

0:01 Good afternoon, ladies and gentlemen, and welcome to the AUDIOBOOM GROUP PLC interim results investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and could be submitted at any time via the q and a tab that's just 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. These will be available via your investor meet company dashboard,

0:34 and we will notify you by email once these are ready for your review. But before we begin, I would like to submit 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, and CFO, Brad Clark. Good afternoon. Thanks, Jake. Good afternoon, everyone. Good morning from from New York City. Hope you're all well. Great to be with you again to talk through AUDIOBOOM's h one results and q two results. It's another positive set of set of results and a strong performance that I'm I'm happy to to be talking to you about today. As Jake said, make sure you send any questions in. We have few questions that were sent in, in in advance, and you can, send those questions in as we go. And we'll pick those at the end, first of all, though.

1:21 We have a a presentation to walk you through. We'll take a look at the background of the company, the operations, and the business model of the company. Then we'll look at the performance in the first half of this year. Then we'll talk briefly about what's in store for the future and everything that we are focused on. So get those questions in now, and we'll answer as many as we can at the end of the presentation. But before we jump in, for those of you that may be new to AUDIOBOOM and haven't met myself or or Brad yet, we'll just do some quick introductions. I'm Stuart Lass, chief executive of, of AUDIOBOOM. I've been the CEO for the past two and a half years. Previously, I led AUDIOBOOM's US operations after we launched the The US arm of the business back in 2015.

2:08 Before AUDIOBOOM, I was running a business called Voxnes, the the content side of the business, Voxnes, which is a podcast ad tech company. And going back a little further, I was based in based in London at the BBC running the BBC's digital audio products and and their radio products. So I have been working in and around podcasting now for the the past, twelve or or thirteen years. I'm just happy and excited to to be leading AUDIOBOOM. We have a a great business here, a great future ahead.

2:45 Hi, everyone. I'm Brad, CFO. I've been with the company since March 2018, so approaching four and a half years. Prior to AUDIOBOOM, I spent fifteen well, I spent fifteen or so years working with various different media companies and their finance functions. So Brave Bison before AUDIOBOOM News UK trained with Grant Thornton. Obviously, the the company that you see today and what we'll present today is significantly different to what when I started in in 2018, so it's particularly pleasing to report what we did this morning. I've got a couple of slides later to give that bit more detail on on the finance of the company and how how I look at things, but that's a bit later on. So back to you, Stuart.

3:28 Thank you, Brad. So first of all, as I said, yeah, if anyone new to AUDIOBOOM, we'll we'll take you through the business model and and and the operations. I wanted to show you this slide first. This is actually just the the new website for AUDIOBOOM that we launched about six weeks ago. I just wanted to put this up here first because it really just shows off, what AUDIOBOOM is and what we do. We power podcasting and we do that for creators and we do that for brands. So, AUDIOBOOM sits at the heart of a three sided marketplace. We, we are connecting creators and great content with advertisers and brands, and then we're distributing them out to to wide audiences. So we work with the the very best talent and the very best content creators, to to make podcasts.

4:15 We sell those podcasts out to brands that wanna be connected to the very best content, and then we distribute all of that that content out to Spotify, out to Pandora, Google Podcasts, Apple Podcasts, iHeartRadio, all the listening apps, where podcasts are available. We're powering that that that distribution. So without AUDIOBOOM sitting at the the heart of of this industry, there's there's very little value. We need all three of those parts, advertisers, creators, and audience to be connected together. And AUDIOBOOM does that. It's very does it very efficiently through its platform. It does it at a very good scale, and and we're able to deliver value to the creators. We're able to deliver value to the advertisers and bring those together, to make podcasting successful. At the heart of Audioboom is The technology platform that that enables us to to create that connection between content creator and brand.

5:12 And this is just an overview of the Audioboom platform. So at the bottom of that platform is our content management system. This is where the the content creator is, uploading their podcasts. They can manage the publication of of of those episodes in their dashboard. We distribute with one click out to, out to Apple and out to Spotify and out to Pandora and iHeart for listening, and then we gather all of that data from from the listening. No matter where that that podcast was heard, we gather that data. We consolidate it in an analytics dashboard, and we surface that to the podcaster so they can make great editorial decisions about their content based on that data. And then we provide that data out to our sales and marketing teams so they can grow audience for those podcasts and then monetize very strongly the the podcast because of that audience data that we're able to collect from all of those platforms.

6:09 On top of that content management system, we've built an advertising tech stack. So the advertising tech stack is an ad server that fires in ads in real time and allows you to, to provide fresh ads for every listen to a piece of content. It's a yield up system that gathers the best pricing available at that moment in time, for for advertising inventory. It's an inventory creation tool called AdRip that goes into back catalogs of content and creates more ad inventory. And it's a marketplace where we connect buyers and sellers of podcast advertising and and create strong demand, for and and strong supply, put bring the two together and allow monetization to happen, very efficiently in an automated fashion through that advertising tech stack.

6:56 Then on top of that, we have a a system called Lyrical. That's a Salesforce based system. It's an inventory management system. It allows us to execute the advertising. It automates the billing. It gives us business and sales intelligence around pricing, and open inventory and sold inventory and allows us to optimize the, the monetization of of of of that content. And those three parts of the tech stack together, like you said before, are very are efficient and we're really creating some great scale within there now. So we have 8,000 plus podcast channels running through our platform. We reach more than a a more than 34,000,000 unique listeners globally every single month and that content is downloaded more than a 130,000,000 times each month or so. So some really good scale starting to emerge through through that platform, and that platform really drives the the business of podcasting for us.

7:52 This is a a look at our content and our and our revenue model. So on the left hand side, you'll see our content model that's broken down into three areas. As we see it, we have AUDIOBOOM Studios, which is a a small group of shows, around 25 shows, shows that we produce our ourselves through our production teams at AUDIOBOOM based in The UK and The US, and that's content that that that we control, that we develop ourselves, or that we coproduce with a partner. So AUDIOBOOM is a is is the official podcast partner of Formula One. We coproduce the Formula One podcast Beyond the Grid and f one nation with Formula One through AUDIOBOOM Studios. The AUDIOBOOM Creator Network is is that next 8,000 shows. Those are shows that are created by independent creators and producers, and then they partner with us to monetize, to distribute, and to to power that that that podcast for them. So as I said, there's 8,000 shows running through that that creative network. And that's a group of shows where at the top end, they are downloaded more than a million times per episode.

8:57 And at the bottom end, they are downloaded maybe a few 100 times per episode. But as a as a network of of content and distribution, it's a very powerful very powerful network that we've built through through our creator, our work with creators. And the final part to our the the content model is the wider podcast landscape. So this is, this is the entire global, 3,000,000 podcasts that are available in Spotify or in on Apple Podcasts. And through one part of our advertising model, we're able to access advertising inventory within any of those podcasts globally and monetize a much wider footprint of content giving us more options for advertisers and and more scale. How we monetize that comes through our advertising model. So we have three types of of advertising within AUDIOBOOM. We have our premium sales model. So that is, very high value advertising units. They are delivered by the host of the podcast. In the podcast voice, the the podcast host is endorsing the product that they are they are advertising, and it is very valuable, because of the influence of the podcast host.

10:04 The the audience is engaged. They trust the podcast host. They listen to the ads that the podcast host is reading, and then they go and buy product off the back of that. It's very measurable. So we're selling those premium ad units across AUDIOBOOM Studios and we're selling them across the top 250 shows within that within that creator network. The ad units sell a much, a very strong, very premium rate, between 25 and $40 per 1,000 listens. So that's, that's a CPM and that's how we we measure, the value of of of the ads, within premium, sales model. The secondary sales model is, is something called Showcase. That's our global marketplace. It's, automated through our ad tech, and those ads can run across the entire 8,000 podcasts in our network.

10:52 So, the ads are prerecorded. They may sound a little bit more like a radio ad. They're prerecorded in the voice of an announcer, and we can then dynamically insert through the ad technology across all 8,000 podcasts. We can target target listeners by demographic or by location and territory or by keywords. So if the the podcast, is about Coca Cola, we have the ability to, to to target a Coca Cola ad in and around that piece of content. We're able to do that at great scale, very efficient through the ad tech, but because of the, you know, the wider group of podcasts that that we are hitting there, the advertising rates are lower, often between around eight and twenty dollars, in in Showcase. But we, we we make available around 4,000,000,000 advertising impressions through Showcase every single year. So there's huge scale, involved in Showcase, and that's a product we launched at the, the end of last year and has, has grown significantly since then.

11:52 And then the third part of our advertising model comes through, a business unit called Sonic Influencer Marketing based in Austin, Texas. Sonic works directly with brands to manage their advertising campaigns across the entire podcast landscape. So Sonic will work with a with a brand or with a client. They will they will place those ads onto AUDIOBOOM studio shows. They will place those ads onto the AUDIOBOOM creator network, and they can also go and access advertising inventory in some of the biggest podcasts in the world, directly also. So Sonic allows us to open up access to that that podcast landscape to monetize podcasts that are not exclusively part of the AUDIOBOOM network. Then this slide just breaks down, how each of each of our divisions really contributes to group revenue and then the gross margin from from each of those units. So AUDIOBOOM Studios, those shows that we produce ourselves or we coproduce with a partner, obviously, a much smaller contribution to group revenue. It contributes just 3% of of our group revenue, but has a much stronger gross margin at at 31%.

13:03 We're able to control production budget there and and and control the the cost of creating that content. So it comes with a higher, gross margin for AUDIOBOOM Studios. That premium ad model, on the creator network, the top 250 shows, that comes with a, you know, a slimmer gross margin, 21%, because we're being competitive there to sign the biggest and and best shows to AUDIOBOOM, and we revenue share with those podcasts. And so we have to offer them a strong revenue share in order for them to to secure working with those shows. But obviously, that drives a very strong amount of of group revenue. 67% of group revenue is attached to that premium ad model where we are partnering with the biggest and and best 250 shows in our network, to create good value there.

13:53 Showcase, the automated ad product that that delivers against 8,000 different podcasts, good gross margin there, 29% gross margin. Again, we're working with smaller podcasts. We have the ability to create stronger revenue shares for AUDIOBOOM within Showcase, So that's why the gross margin is is stronger at 29%. And Showcase is now delivering almost 12 and a half percent of our group revenue. So form the product formally launched in q four of last year and has grown very quickly to be 12.4% of of our of our revenue, and I expect it to continue to to increase and become a bigger part of what we do. It's very scalable because of the automation that's in there and because of the amount of inventory that we're creating within that marketplace.

14:39 And then finally, Sonic, a part of AUDIOBOOM that has now been up and running for three years, that is now contributing almost 17% to to group revenues. That's growing very quickly over the past three years. Comes with a much slimmer gross margin. So it has a slightly different business model when it's working directly with clients and and and and works off of a more traditional ad agency commission model, but it's very efficient and has grown very quickly, and it's an important part of of what AUDIOBOOM does. So that's the the business model. That's the operations. Next, we'll look at at the, at the performance of the business in the first half of the year, and I'm really pleased with the momentum that continued into into h one and through the second quarter of this year, and it's led to, some some more record results for the company.

15:27 For q two of twenty twenty two, we saw $21,200,000 of revenues. That's record quarterly revenue, up almost 60% on the same period of of last year. And within q two, we had 1,100,000 of adjusted, EBITDA profit. So again, significantly up on the the same period last year as as we start to see some of that gearing effect of the of of the revenue growth. H one was obviously a another record for for for the business, $40,900,000 of revenue during the first half of the year, and that's close to 80% growth on the first half of of last year. So a significant and very strong revenue growth in the first half of this year. $2,000,000 of of adjusted EBITDA for h one also, and that's up almost 10 times the the the adjusted EBITDA of the same period last year. And then that's a really great cash number, $5,800,000 of of cash. That's the highest cash position ever reported by, by the company. We're fully funded for the current growth trajectory.

16:34 We have an additional

16:36 £1,500,000, so around $1,800,000, available available to us through a new overdraft facility that we have at HSBC also. So record revenue numbers, very strong adjusted EBITDA numbers, and a and a record, cash position for the business also. It's just been a a really great first half of the year. I'm really pleased to to be able to bring you this news today.

17:01 When we take a look at at what's got us here, you know, two comparisons here for our performance versus the wider industry. So I think it's really important to to put our performance into context, not only are they record numbers, we are outperforming our competitors significantly. So that first chart on the left hand side here, this is our revenue growth versus the industry. And you'll see here that every single year, since 2017, we have outperformed our competitors, outperformed the wider industry. PLC in their global entertainment and media outlet report have pegged this year's industry growth at 15%. Audio boomers you've seen in the first half of the year has has grown close to 80%. So once again, we are significantly outperforming the wider industry here, across 2022 so far.

17:52 On the right hand side, this is a chart that that looks at, audience growth, in The US. And AUDIOBOOM is now, according to Triton Digital, the ranking service of of of podcasts, we are now the third largest, podcast publisher in The US when it comes to audience size. We reach 6,700,000, listeners, unique listeners every single week in The US, and we've grown strongly over the past year as well at 56% growth over the last year. Now we just moved up to to third position on that Triton ranker. You know, we will likely move down to fourth or fifth position over the coming months as one of our major shows, a show called Morbid, leaves the network. That's something we've already been planning for and have known about now for for more than than six months. So we will likely dip back down into kind of fourth or fifth position on on that ranker, but that's to be expected.

18:48 And like for like, our our group of shows is growing strongly, and we will still see still see that US weekly reach number grow again once we once we revert to fourth or fifth position on that that Triton rank. So, we're also big globally. We're second in New Zealand, third in Australia, fourth in Canada, and and and we have that global footprint too. So we continue to to, to really kind of punch above our weight in in that list of big media companies, in that Triton, Bronco. It's been a successful year of growth when it comes to audience for us also.

19:28 Let's have a look at those key growth drivers for for that strong performance in in the first half of the year. So Showcase, as I've already mentioned, has grown very quickly since the the formal launch at the end of last year. But when compared to to the to the ad tech revenue as we were building it out at the start of last year, it's now 150% greater in terms of revenue than it was this time last year, contributing 12 and a half percent to group revenue versus less than 9% a year ago. So we've seen very strong growth on the the Showcase automated ad marketplace side of of the business, and we'll continue to to grow that going forward. We've added new demand side partners into Showcase, and that has driven that strong revenue performance. So we partnered with NZME in New Zealand, Instrumentl and SoundStack in in in The US.

20:16 They are all on the buy side of that marketplace. So we expose our inventory to, to that marketplace and then we've added buy side partners who come in and monetize that inventory, on our behalf within that marketplace, and that has led to that that strong showcase revenue growth. We've renewed major, revenue driving shows in our creator network, so that's continuing to, like, solidify that foundation of the creator network. So CASEFILE, no such thing as AFFISH, Dark History, Mile High, Strange and Unexplained, a few more like Murder Mystery Makeup, all major shows for us, all kind of top 15 podcast for for AUDIOBOOM. We've renewed some of those, those those major deals, in in the in the past six months that this again, like I said, provide that long term foundation to the business.

21:06 You'll know as I as I just said that we, we've been planning for some time and we've known about a show called morbid leaving, again, one of our our our top shows on the network, which which will have an impact, in terms of downloads on the business. But as I said, we've known about that for some time. That wasn't in our in our growth projections for the year because we we've known that that show is moving away from us. And that's gonna happen with AUDIOBOOM. We are a great kind of incubator for for smaller shows. We work with them at an early stage. We recognize the talent, and the the the the potential of those creators. We help them grow. We help them build audience. And occasionally, they will leave us as morbid has done. But in, in the majority of cases, we've created such good, strong, deep partnerships with those podcasts that we're able to to renew those shows, and to continue working with them as partners, for the long term.

21:58 Just announced last week, we we've we continue to sign, the top talent to to AUDIOBOOM. We we we announced that we'd signed a show called Fair Game with Leah Remini, a US actress. We we signed and we're the Roman Atwood podcast. We're working with a show called The Herbert's, some YouTubers that are launching a podcast and we expect big things there. And also a show called Speak the Truth. So all of these are are kind of top, again, top 20, shows for AUDIOBOOM. They come directly into our creative network. We can monetize them with with premium ad sales, from from day one, and that will help us to continue to build the size of that creative network and the size of our our audience footprint. And then finally, AUDIOBOOM Studios. Since we, set up our UK production operation, the end of last year, we've been focused on, delivering new shows for The UK. Devil's in the Dark, the first of those UK productions that launched in q one, and then the Criminal Makeup that launched in q two.

22:55 Both of those shows reached the top 15 of of the Apple Podcast chart in The UK, and we're really pleased with the success we're seeing from from our, new UK production unit as part of of AUDIOBOOM Studios. So those have really been kind of key to the the the success of h one and that momentum continuing into the the first half of this year.

23:16 Last slide from me, I think, for a few moments is is just a look at our KPIs. You'll be familiar with these if you've followed the business for some time. We update these on a quarterly basis. The first one of these is is global downloads. Downloads are a, you know, a proxy for advertising inventory. The more downloads that we have, the more advertising inventory we we make available for us to sell. We've seen 35% growth in those, in in that global downloads number over the the the past year. You're seeing a little dip there, in q two. As I said, one of our biggest shows, morbid, is moving on. So you will see a dip in in in some of that in those downloads before we head back up in in the right direction across the the second, part of of this year. Brand count is the number of brands that we work with directly on a on a a premium basis. So it shows that we are monetizing through with those high value advertising units.

24:11 We currently work with 376 brands directly. That's 15% growth versus versus last year. And what you're seeing on the right hand side of this chart, which we'll talk a little more about as as we go deeper into the presentation. There's some questions on on this at the end that I'll answer. In q one of this year, you're seeing a little of that seasonal softness. Q four is very strong high demand quarter for podcasting in and around holiday season. Q one, there's a small dip there because of the softness of of the first quarter in the advertising market. And then in q two, you're seeing that leveling out, and that is some signs of of some softness in the ad market due to those global macroeconomic conditions. And as I said, we'll we'll talk more about that later on in the presentation.

24:57 Third KPI for us is our eCPM metric. That's how much value we extract from a thousand downloads across the network. So that's an optimization metric metric. We've reached a new record with that eCPM metric. We now extract $57 of revenue from every thousand downloads across the across the platform. So that's 12% growth year on year, and it's a record quarterly ECPM performance.

25:26 And I'll let Brad take over here. Great. Thank you, Stuart. Hi, everyone, again. So if you've tuned into the last few of these presentations, you'll you'll recognize the next few slides. I'd to just go a bit deeper on some of the financials, call out some additional statistics, which aren't always on that front page of the r and s, but something that we always look at within within finance and across the business as well. So just to give you a bit further insight into the top of things that we're looking at here at AUDIOBOOM. Obviously, that that first slide can display as well the significant revenue growth that has been recognized at AUDIOBOOM over the last couple of years. Q two of this year was our record breaking revenue quarter at just over 21,000,000,700 k up on q four of twenty twenty one. I always like to give a slightly, you know, a slightly different statistic in terms of that revenue growth in these quarterly presentations.

26:20 So this q two of this year represents 80% of the total revenue build in in 2020. Sometimes this this you forget how quickly this this this company has grown. But throughout the first half of this year, being 79% up year on year is is very, very good growth. And importantly, when we referenced as we did in this morning's report, and Stuart also called that growth figure out that PLC published a few weeks ago, stating that The US podcast advertising market growth will be 15% this year. So we obviously compare very favorably there to that wider market growth. Adjusted EBITDA profit, good progression in the first two quarters of this year, Q2 being the second highest adjusted EBITDA quarter that we've reported.

27:07 If you tuned into the last quarterly update that we did in April, I explained why Q4 EBITDA of 1,900,000 was higher than Q1. So just a refresher on that, why we haven't seen that sequential quarter on quarter growth. Well, in H1 of this year, we've had higher salaries and commissions because of the higher revenue that we've recognized. We've taken on additional heads to support the growth within the year. So we're incurring more cost in the first half of this year versus Q4 of last year. In Q4 as well, we also reported a higher gross margin because we were able to release a proportion of music licensing accruals in the fourth quarter of last year that we didn't need.

27:53 And we also were able to release provisions against seasonal contracts with minimum guarantees as well in the fourth quarter of last year. So the inventory and advertised revenue for one particular deal was weighted towards the second half of the year. We built up the provision against the minimum guarantee throughout the year. We met the minimum guarantee and then released that to the P and L in the fourth quarter. So slightly distorting that fourth quarter EBITDA, but good to see that progression quarter on quarter through the first two quarters of this year. And let's not be shy about highlighting and reinforcing the point that this now is a profitable company in the first half of this year. We were cash generative as well, which is fantastic to be able to report. I think when assessing, you know, this this company's performance, it's great that we're delivering those desirable metrics, those growth metrics, growing faster than our competitors taking market share, generating profits.

28:45 I think sometimes those last that last point, you know, being profitable is is challenging for companies who are excelling at the first two points. So when you're growing and taking market share, you know, reinvesting for growth at the expense of delivering profit. Well, this company, AUDIOBOOM, is delivering on all fronts, and it's in control of its own destiny as well. So we should remember remember that when we go and look through these numbers. Now in terms of in terms a bit more detail on revenue and cost, again, can see that great growth curve on that top line. Revenue increased 59% q two this year versus q two last year. OpEx increased by 24%. We've gone through the year to date metrics.

29:31 The the contribution of different revenue lines, that remains fairly consistent with 2021, but there were some good growth statistics within that revenue mix as well. Obviously, Stuart went through the the contribution of different revenue lines earlier on as well. But just to reiterate some of those percentages, 67% of our revenue comes from that premium advertising on the creator network that we specialize and are experts in selling. That grew 85% year on year. 12.4% of revenue comes from the marketplace. That grew a 154 year on year. And good growth from Sonic Influence and Marketing as well. That contributes 16.6% of that growth revenue number. That grew 59% year on year. I think there's a question earlier from I think it was Adrian as well, which said that that slide actually added up to 99%.

30:20 That did add up to 99%. That's because 1% of our revenue relates to subscription revenue. So for those smaller podcasters, they can pay 10 or $20 a month to use the platform, but that accounts for around 1% of our revenue. So, yeah, that's why that slide added up to 99%. That was on purpose. In in terms of the OpEx, it's fairly consistent. It has been consistent over over over the last few years in terms of the the the breakdown of cost within that within within OPEX. So 20% of OPEX relates to what we term as technology cost, the cost to run the AUDIOBOOM platform, and the material cost within that relates to the hosting and download of content now. Obviously, as downloads increase, the cost increases. So there was a 51% year on year cost increase for the downloads.

31:15 Downloads increased by 40% year on year from a 179,000,000 in the first half of last year to 250,000,000 in the first half of this year. So simplistically, it costs more for more downloads, so that cost increases. The the largest cost bracket relates to salaries and sales staff commissions. There was a 32% increase for the first half of this year. That's mainly due to a higher headcount. So we've recruited across the business to support the growth that we are going through. So new heads have gone into sales, ad ops, production into Sonic, finance as well. So we report a head count of 47 as at the end of June versus 37 last year, at the end of June. But, obviously, at 47, we continue to remain extremely lean, especially when you compare us to our competitors.

32:03 So we can clearly demonstrate from that slide that there's a good handle on OpEx, good cost control ongoing as you would expect. If you look at the variable cost going forward, that's a common question that we get asked. You know, what will change as we look look forward? Obviously, I've spoken about download cost varying, depending on the number of downloads that that occur. Commissions are linked to to revenue that's booked and also promotional costs in relation to new AUDIOBOOM Studios launches. We have dedicated promotional budgets for any new launch. Also varies depending on when the show is actually launched. If we go to a couple of additional points as well that aren't actually on the I've seen a bit of commentary today and a few questions coming in as well during the session, just to explain a bit of background on a couple of the charges that have gone through the face of the income statement today, just to give a bit of background on those. So firstly, there's a a share based payment charge of $2,300,000 in the first half of this year. Now being a public company, we utilize share options to incentivize and retain staff with the aim of compensating them for the work they've done. Historically, we've awarded share options to staff who've been with the company for more than a year now. In May of this year, 443,000 share options were granted to staff, 60,000 each to Stuart and myself, with the remainder split amongst those qualifying staff who've been with the company for more than a year. Now, obviously, these were awarded in May when the share price was higher than what it is today.

33:28 They have an exercise price of $15.55. Now when we when we decide to award share options, you also need to take a charge through the p and l for that. The options are run through a Black Scholes calculator. The charge is spread out over three years to align that with a three year vesting period. Now if anyone wants a separate session on this, please let me know. It can be complicated, so I'd happy to talk anyone through it. But it's typical for a company to charge that below EBITDA because it's non cash non cash accounting entry. It doesn't directly impact the operations of the business. Now what it does do is it incentivizes staff to stay and work for the company and in the belief that contributing to good company performance will lead to share price increases, and they can benefit from that along with along with shareholders.

34:18 So that's a bit of background there on one of the one of the charges there, I've had a question on today. Second question on the FX. Obviously, over the last six months, we've seen the dollar go from around 1.3 to around 1.2. Now in terms of the structure of the company, all trade, excluding Sonic, goes through AUDIOBOOM Limited, which is a UK registered sterling based functional currency company. So what we're doing in AUDIOBOOM is because the most majority of traders within AUDIOBOOM over in The US, we actually raise invoices in dollars, but hold those balances in sterling on on the balance sheet as debtors. So with the pound weakening against the dollar, the FX impact has led to a gain. If you look at our EBITDA box on the release today, on the income statement, you'll see just over $1,000,000 gain there in terms of those operational FX impacts.

35:11 Secondly, the reserves within the company have to be translated as well. That's where we can see that $1,500,000 FX loss in those translation of those reserves, neither of which impact the operations of the business, hence why we moved that FX impact of the P and L below EBITDA. We did that a few years ago to de risk ourselves from any potential movements there. We'll keep the current structure in terms of the company as we go forward. The main reason why is because we've got $32,000,000 of tax losses available within the company and we'll use those to offset future profits as we go forward. So just a bit of commentary there on a few questions that I've received today. Time for my favourite slide, is the working capital slide.

35:56 It's really pleasing to be able to report that highest cash balance that the company has ever reported at $5,800,000 That's a testament to the internal processes that we have built here at AUDIOBOOM, which allow support the business as it continues to grow. So cash increased by $2,800,000 over the first six months of the year. Collections, just a touch over $40,000,000 between January and June. That figure actually outstripped revenue booked and payments made in q two for the first time as well. I'm pleased to say that the first bullet point is already out of date. So I've said there, this was written on Friday. So collections totaled 3,900,000. We've collected another 800 k today, so that's 4,700,000 for the month.

36:45 Overall, the point is the processes that we have internally in terms of collections are working well, which contributed to that debt to day figure dropping by an impressive twenty six days from 94 down to 68 at the half year. Have we done that? Well, it's high quality, reliable invoice information being distributed, structured data collection processes, good customer relationships. So we've enabled to decrease that data day figure despite continually increased revenue. So welcome to Sean, Tosin, James and Jamie, the finance team for making that happen. Q one, we saw a higher payment figure than in q two. That's because in q one, we paid a million dollars of recoupable advances. We also paid out the higher revenue shares in q four as well in that first quarter.

37:34 Let's not forget these impressive results done with a very lean team of 47 people. And the processes we've built, you know, we've we've done them so they don't require a high headcount to power them. But it's very pleasing to say we're not standing still. So on July 1, we launched our new accounting system, NetSuite. So that went live and replaced our previous system, Xero. And that will enable us to even further implement automated processes into the business as well. So the aim is to improve those impressive statistics that we're reporting already. So data chasing will be automated. Payment runs will be automated. And we're gonna be able to get that financial intelligence as well out of that out of that new system. So looking forward to that one bedding in. So in conclusion, working capital and balance sheet of the company at end of the first half are in good shape, fully funded for the current growth trajectory.

38:27 Companies report its highest cash balance ever. In addition, it also has that £1,500,000 multi currency overdraft from HSBC. So in total, it has access to over $7,600,000 of cash at the end of June. And also, obviously, moving to improve things further with the launch of a new accounting system to help support the business on its growth trajectory. So hopefully you found those slides interesting. A bit more details on the finances there. If you've got anything specific to ask, fire in a question either now or email me. But back to you, Stuart, for the last slide. Thanks Brad. We'll look at 2022. Just one slide on this one before we get to your questions. So now's the chance I guess to ask any any kind of final questions that we'll do at the end here. But let's look ahead for the rest of 2022.

39:18 As you'll know from from the update that we put out this morning, we now have currently more than $68,000,000 of advertising booked for for 2022. So to take you back, it's actually on point three here, but PLC have projected that the podcast revenue grows at 15% this year. So if you look at that $68,000,000 number, we're we're very close already to to to hitting that market projection of 15%, and we are, you know, 13% higher than the entirety of of of 2021 revenue already. So already good growth and and a very strong set of of bookings and good visibility on on the rest of the year, $68,000,000 today.

40:07 That said, you know, we there's a question here that so I'll go into a little more detail on this one in one of the questions. But there is a softening ad market. Right? The the the macroeconomic conditions are impacting in impacting consumer spending. And so, you know, we are starting to see that in the pricing and the demand that we are that that's coming to us from advertisers in q three. It was something that we called out in the in the interim report earlier. We are just, you know, working right now to understand, what that looks like and and and how deep that that is set to run. Audio boom, as I said before, out is set to outperform the industry growth. Again, this will be the fifth year in a row that we that we outperform the wider industry when it when it comes to growth. 15% is the, is the figure from PLC.

40:55 We're very, very confident, you know, at this stage that we will go, above and beyond that. We have key renewals to three or four more key renewals. When I say renewing those those partnerships, what makes it a key renewal? Probably a show that is in our top 25 creators in terms of audience size and revenue potential. So we have three more of of those key renewals to work on across the the second half of the year. One of those, I already have terms agreed on and we're just negotiating on on two of the others. We have new AUDIOBOOM Studios launches as well. So we're really focused, think, this point on delivering new inventory whether that be the the premium, high value host endorsement inventory or the wider, more scalable, showcase marketplace inventory. So we're really focused on growing out those inventory levels.

41:51 And then we can continue to add, to the demand side of showcase. So adding in, more demand side partners to monetize the inventory that we place, in into Showcase as well. So that will be international partnerships, as well as programmatic connections, connections to trading desks, through the through technology. Anything that we can do to, to to add to the demand, and and the monetization of the inventory that that hits showcase. So, yeah, those are the the areas of focus. We think there's, you know, there there may be some some challenges ahead with the the changing, conditions that we're operating in. But we're confident, as I said, about about getting to goal and to to to outpacing the the industry and and and taking more market share and becoming a a bigger player in podcasting.

42:44 So, so thank you for for for, looking at that presentation with us. I can now, jump into into some questions that that are starting to come in. So I will. Stuart? Yes, Steve. Brad, thank you very much indeed for your presentation this afternoon. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab that situates on the top right hand corner of your screen. But just while the team take a few moments to review those questions that are submitted already, I would like to remind you that a recording of this presentation along with a copy of the slides and the published q and a can be accessed via your investor dashboard. Brad, Stuart, as you can see, we have received both a number of pre submitted questions as well as a number of questions that have come in throughout today's presentation. Firstly, can I thank all the investors for submitting their questions? And, Stuart, Brad, if I could please just hand back to you just to run through that q and a tab, And where appropriate to do so, if you could please just read out the questions and give your response, and then I'll pick up from you at the end. Thank you.

43:41 Thanks, Jake. So I think this is just probably the perfect one to to to to start with. The question is, how resilient are audio BOOM to any down turn in consumer spending, which could impact advertising budgets? We might now be seeing pent up consumer spending from savings during the lockdown years, but with increase in the cost of living in 2022, consumers will have less disposable income. Yeah. As I've already said, we're we're we're starting to recognize that we are operating in a in a changing advertising market. And I would say, in particular, changing advertising market in The US where high inflation hit earlier, consumer spending habits, have have already changed, because of that high inflation. I expect a lag in The UK and to see changes there happening, more likely in q four or early next year once the impact of of energy price rises, kicks in. But we are start certainly starting to see the effects, of of that macroeconomic downturn coming into play.

44:43 And, yes, I think brands will cut advertising budgets as consumer spending lowers. There will undoubtedly be headwinds. The WARC, which is the the World Advertising Research Center, they have said that advertising in The US this year will be around 20% lower than last year. So advertising as a whole across all sectors will be 20% lower, in The US this year. But as I've just told you, podcasting is projected to grow 15% this year. So that means for me, just as it as it did in COVID two years ago, advertising budgets will take hits across other mediums. So, you know, radio, TV, print, digital, outdoor, those those mediums will more likely, be part of of of that drop in advertising budgets.

45:36 But I think podcasting, just as it did during COVID, will continue to to grow, and and PLC says the same. It says that the industry will grow grow 15%. And and why is that? Well, podcasting is a high performer for for brands. As I said before, the the the, you know, the host of the show are influencers. They are trusted by their listeners and their listeners are very engaged. And so listeners react to the ads that their their podcast host, their favorite podcast hosts are delivering. They then go and and buy those products. So the advertising works directly in podcasting. And the other thing with podcasting really is how measurable it is. So podcast advertisers can work with us at AUDIOBOOM to use a combination of ways to measure the success of of that podcast advertising campaign.

46:31 So that will be vanity URLs, promotional codes, and then attribution technology. And it will really show off very precisely how successful that advertising campaign was on a particular show. So we can show off to advertisers, which shows perform well for them, and we expect those advertisers to continue to advertise, in podcast, the high performers that that that that work really well as we optimize performance, for for those campaigns. So I think as I said, you know, in my, interim, report earlier today, there is some softness in the ad industry. We are going to, see some changes, and and and budget cut in that space. But podcasting, will still grow even though other mediums, may may not grow.

47:22 And, you know, I think it will be, you know, set against this this this backdrop of change, but there will still be and there will continue to be podcasting advertising growth. The second question we'll do here is is one we get asked a lot, similar to one we get asked a lot during these presentations. It says the last presentation talked about the options of being an attractive ad to another company, wanting to grow in the podcasting space such as Amazon, Apple, or Spotify, or remaining independent and continuing to grow. Can you tell us about those those different options? So, yeah, as as I said, we've talked about this in the last few presentations as it's a question that we we do get asked often. I've always been clear that I wanted to build AUDIOBOOM as a business that could thrive independently, but also be an attractive proposition for a big company who are looking to fast track a podcast element to to its business. And I believe that that is what we have done and that is what we're doing successfully.

48:24 We are the leading independent podcast business. We're the third biggest podcast publisher right now in The US. So we have the scale in audience. We have fast growing revenues. We're pretty much the only profitable podcast company of any size out there. So yes, I do think that that that at the right time, which may not be now, may not be in this current market, that we would be be attractive. But we're also in a great position to continue to build this thing independently. We can continue to build value independently. All the m and a activity in the space so far has been really focused on creating a value chain that comes from technology, content, and monetization. And we've built AUDIOBOOM around those three pillars.

49:10 We have a tech platform. We have a strong content operation. We're the most efficient monetization engine in the space. So we have all the parts that allow us to compete as an independent. Now we have some cash, best cash position we we've ever reported, allows us to invest for growth, and it allows us to continue to to to be competitive, as we build this this independently. Third question I'll do is a good one. It's it's how is AUDIOBOOM positioned compared to competitors? How does it grow its listeners, income per listener margins compared with competitors? So there's not there's not a huge amount of information available from our competitors.

49:57 Only Acast as a as a podcast pure play, publicly traded there on Nasdaq North. So we see some good comparative data from them. Others like Spotify or wondering that their podcast operation is part of a bigger business. So we don't see too many specific data points that that that we can use to to compare, but there's a there's a few that we do know. So one, if we we go back to one of our our three KPIs is our eCPM. That's how much value that we extract from a thousand listens to to or downloads to to the content. And our eCPM number is is $57. That's very strong compared to a similar metric from Acast. Their their their similar data point puts them at around $31.

50:43 So we're extracting close to double the value from from the consumption as they are. And again, I think that speaks, Brad said earlier, to our kind of expertise in in that premium market working with the the very best shows out there and selling premium advertising units, particularly in in in The US and The UK. We know we're very lean. Brad mentioned that a couple of times, our headcount is in the forties. Again, as a comparison to to to Acast, they are close to 400, we believe, in in terms of of staffing. So we're very lean there there too. We know other, podcast businesses in in the top 10 of that Triton Wrangler I showed you earlier have, you know, in excess of two or 300, team members. So of 47 as we are today, we're extremely lean there. In terms of gross margin, we are weaker than ACoS in in terms of gross margin. Their margin is is is above 30% compared to ours in in the low twenties.

51:42 And, in part, this is because we are very strong in The US, where where they have little footprint here. So in The US, the the market is ultra competitive. The talent agencies, WME, UTA, CAA, they have created stronger revenue shares for their clients, those top tier shows that that we work with, which has lowered our margins. Whereas ACAST, stronger in Europe and and and Asia, they are much much less kind of competitive markets. So creator revenue shares can be more favorable to them and hence the the higher margin. So, you know, we have it's a trade off. We have a big footprint in in in the the bigger market, but that comes with with the lower gross margins there.

52:27 And then I think if you, you know, other data points you can look at are those audience rankers. So we already talked a bit about the Triton ranker where we're third in The US. But there's another ranker by a company called Podtrack. We don't take part in in that one. But if we did, we would also be the third biggest publisher on that rank too. So hopefully, those are some kind of good comparison data points for you there. Next question. Chairman mister Tobin has been purchasing shares frequently at a share price much higher than the recent 8 to £10 per share value. Does he no longer see it as good value? If so, what has changed? So, yeah, Michael has has been extremely supportive of of of the business, and, you know, his investment decisions are very much his own.

53:18 I would say that he has a has a very clear appreciation of what we're building, AUDIOBOOM, our business model, our performance, our operations. He has such a a great understanding of that and then of, obviously, of the the future value that that we're creating. So he he has been very, yeah, very, very supportive. As you as you may or may not know, directors are prohibited from from trading shares in the business in the thirty days immediately before the interims or annual results. So, so he hasn't been he's been unable to share, to to unable to trade shares, during that thirty days, even if he kind of wished to. So, you know, that's the reason. I don't know if there's been a few questions on on this. That would be the reason why he hasn't been able to to trade during that that last thirty days. But like I said, he's he's incredibly supportive, to the business and really fully understands, that that value that we're building here.

54:16 I have a couple more questions. Hopefully, I can fit in here. The first one is great to see that key partnerships have been renewed for content providers. Are these three year contracts? So, yeah, the majority of those key partnership renewals that we we announced last week and also in in the interims shows like Dark History and Murder Mystery Makeup, No Such Thing as a Fish, is a big UK show, Case File, one of the biggest shows in the world out in Australia. The majority of of those renewals are done on on three year contracts. Many of of those top shows have already been working with us for for several years. We've built really great relationships with the creators in partnership with them. We we kinda have this proven track record of creating really great value for them. They trust us as their monetization partner, their distribution partner.

55:13 And, you know, I'm just really pleased that we we now get to work with with them through through 2025. And, you know, having that that visibility through 2025 on on those key shows is is so great for us. You know, the most important aspect, I think, of of growing is retaining key revenue to provide that very stable foundation. So, those renewals are so important to us. And and, yeah, like I said, just really pleased that we we get to to work with, these fantastic creators, some of the best talent in podcasting for the next three years. And then just, I think this will be the final one that we we we can get to just similarly, connected to to the recent, RNS of last week. This question, with the two new podcasts from Leo Remini and and Roman Atwood, do you have forecast for audience reach and downloads, and how will this translate into advertising revenue?

56:12 So so these shows are really great examples actually of the work that our business development teams are focused on in The UK and in The US. On one side, they are working to attract existing podcasts like Fair Game from Leo Remini to the network. So these are top performing existing podcasts that have really strong built in audiences that we can monetize from day one of the contract. Plus, they also have, very strong back catalogs where we can use, that proprietary inventory creation tool that I mentioned called AdRip to create even more value from from that back catalog. So when we do these deals, we absolutely know audience reach. We absolutely know download numbers for the show. Our business intelligence platform that we have, you know, enables us to do that.

56:59 And then we're able to make very accurate ad revenue projections for them as we enter into the contract. So like, I don't give out revenue numbers for individual shows generally as I feel that it it kind of provides our competitors with too much information, but I would say that the fair game will will will become a top 10 show for AUDIOBOOM. So that's that one. And then on the other hand, our biz dev team is talent spotting. They're looking for the best creative talent to partner with to launch brand new podcasts, and Roman Atwood is a is a great example of that. He's an incredibly talented influencer, YouTube personality, and his creativity very smoothly translates into podcasting. He has a strong following that we can convert into podcast listeners, and it's enabling us to to build audience for the show very quickly. I'm really excited about about Roman's podcast. It's five episodes in at this point, and it's already being heard by more than half a million people each week. So it's been a and, know, it's a success story for us already. And and like I said, just goes to to show, the fantastic work that our our business development team does.

58:05 So I think that's where we need to wrap up. We have a minute to go. And, hopefully, we've we've got through as many questions as as we could, and it gives you a little more insight into the operations and and and the financial performance of of the business. So thanks for joining us today. It's been a yeah. Another great period for the business. Really excited about what comes next. There'll be a few challenges on their way, but I think we have a a business model, an operational structure, and a great strategy that will, that will kind of guide us forward, and and we're confident about how the rest of the year will work. Stuart, that's great. And thank you very much indeed for taking the time to address all of those questions that came in from investors this afternoon. And, of course, ladies and gentlemen, the company will review all of the questions submitted today, and we'll publish all those responses where it's appropriate to do so on the investor meet company platform.

58:58 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 that the management team can better understand your views and expectations. This will only take a few moments to complete, but I'm sure will 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.