Audioboom Group (LSE:BOOM) — Q1 Trading Update

0:01 Good afternoon, and welcome to the AUDIOBOOM GROUP PLC investor update. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time by the q and a tab situated in the right hand corner of your screen. Just simply type in your questions and press send. The company may not be in a position to answer every question received during the meeting itself. However, the company will review all questions submitted today and publish responses where it is appropriate to do so. Before we begin, I'd like to start the following poll. And I'd now like to hand you over to Stuart Last, CEO. Good afternoon, sir.

0:31 Thanks, Alessandro. Welcome, everyone. I'm glad you can be back with us for an update on our q one trading. We have a lot to get through today, so we'll we'll move pretty quickly into it. But just a reminder to submit those questions, and we'll get to those towards the end of the the presentation. Quick intros, as always, first, from Brad and myself, just for anyone that is is new to the business and hasn't met us before. My name is Stuart Last. I'm the CEO of AUDIOBOOM and have been in that role for the past three years. Previously, as COO of the company, I launched the business in in The US back in 2015. I have a history in audio and and digital audio. I previously worked at the podcast ad tech company Fox Nest based here in New York City.

1:21 And before before coming to The US, I was an executive at the BBC and BBC Radio delivering their digital strategy. So

1:30 long history in digital audio and just, I think, really enjoying my time as CEO of AUDIOBOOM. We have a great company here. We're making really fantastic progress, and we have a a good future ahead of us.

1:47 Hi, everyone. I'm Brad, CFO here at AUDIOBOOM. I've been here since March 2018, so into year six now. Chartered accountant, fifteen years of experience in various finance functions at at media companies. Started off at Grant Thornton. Then went to Brave Bison, News UK before joining joining AUDIOBOOM. So, yeah, let's let's get into the presentation, Stuart. Thanks, Brad. As always, for those of us that those of you that that already know the business and have been with AUDIOBOOM for a long time, I just ask that you're you're patient through this first section where we lay out the business model, talk about what the the company does and and how we operate. Some of that, you will will already know, but it's great for those that are joining us new or relatively new to the company to to go through that.

2:36 And, obviously, there's always things that in in there that you may learn anyway. Part two of this, we'll we'll look at our q one trading. We'll break down the numbers. We'll look at our operational progress in there. And then finally, before we get on to your questions, we will look ahead to the future, talk about what we're focused on, and how we're moving the the the business forward. So let's dive right in and and look at the the model and and and the operations. I think the the first thing to say is that you'll no doubt be aware at this point that, you know, we are working in a in a pretty weak advertising market, and AUDIOBOOM is our revenue is does come from from advertising. And I think while the the market is perhaps in the short term growing a little slower at this point than previously projected, I think we have to all look forward to to 2030 when the the the industry and the the total addressable market for podcasting is will quadruple. So today, globally, podcasting is worth around $4,000,000,000.

3:41 By 2030, that that same industry will be worth around $16,000,000,000. So the the industry, the market will grow on average at 22% a year over the next seven years. So despite the short term slowdown and the headwinds in the advertising market, the projections for for podcasting still very strong. And AUDIOBOOM is is fantastically positioned to make the most of of of that growth and and to grab market share. We are the the leading independent pure play platform globally. And as I'll show you on the next few slides, we're growing faster than the industry as a whole. And as I said, just well positioned, well placed to to really capitalize on the growth of of that total addressable market in podcasting over the next seven years.

4:31 This is AUDIOBOOM against the industry. To put that into some kind of context, on the left hand side, you're seeing AUDIOBOOM's growth against The US market's growth. We grew at 25% last year and significantly outperformed the full year growth of 15%. We have now outperformed The US market growth every year for the past six years. And in that time, we've taken our market share from less than 2% to more than 6%. So, again, you know, our business model, our focus is really allowing us to capitalize on the the the growth in the industry, but also to grow faster and to gain that market share. The chart on the right is the the ranker of all podcast publishers in The US, and AUDIOBOOM is the fifth largest publisher in The US. Again, something we are immensely proud of, the position we've been able to take there.

5:26 We have strong competition from some major media organizations, Amazon, Audible, iHeart, Spotify, Sirius, so the the only ones ahead of us in The US. So to do this as a small independent company really just highlights the the strength of our business model and and and why being a pure play podcast operator is so impactful right now. So to sum up those last two slides, some strong growth for the industry ahead of us. AUDIOBOOM will move faster than that. We will gain market share, and we're in a great position as the the leading pure play to to capitalize on that growth. Our business model is based around bringing three key elements of podcasting together and extracting value from bringing those those elements together. So our platform will connect creators and their content with audience and then with advertisers.

6:22 And the only value in podcasting is by putting those three together. So it's it's good to have great content, but unless you have audience attached to that content, then advertisers not interested. And so by bringing the three together, we're able to extract value for for creators and and advertisers and and distribute widely to audiences globally. AUDIOBOOM believed in in three things. First one being that this is an independent creator medium. So podcasting won't be led by major media organizations. Podcasting will be led with authentic independent creators. Our platform works great for for independent creators. We allow them to monetize, to distribute, and and and extract that that value from their content.

7:08 Our second belief is that this is an ad funded business, an ad funded industry. Podcasting does not have any of the legacy issues of, let's say, TV with the cost of cable, things being, you know, only available in a linear fashion. There is no real need for subscription or monthly payments for podcast content. There's great content widely available, ad supported, and the audience expects that content to be free at the the point of listening. And then thirdly, we believe in podcasting being a distributed media, which means that we put the content and we place that content everywhere the audience can can hear it. So there's no exclusivity there. We're distributing that content out to Spotify, YouTube, Apple Podcasts, Pandora, iHeartMedia, and many other listening destinations.

7:59 So those three core beliefs drive the business model, and the business model is based around connecting three key elements together to deliver that value. And our mission as a business, as it states very clearly on our on our website, is to power podcasting for creators and brands, and we we do that very successfully. Since 2018, we've delivered more than a $150,000,000 to independent podcast creators, and we've delivered and executed more than $200,000,000 worth of advertising campaigns for for our customers and and the brands that we work with. So we have a a a strong business, successful business moving forward based around a business model that is allowing us to to gain market share and move faster than any of our competitors.

8:45 That business model is underpinned by our technology platform. It's the AUDIOBOOM technology platform that sits at the heart of our business and allows for the scalability and the monetization to to to to really flow. So just to walk you through the the key elements of of that technology platform. AttheCore is a is a creator platform. This is allowing our creators to publish their content. It gives them a bunch of tools to successfully plan and publish their their content. It hosts the the audio and distributes that audio out to all of those listening destinations, and then it gathers the analytics and the data back, consolidates that that those analytics in a in a dashboard both for the creators, but also for our our advertising and monetization teams to go out and and successfully monetize that content.

9:36 On top of the creator platform, we've built an advertising technology stack. So that's an ad server, a yield up system that gathers the best pricing in real time for that advertising inventory, inventory creation tools like AdRip, which we'll talk about a little bit later, and then our automated advertising marketplace, which we which we which we call Showcase, which launched almost two years ago now and is the fastest growing part of the of the AUDIOBOOM business. So we believe in tech based advertising platform on top of our creator toolset. And then thirdly, we have a layer on top of of that a Salesforce based and a bespoke Salesforce built inventory management system that we call Lyrical.

10:22 This is giving us incredible business and sales intelligence around how we sell and deliver advertising and and gain the best pricing. It automates our billing process. It really drives every aspect of what AUDIOBOOM does. It allows us to be very lean with a a very small headcount and has really changed the the the the focus of of the of the business since we launched that inventory management system around four years ago. So that's the that's the tech stack. That's the platform at the heart of all of this. And on top of that, we now have some real global scale to the content that that runs through that platform. So we have more than 8,000 podcast channels from independent podcast creators. That content is downloaded more than a 130,000,000 times per month, and we reach 38,000,000 unique listeners around the world each month as well. So the the platform is fully scalable. It doesn't require vast investment to to create that scale.

11:26 And as I said, we have some some really great content and some really great numbers running through that platform today.

11:35 Quick slide just on the content that's running through that platform and a little more detail there. We have 8,000 shows in total, as I mentioned. Within that 8,000 podcast channels, we have around 200 podcasts that form our premium network. These are some of the biggest shows available globally. They have large audiences, you know, a million plus, in some cases, audience size, and they are a real driver of of advertising revenue. Within that premium network, there is also AUDIOBOOM Studios. Those are shows that we are producing or coproducing or creating in house from our production units in New York. And and and London, it's a smaller set of shows, around about 30 podcasts.

12:21 And then there is the long tail of of content of the other 8,000 podcasts, much smaller shows from independent creators, but some they they drive great great volume when they come together through our through our network and then through our platform. The next slide looks at our revenue lines, our revenue products, and the three key products being our premium advertising, Showcase, which is our automated marketplace, and and Sonic. I'll talk about each one of those in a in a little more detail starting with our premium ad product. You'll recognize this from any podcast listening you do. Pre our premium ad product are host endorsements endorsements for products that are voiced by the host of the show with high engagement and therefore very high pricing that that comes with those.

13:17 We sell those premium ad units in house directly to advertisers and brands through our in house sales teams, and we're able to sell those against our top 200 shows because those shows are large enough for us to to gain that that that advertiser attention. Premium ads are still the bulk of of our revenue at 60% of our revenue in q one of of twenty twenty three, and they come with a a revenue share to us of of 21%. So we do revenue share deals with our podcast creators. For our premium advertising, that revenue share is at 21% currently. Showcase, as I mentioned before, is our automated advertising marketplace, the advertising that runs through our ad tech stack.

14:11 Again, this is on our top 200 shows, but also in our wider 8,000 podcast, the long tail of podcast as well. So we have the the scale running through the the entire group of of of podcasts. This is an automated sales process. We're not selling those ads directly in house. We're using the tech connections and the tech platform to monetize the the advertising inventory that flows into Showcase. And it's something we'll talk about later in the slide, but it is the fastest growing part of of this business. We launched Showcase two years ago, and in q one of twenty twenty three, it made up 20% of the the company's revenue. A year ago, it was only delivering 11% of the company's revenue.

14:56 So fast growing part of the business. And as we look to the future, Showcase will continue to be that that fast growing part of AUDIOBOOM. And then Sonic, the third part of our advertising business, Sonic is a is a brand platform that works directly with advertisers and allows those brands and helps those brands to deliver and execute their advertising campaigns in podcasting. Sonic has been part of the AUDIOBOOM GROUP for the past four years and has grown quickly to become 20 per 20% of our revenue contribution. Has that slimmer revenue share attached to it as it works directly with the the brands and on behalf of brands rather than directly with the the content creators and and the the the podcasts.

15:43 And as you'll have seen, if you've been with us for the last few presentations, we are increasing that revenue share with Sonic. It has previously been 10 to 11%, and we're we're, over time, making that more favorable to to to AUDIOBOOM. So that should give you a good overview of the the three revenue lines within the group, how they're performing, how they're growing, and the revenue shares that that AUDIOBOOM sees from each of those. So, hopefully, that first section has given you a good look at the business, the industry that we're in, why we are able to grow faster than the wider industry, and what we have ahead of us and what opportunity that that we have. The second part will focus more on our financial results in in q one and the operational progress that we have been making in the background since since we all last spoke.

16:36 First slide, I will just walk you through this one to start with, and we'll go into more detail on it in in upcoming slides and with Brad shortly. But the headlines, I think, from our q one twenty twenty three trading update that went up this morning, this $15,400,000 of revenue in q one, and that's down from from the 19.5 in q one of of last year. And, again, we'll get into this as we go, but that is due to the ad market weakness that's currently in play because of the mac macroeconomic downturn that we've seen over the last nine months and against, you know, against a backdrop a year ago of an extremely buoyant advertising market. So real extremes at this point, probably the most buoyant advertising market that I've ever experienced a year ago versus a very tough advertising market today, and that's really been the the impact on that revenue by around 20% is is linked to to that advertising market.

17:41 Adjusted EBITDA profit of 200,000, again, down from from q one of of last year. EBITDA impacted by the the lower revenue because of the ad market, minimum guarantee payments that we have to deliver to our podcast partners despite the lower revenue, and then some inflationary pressures on on OpEx that we're dealing with very, very well, actually. And you'll see in Brad's slides that we are managing our our costs extremely well. But nonetheless, you know, in this in these inflationary times, we do have pressures on on on that OpEx too. So 200,000 adjusted EBITDA profit in that time. And we have $5,100,000 of cash currently, although we have, as you'll have seen on the trading update, collected more than $3,000,000 above that number since since the end of the last month. So that $5,100,000 of of cash is obviously down from the end of last year.

18:44 In q one of each year, we have some sizable advance payments that we make to our podcasters, our top podcasters. Some of those deals that we have there involve an advance against their revenue. Those advances are recoupable, so we expect to make and recoup that advanced payment against the podcast over the lifetime of the contract. So while cash goes out of the door somewhat heavily in q one, we do expect to to recoup that against sales over the the the the contract. As you'll have seen in previous, RNSs, we are proposing a progressive dividend for 2023, payable in 2024 because we feel strongly that we're in a good position around cash. We have enough cash to continue our growth and to to fund our operations, and and we are planning our maiden dividend for 2023.

19:41 And then just to say, still have an additional $1,800,000 available to us in in an overdraft that that is untouched. So a very healthy cash position still, and we'll go into a little more detail now on the the the revenue and and EBITDA numbers from q one. So to analyze that revenue, and I spoke a little a little moment ago about how we believe the ad market has impacted that revenue number by more than than 20%, I just wanna highlight two of our our KPIs that we that we show to you every quarter. The first one being global downloads, the second one being our eCPM, which is the the the value that we extract from those downloads. So I think first note here is that our global downloads number

20:30 of a 125,000,000 downloads per month is very much in line with with q one a year ago at a 126. Now in that time, we lost the morbid podcast from our network, and with it, we lost around 30,000,000 monthly downloads that that show was delivering. We have now replaced fully replaced all of those downloads. So we are back to around a 125,000,000 downloads per month, which I think is a fantastic effort over the the the nine months since that show left us to fully replace such a a a large show. We're back to that that download number of around a 125,000,000. So we have the same number of downloads, but we have lower revenue. And that's because our eCPM, the the value that we extract from each of those downloads is down versus last year. The eCPM for q one was around $41.

21:23 A year ago, that eCPM was around 49 to to to $50. And historically, during the strong ad market, that eCPM was around 50 to to $55. So, obviously, you know, that that eCPM that eCPM is down because pricing is low in the short term. The pricing that we can get from advertisers is is low in the short term, and the demand for advertising slots and advertising spots is low in the short term for from advertisers. So that impacts the eCPM, and the the roll on effect there is is with the the global downloads number of a 125,000,000. We come out around 20% lower than we did a year ago based on the a very similar downloads number. So the ad market is is tough right now.

22:12 It it is weak. Pricing is is lower. Demand is lower. And on like for like consumption, that weak ad market has impacted our revenue by by more than 20% in q one. But we are focused on on improving that revenue, obviously, and we have some some some changes that we are are making within our advertising sales in house teams to to counteract that weak advertising market. So I think the first thing to highlight is the the number of brands and advertisers that we work with currently. We have almost doubled the number of advertisers from a year ago, and and much of that brand count growth has been delivered through Showcase, and Showcase has been responsible for for bringing in new advertisers because of the automation and the ad tech that's in Showcase. It makes it very easy for advertisers to plan their campaigns and execute their campaigns.

23:11 And they can do that with lower budgets and and and lower commitments to podcasting, which is is very important in a in a weak advertiser market. But in q two of of this year, we are focused on the the launch of a new revenue unit within the business. This revenue unit will access brand awareness advertisers. So currently, podcasting and previously, I should say, podcasting has really been built around performance marketing, performance brands. Those are disruptive new, often new direct to consumer brands that that measure ROI directly from podcasting and have have shown strong commitment to to to podcasting. You'll see those brands on the top right there, brands like SimpliSafe, HelloFresh, ZipRecruiter.

24:05 We do a great job with those customers, and we do have a great value for for those those customers. But the new unit will start to access budgets from larger, more established brands. Brand awareness, we call them. So they are not directly they're not directly measuring the performance of their podcast advertising. Their advertising is about building awareness of their brands. So that could be companies like Ford, Nike, Procter and Gamble, Pepsi as as as example. So they have bigger budgets. They're more mature. They're They're more established, and they're impacted less by these downturns in in in the advertising market. That will be incremental revenue. It doesn't cannibalize the current sales inventory that we have. All it does is it adds to the overall demand and overall fill rates for for that m inventory.

24:55 And from launch until the end of the year, that new unit will have a a 5% revenue goal. So we expect them to deliver 5% of our overall revenue for 2023 despite not launching in until later this month. That will increase our eCPM and and and and grow our grow our revenue across the year. Another improvement that we are making to to improve that revenue is with our advertising inventory. So, again, this is about extracting more value from the content that that we do have on the platform. So if you can compare the numbers here, I've shown you previously that the average monthly downloads across the this quarter and and the same quarter a year ago were were similar, and you'll see that here.

25:48 In q one of twenty twenty two. We had a total of 378,000,000

25:51 downloads, very close in in q one of this year at 375,000,000 downloads. But you see the real difference there in the number of available advertising impressions that we have made available from those downloads. So a year ago, it was just under 2,000,000,000 available ad impressions. And this q one, we made over two and a half billion available ad impressions. And so you'll see that the the ratio down there at the bottom, we were just making 5.2 ad slots available per episode, and now we make 6.7 ad slots available per episode. So we are increasing the level of sales inventory from the same number of downloads. We've increased that by more than 25% since q one of of of last year.

26:38 We do that in a variety of ways. We are updating contracts that we have with our creators to make more advertising available. We launched a tool called AdRip around eighteen months ago, and the adoption of that from our creators has led to those higher impression numbers. We continue to work with our creators around advertising best practice and build out the layers of our ad tech and and and automation. So this one will continue. This piece of work will continue will continue to extract more available ad impressions from the content that flows through our platform. And as the advertising market returns, that will enable us to really gear that revenue up and

27:21 as we grow and and show some strong revenue growth across the the rest of the year and beyond. That downloads to inventory ratio of 6.7, we do expect that can to continue to to grow across 2023. To focus on some more operational improvements, and I think one of the, you know, the the key messaging here behind this is although we are not seeing it in our financial numbers in q one, the operational progress is there in in the back rounds as I've just shown on the last two slides. More operational progress to to show off here. And, again, when that ad market does return, what I wanna make sure is that we have done everything that we can with the things that we can control, the operations operations that that that we can control to fully capitalize on on that return in in the advertising market. So another one of those operational changes is the improvement in our advertising revenue shares, Again, through contract renewals, new contracts with our podcast creators, we've increased our network wide advertising revenue share to 24%, up from 21% in in in 2021.

28:38 Those more favorable creative contracts will begin to throw flow through the p and l as the ad market improves. It will improve our gross margin. It will improve our EBITDA as the advertising market recovers. So good progress there on our advertising revenue shares. We talked a little bit about download numbers, but we have record audience reach as well. So in March, we reached a record 38,000,000 unique monthly listeners globally. That is important because although the download numbers are similar to a year ago, We are doing this through a wider group of of monthly listeners. So the the downloads are spread out across 38,000,000 listeners rather than 32, and that helps advertisers execute their campaigns. They they they need to be able to spread those campaigns out against a wider audience reach.

29:31 And, again, that will help us as the advertising market continues to recover. We've further grown our creator network, so we continue to add new podcasts into that creator network that adds audience, that adds advertising inventory. So you'll have seen recent announcements about new multiyear deals with shows like Net Worth and Chill and Stan Report with Britney Broeski. We expect those to be good contributors to our revenue over the the rest of of of the year. And we've done a great job, I think, as well across this year and and last renewing our contracts with some of our key shows. And just recently, we have renewed deals with Tiny Meat Gang, Astonishing Legends, Speak the Truth. Those are all top 20 shows on the AUDIOBOOM network. So we continue to to grow that creative network and the footprint of that and the advertising opportunity that comes with it.

30:27 Formula one partnership just got renewed. I hope that you you've all seen that. That's a fantastic partnership for for for us. We will coproduce the official Formula one podcasts. We will provide them with their technology and the distribution and commercial services as well. So that that Formula One podcast is now in its fourth year. It's great for us. They are a really fantastic partner of ours. And that partnership, I think, just really highlights all of the elements of the AUDIOBOOM platform more more than any other partnership.

30:58 Perhaps, you know, we coproduce that that content with them. We provide them their technology and the distribution. We we sell advertising on their behalf into those podcasts. So really every element of the AUDIOBOOM platform and and business is utilized in that Formula One partnership, and I'm very happy that we have renewed that for the next few years. Also recently renewed is a is a commercial partnership that we have with Australian radio network to monetize our ad inventory in in Australia. That is our fourth largest region for for for consumption after US, UK, and Canada, and comes with a a revenue commitment from ARN so that we are confident of our our revenue in that fourth largest consumption region over the the next two years.

31:46 And then finally, we've touched on it before here, but just to reiterate the the strong growth in Showcase. Revenue from from showcase in q one was 47% greater than a year ago. And and as I've shown you, it contributes around 20% of of the group's revenue. So very fast growing area of the business. We expect that to continue to to grow quickly, the launch of that new revenue unit that I talked about, that brand awareness revenue unit within AUDIOBOOM will flow through into the growth of of of Showcase as well across the the the rest of the year. So Showcase is doing great and a real win for us and a real strong operational part of of the business in Showcase. So that's the the operational improvements. As I said, they will they will begin to flow through the business as the ad market recovers, but I'll throw it to Brad now who's gonna do a deeper look at the at the finance.

32:46 Cool. Thanks, Stuart. Hi, everyone, again. So, yeah, the next few slides, if you've tuned in before to these presentations, it's got a familiar feel to them, but there's some some good data points to to to draw out from from q one. So, yeah, we can see our financial progression over the last six years here as we've positioned ourselves among the the leading companies in in the podcast industry. We can see that compound annual growth of revenue at 59% between 2018 and and 2022. So really good strong top line growth there across the company.

33:17 As as expected, we announced this morning, the q one revenue of 15,400,000. That was in line with our expectations for q one. Obviously, we've got those global macroeconomic pressures, in the ad market currently having an impact. And, also, we didn't have the, morbid podcast in the network either. So morbid accounted for 4,100,000 of revenue in the first quarter of last year. So removing that q one twenty twenty two was also at 15,400,000. The in terms of the EBITDA, you know, the cost control, we'll come come to that in a a lot more detail shortly. But, you know, the the cost control across the company has, again, allowed us to continue to report on adjusted EBITDA profit for the first quarter. We continue to demonstrate to the rest of the podcast and wider tech markets. It's possible to generate profits from this industry if you align your cost base appropriately, and that's something that we absolutely do.

34:13 Again, to repeat, 2022 is our strongest year yet. Revenue increased by 25%, record EBITDA, record cash generation, and we expect 2023 to be a year of growth once again above that of the wider podcast market. In terms of revenue and cost, we can see that that revenue trend over the last couple of years. Again, we've been through the the, you know, the revenue of the first quarter being in line with our in line with our expectations. It's good. You know, Stuart's highlighted the the good growth across showcase, 47 growth year on year, contribution increasing from 11 to to 20% of that very healthy gross margin of of 42%. So it'd be good to see that progress as as as as we go forward.

35:00 Sonic q one revenue was also in line with q one last year at at 3,100,000. The the cost base that we have, I've before, that flexes with we said in the announcement this morning as well, that flexes with business performance. So if you view the OpEx over the last thirteen quarters that we've got detailed on the page here, obviously, there's variances, but that has varied in relation to the performance of the business. The actual average OpEx over those thirteen quarters is is 2,400,000, and it doesn't really move significantly too far away away from that number on a on a quarterly basis. So q one OpEx was 14% lower than in the first quarter last year, so 2,700,000 versus versus 3.1.

35:45 Q point four OpEx was lower again at at 2,100,000. We had some accrual releases that we processed in the fourth quarter of last year, mainly across the staff cost line due to lower incentive remuneration because of the performance of of last year. 60% of the OpEx continues to relate to staff costs and commissions. That actually reduced 20% quarter on quarter, and we achieved that by reducing headcount by, you know, year on year. So we're now at 39 heads. We're actually at 44 at the end of December, so five heads were taken out of the business in in in January. And we also incurred lower sales commissions because of the lower revenue recognized versus a year ago.

36:32 Technology costs, that's the second biggest cost bracket in in the company. That has actually increased year on year by 21%. That's because of those that high those high level of impressions and the higher higher bandwidth that that we're incurring. What we've actually done in terms of the material costs within that cost bracket is renegotiated the contract for the for the impressions and bandwidth. So on a like for like basis, we managed to achieve we we estimate that we would achieve between a 1215% saving. However, the overall cost will increase because, obviously, as we as as Stuart has outlined, we we are increasing, you know, those the, you know, the bandwidth and the advertising impressions across across the business. But the overall like for like cost, we're expecting reductions there.

37:19 And that that that work's being done for you know, in preparation for when when the ad market when the ad market returns. So as I've said before, this isn't a a business that's lumbered with with higher recurring costs or stock doesn't have a high headcount. So when we are in periods of macroeconomic challenges, the the cost base is is well set to weather those. So, yeah, hopefully, that's giving you a good update on the the OpEx within the business, but the cost control is of utmost importance as we as we go forward. In terms of in terms of working capital, I guess, you know, the main point here is that, obviously, the cash reserves have have decreased by $3,000,000 as as Stuart mentioned earlier. Again, we we expected that because of the q one capital requirements.

38:05 Q one always it always has those capital requirements. There's there's contracts that have advanced payments that contractually required to be paid. So we've paid around 1,200,000 of recoupable advances in in the first quarter. We expect to recoup those advances over over the life of the contract, but that does that does impact working capital in that first quarter. First quarter as well, we also pay staff bonuses and q four sales commissions, and we pay podcast revenue shares for that seasonally stronger fourth quarter as well. So there's a few non recurring working capital requirements in the first quarter, but we also do have that 1,500,000 multi currency overdraft, which we expect to renew over the next month or so as well, but that's untouched at the moment.

38:52 We also see, as we saw last year, that towards the end of the first quarter, particularly amongst our biggest customers, there's my sense is there's definitely a case of customers with withholding their cash to preserve their own cash reserves. That's why we gave that context of the 3,600,000 being collected since since quarter end, a third of which came from one of our largest customers. So it's good to get that collected. We've actually collected another 200 k today, so we can say that's 3.8, and that takes us through $20,000,000 collected on a on a year to date basis. For the first quarter, 16,300,000 collected, which is a 106% to the q one revenue books. Three year average on that is is 94%. So that's the that's the that's the level that we're targeting in terms of collections is to, you know, get get us close to the revenue books total in in any given quarter.

39:44 Debtor days, they've increased by 10 since December. So from 68 to 78, we'll we target here trying to get that below 90 as much as possible. Our biggest customers are couple of our biggest customers are advertising agencies. We typically pay on ninety days. So the further we can get that below 90, that's our that's our target. And maybe that's good performance in the fourth sorry, in the first quarter, particularly with that withholding of cash from our from our biggest customers as well. And there continues to be a a very low level of bad debt expense incurred first quarter around naught point 2% of of revenue. So that that remains a a very low number as well. In terms of wider process improvements, we're always continuing to push things forward within AUDIOBOOM. So Sonic is now in a in a very good place, having adopted many of the financial processes that we have in in AUDIOBOOM in terms of collections and payment run processes. That entity is now working very, very efficiently.

40:37 And we've just kicked off the next phase of the NetSuite implementation, which will be utilizing their budgeting and planning tool, which will go live in q three. So that's another area of improvement that we are investing in the business as well. So, yeah, to to wrap up these slides, you know, financial slides before handing back to Stuart, you know, business done, in my view, a good job in terms of controlling the cost, very lean cost base. We've gone through the review of ensuring that, you know, stripping out any unnecessary costs continues to remain a a very lean very lean business. Fully funded for that current growth trajectory. We've announced that progressive dividend policy as well in relation to the current fiscal and those working capital requirements. So sorry. Working capital cycle as well continues to operate as we as we expect with those known pressures that we have in the first quarter of as I've as I've outlined.

41:26 So thanks for listening there. I've got a few questions to go through at the end, so I'll speak to you again shortly. Thanks, Brad. And just a reminder, probably this is the last chance to get some questions in. We have maybe two more slides, I think, before we we get to to questions. Those those last two slides are really on on future focus, and I think we've touched on on many of the points there earlier when it comes to our operational progress. But in in terms of future focus, there's clear areas that that that we're we're thinking about now. This does relate, I think, to some of the these top two here does relate to to some of the questions that have come through around ECPM. I I think, you you know, many of you are recognizing that that lower ECPM has has caused the revenue drop off, and there's questions about how we we get that eCPM back back up.

42:15 Several questions there, so maybe I'll I'll answer that now. But I think these these top two areas of focus are designed to do that. So with ECPM down, we want new customers. We want customers that are less impacted by the current macroeconomic situation, and that's what the development of our new brand awareness revenue unit is. It it's opening us up to to new advertising budgets from those more mature, larger awareness driven advertisers, like I said before, things like Ford and Pepsi and and and Procter and and Gamble. As I said, we launched that this month, and the goal there is to deliver 5% of our revenue this year. So more customers, more budgets, that will increase eCPM as we go through the year.

43:05 And then the the second point here, value extraction, which I broke down for you earlier. The more ad impressions we're able to create from a number of downloads, the more monetization opportunity there there is there. So we'll continue to to to grow that ratio of available ad impressions from from the downloads that we have. We'll further the use of of tools like AdRip amongst our podcasters and and roll out those that tool set to to our creators, which will and and recontract with our with our creators so that we can deliver more value from those downloads through a higher number of advertising impressions. So those top two really are, I think, are answering those questions that have come in on ECPM and how we grow that ECPM.

43:53 Again, I think one of the questions asked if we feel that the ECPM has hit its floor, and and I do I think that that around 40 is the the current floor on that ECPM. So expect that to to to grow across the the rest of the year. Another, you know, area of focus is the continued expansion of our creator network. I think, you know, we are in a place where there's opportunity at this point to increase the the number of of top tier podcast signings. We're in a somewhat less competitive space than we were a year ago, so we can we can offer top creators strong contracts and and and beat out offers from our competitors that are more leveraged and more impacted by the the advertising market downturn than than we are.

44:46 As always, we'll continue to focus on the the growth of showcase. It's been a growth area for us, obviously, but we think there's a long way to to go with with with showcase. So building out new ad tech tools, growing the the number of demand side partners that we have on on Showcase for the for the automated advertising part, and expect continued growth from Showcase over the the rest of the year. And then in in terms of progress for for 2023, we currently have $52,000,000 of advertising bookings in in place. Historically, at the end of q one, we've been 65% booked to the final revenue number. Now I expect that to be a little different this year because of the the the weak advertising market and the lack of confidence that advertisers have had in the early part of the year. So I do expect, you know, that that bookings number to be more weighted to to the second part of the year as confidence returns and sentiment returns in the in the advertising market.

45:53 But nonetheless, I think $52,000,000 on the books today shows that there is still confidence in podcasting from from from from brands, but I do expect that to accelerate, you know, as we get further into the year and and more confidence comes into to the space. So overall, that means that, you know, revenue, as you've seen in q one, will be lower than 2022 during the first half of of the year. That's the, you know, the weak ad market now versus a very, very strong ad market a year ago. And then we will return to growth mode in in the second half of the year. And we continue to expect that full year growth will will happen in 2023. No changes there. We expect full year growth, and we expect that growth to be ahead of the wider industry to increase AUDIOBOOM's market share.

46:45 And as we've highlighted a a couple of times, you know, based on on on that expectation and that performance expectation, we do plan to deliver that maiden dividend in 2024 for for twenty twenty three financial year. So good progress, I think, and we're seeing some some good signs that the the ad market is returning bookings numbers and bookings cadence over the the last few weeks has has been strong, and and and we are doing everything that we can, I think, that everything that we are in control of to improve the the revenue across the year as I've highlighted in those areas of focus on the last couple of slides? So that's the last slide from us.

47:32 I appreciate your your time as we walk through that, and we'll be back to answer some questions in just a second. Stuart, Brad, thank you very much for your presentation. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab, which is situated on the top right hand corner of your screen. But just while the company take a few moments to review those questions submitted today, I'd like to remind you that recording of this presentation along with a copy of the slides and the published q and a can be accessed via your investor dashboard. Stuart Brad, as you can see, we've received a number of questions throughout today's presentation. And if I could just ask you to read out those questions and give responses where it's appropriate to do so, I'll pick up from you both at the end. Thanks, The first question here was actually a pre submitted question. It says, previously, you mentioned that the subscription element of the business has gross margins over 90%, but it wasn't mentioned in the most recent presentation.

48:26 And on the last presentation, you didn't seem that interested in growing this element of the business. Why is that? Yeah. We've always had that subscription element of the of the business. In terms of revenue, the the money that pop small podcasters pay us to use our tool set is is is very small. It's less than half of a percent of our overall revenue. The the kind of the the main reasons here for for not focusing on on growth of that despite the the high margins that come with it are the relatively small addressable market for podcast toolset subscriptions. There are today around 500,000 active podcasts globally. So podcasts are actually producing content and and need that podcast toolset.

49:15 That equates to around $60,000,000 of revenue per year total total globally. And it's a very competitive space. There's at least 30 hosting platforms that are dedicated to providing podcasters with a with a a toolset. So a high number of competitors for that that 60,000,000. And, really, they all have the same product. There's very little to distinguish between those hosting platform products. The only real differentiator there is in pricing, and there are a handful of those 30 hosting platforms that actually offer a toolset for free to podcasters. So, you know, small addressable market, high number of competitors, very little to differentiate amongst those competitors, and many of them offering the service for free. It's not it just doesn't add up to an area that we feel that we we wanna focus on. We feel that the the the growth and what we are are set up to to really deliver is based around podcast advertising.

50:26 Second question actually relates to more to our 2022 full year numbers and annual report that that went out recently, but I think it's definitely one that's worth picking up on here because I know some of the the message boards have been asking questions about this one. And, probably, Brad, one for for you to to pick up on, but it says, last year, you made $4,400,000 of share based payments. Can you explain what this money was used for and whether this level of share based payment will be a continuing theme? Yep. Yes. Like I say, it's a common question since the publication of the annual results last month. So, yes, I I think, firstly, as a public company, AUDIOBOOM, AUDIOBOOM has and and can issue share options to staff to incentivize and retain those working for the company.

51:13 It's it's it's really an important tool for us as we rotate you know, try and retain the talent within the company so that we remain competitive in terms of what we offer to staff as we know that, you know, competitors, you know, may may pay more in terms of base salary. So first point is it's a it's a really important tool to retain talent within the company. Specifically on charge for last year, so, you know, the the reason for the, you know, we should say it's noncash, non EBITDA impacting share based payment charge of of 4,400,000. That was largely because in May of twenty twenty two last year, 442,000 share options were issued to staff, but they had an exercise price of £15.55, which was reflective of the share price. At that point, if you head to page 55 of our annual report on our PLC website, you can see all the detail on share options there.

52:05 But when when calculating an appropriate charge, we need to use the Black Scholes calculator and calculation method. And with that exercise price of $15.55 with a 442,000 options being being issued, that generated a significant charge to be recognized in 2022 because those options vest over a three year period, and you need to recognize a third of that charge within within the first year. In previous years, share based payment charge had been lower because that share price has been has been lower and options have been granted with a lower exercise price, and therefore, a lower charge has been has been calculated. That charge will reduce over time because the two thirds of options that didn't vest in 2022 will vest in 2023 and 2024.

52:53 So that charge is spread out over over a longer period. I think, you know, to guide on on this year's this year's expected charge, last year, 4,400,000. I'd expect the charge this year to be somewhere around 2,800,000, and then lower again in in 2024 in relation to those options issued issued last year. So, yeah, we'd we'd expect that to to reduce over over the next couple of years. Thanks, Brad. We have seven minutes, so we'll move quickly through some of these. You've mentioned losing the morbid podcast in previous presentations, but today, the impact of that is a is a bit more clear. Why were you unable to resign that show when it was clearly so important? Yeah. So MOB is a huge show, top five show in the world. As I already said, 30,000,000 downloads a month.

53:41 It was generating and a big revenue contributor to to AUDIOBOOM. In the first half of last year, the the advertising market was was extremely buoyant, high demand, high pricing, and it meant that bidding for talent and and top podcasters was in was was very highly competitive. It was it was a real bubble. Many of our competitors and if you go back to one of the early slides I showed you today, you know, some of our competitors at the top end of podcasting are Amazon and Spotify and iHeartMedia. They were willing to make huge bids for shows and be potentially loss making immediately off the bat. Just, you know, never mind moving into a weak ad market. If AUDIOBOOM AudioBOOM doesn't have that luxury, you know, we we are smaller. We have to be more aware of of what each of those show signings delivers to us. We we we don't we can't sign shows that are immediately loss making just to look to grow in in in the long term. We have to be a little smarter than that.

54:45 If we had have won that show, if we'd have been high enough to to to renew Morbid, as the ad market turned, it would have been materially loss making for us, and and we'd have been in a very, very tough position at this point. So while it does impact the year on year revenue, not having that that show in the network, we are fundamentally in a stronger place without it. The the revenue and the risk is is spread over and more evenly spread over a much wider group of shows across the the wide network. Any plans to expand within Asia? You know, I don't think we have hard and firm plans on on the Asian market.

55:32 We actually see Latin America and Mainland Europe as as being as having more opportunity in the short term. We currently have more consumption coming out of those regions. Less than point 25% of advertising inventory that we have is coming from from Asia at this point. So in the short term, not an immediate opportunity there. I don't think we do have a a partnership in India with IdeaBrew Studios. They are able to monetize our inventory there through showcase. But, no, no plans to to step there into there immediately. And if we do so, I think we would we would replicate the work that we do with ARN in Australia and Rogers Media in Canada where we partner with, you know, a large commercial organization that are already on the ground there to to monetize our our content and our ad inventory that way without us having to invest or put boots on the ground there.

56:37 Maybe one for you again here, Brad. In light of delayed reporting of t r t r ones from certain investors, can can investors feel confident that the current shareholder register is now accurate? Yeah. Lots of lots of comments on on this and surrounding issues. So, yeah, I can confirm the company has published all tier ones as received from shareholders, you know, that those major shareholders are disclosed on our, again, our AUDIOBOOM PLC website. I think just, you know, just to add a bit more context and information on the process for people that aren't aware, shareholders that hold more than 3% of shares in a in a public company required to disclose their position via what's called a t r one notification, and that is sent to the company by the shareholder. The company then publishes that on its r and s feed. You know, we we display holders of more than 3% of shares on our major shareholders page of the AUDIOBOOM PLC website.

57:28 When a shareholder goes through a percentage point, so from three to four or from four to five, whatever it might be, a tier one notification is required. But, ultimately, it's the shareholder's responsibility to ensure that tier one is filed with the company. What we do is is run a regular analysis of that shareholder register, and should there ever be a circumstance where there is a difference noted between t r one and the shares that are detailed on that register analysis, you know, I I contact the shareholder to confirm their position. The data on the register can't register analysis can't always be relied upon because the holdings may be held over a number of accounts. However, we, you know, rest assured we do monitor that very, very closely and, you know, follow-up with shareholders if there are any discrepancies noted. But that's a that's that's that's an exception rather than rather than norm.

58:18 But that's obviously something we do monitor very, very closely, but it's ultimately the shareholders' responsibility to file those tier one notifications with the company. Thanks, Brad. We are coming to the end of the the the time slot. We'll try and answer some some more questions after this on the on the investor meetings platform. I think we covered off the major areas with with with some of those questions, Yes, Stuart, Brad. Thank you very much for that. I think, as you say, you've addressed those questions you can from investors. And, of course, the company will review all those questions submitted today, and we'll publish those response on the investor meet company platform. But just before redirecting investors to provide you with their feedback, which is particularly important to you both and the company, Stuart, could I just ask you for a few closing comments? Yeah. I think that the key focus for this business is to control is to is to focus on on the elements that we can control, right, which is building the operations, improving the number of downloads, improving the number of customers, improving the the level of ad inventory that that that we have so that we are just primed to to take full advantage of the return in the advertising market. And as you'll see in in in in this presentation today and and in the trading update, we are making great progress operationally, and it's just frustrating, I think, that it's not being reflected in the the revenue and the EBITDA numbers. And the reason it's not being reflected there is because of the weakness in in the advertising market. I've said that it's impacting us by more than 20% at at this stage.

59:51 And right now, we are comparing a very weak ad market to an extremely buoyant ad market a year ago. It was in an incredibly strong place a year ago. As we move into the second half of this year, we will see an improvement in the current ad market, and we will be comparing against a year ago as the ad market dropped off. So so when you look at that, we're doing all the right things. We're seeing a recovery in the ad market. We will have h two growth. We will return to growth mode in the second half of of the year as we do this. And overall, again, we continue to expect that this this full year for AUDIOBOOM will be a year of growth. It'll be a year of growth that is ahead of the wider industry, and we will gain more market share and kind of continue that mission, I think, to be the biggest pure play podcasting company in the world.

1:00:44 Stuart, Brad, thanks once again for updating investors today. Could I please ask investors not to close this session as you'll now be automatically redirected 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 it'll be greatly valued by the company. On behalf of the management team of audio AUDIOBOOM GROUP PLC, we'd like to thank you for attending today's presentation. Good afternoon to you all.