Audioboom Group (LSE:BOOM) — Q3 2023 Trading Update

0:01 Good afternoon, ladies and gentlemen, and welcome to the AUDIOBOOM GROUP PLC investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged. They can be submitted at any time via the q and a tab that's 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 questions submitted today and publish responses where it's appropriate to do so, and these will be available via your investor meet company dashboard. Before we begin, I would like to submit the following poll. And I would now like to hand you over to the executive management team from AUDIOBOOM GROUP PLC, Stuart. Brad, good afternoon. Thanks, Jake. Welcome everyone to our q three update positive update today in terms of the the future of this this this business. AUDIOBOOM is in a a strong place moving forward, and we're pleased to present the business to you today. We will do this in a slightly different order to what many of you may be used to seeing.

1:03 First of all, we'll dive right in. We'll take a look at the financial performance, the operational performance so far in 2023, and how we're building for the future and how we expect Q4 of this year to be in a very positive place. And of course, as you'll have seen in today's trading update, we really focus on that record revenue in 2024. After that, we will step back a little bit. We'll recap the business model, talk about the company and the industry and the space that we're operating in for those of you that might be new to AUDIOBOOM and the podcast space. And then after that, we'll take a look at the future focus areas that we're focused on building this business around and what we're expecting through 2024 and beyond. And then at the end we will do that Q and A.

1:50 So get any questions in that you have now. We have a few questions that were submitted ahead of time on the investor meets platform. We'll answer those and plenty of time hopefully at the end to answer a few more that you submit today. So we'll get into things in just a second, but as way of introduction for, again, any of you that are new to AUDIOBOOM, a quick intro for myself and Brad. I'm Stuart Lust. I'm the CEO of AUDIOBOOM. I have been CEO for for the past four years and have have managed the company through a very strong period of of of growth and success. I've been an AUDIOBOOM though for for ten years leading out the The US growth of the business since 2014 and 2015. And previously at the BBC, driving their digital audio and radio business when I was based back in London before coming here to New York. But very excited about the future. I'm very positive about where this business is going, I'm very pleased to be, leading the company forward.

2:52 Thanks, Joe. Hi, everyone. I'm Brad Clark, CFO here at AUDIOBOOM. I have been here since March 2018. So coming up for six years, chartered accountant with over fifteen years of experience of financial roles at, media organisations prior to AUDIOBOOM, at NEWS UK and another AIM Quota Company called Brave Bison. I'll be back a little bit later on to take you through some updates on revenue, OpEx, working capital and cash that I will speak to you shortly. Thank you, Brad. All right. So let's jump into the performance and operational update. As I said, we'll get to that, the look at the model a little bit later. Many of you, I think will have seen these numbers from today's trading update that looked at Q3 and our year to date performance. So I'll walk you through those and then we'll go a little deeper on some of the key points here.

3:40 So year to date through to the end of September, AUDIOBOOM delivered $45,800,000 of revenue. As you'll see here, that's down on our position at this point last year, but up significantly on the previous year That that that that back in the year to date revenue is due to two key factors, two key factors that we've talked about a lot in these presentations over over the past year. The first one is that advertising market weakness. So in in early twenty twenty two, we saw a deterioration of the ad market and that ad market weakness has continued through 2023. And we think that the ad market weakness has impacted our revenue by around 20% this year so far.

4:26 The second key point in in that drop in revenue is the loss of the morbid podcast from the AUDIOBOOM network. That's a very large, very successful podcast that we worked with for a number of years, And that that podcast contributed revenue last year until it left the network midway through the year. And and that has obviously led to a drop in revenues. Also morbid is a top five podcast in the world, so a massive podcast with a huge audience and strong revenue attached to it while we were working with that show. So those are the two kind of key factor in that revenue drop, and we'll talk about the improvements that we're making to deliver maximum revenue going forward in just a moment. In terms of profitability, our adjusted EBITDA number year to date through the end of September is a loss of $1,700,000 So we've moved into a loss making territory off the back of that ad market impact on revenue. So EBITDA is being impacted by two key factor here. Firstly, the ad market impact lower revenue allows us to push through less to that EBIT dollar line.

5:37 And that's been key in this first nine months. But the second the second point here as well is impacting negatively and that is partner minimum guarantee payments. As you know, to sign the top tier podcasts in the world, we create a partnership package for them. Some of those involve a minimum guarantee. We have to pay that partner, that creator a minimum amount. And when revenue is low, and revenue is impacted by this weak ad market, we have to still pay that creator that minimum guarantee. And we have continued to do that. Unlike several of our competitors in the space who have been unable to continue to pay their talent, we have continued to invest and pay our minimum guarantee obligations. And that has a direct impact on that EBITDA line. And again, we'll go into that in a little more detail, and I'll show you how we move away from that minimum guarantee exposure over the next few months.

6:35 One key point here, and Brad will go deeper on this one on an upcoming slide, but I think it's just worth saying that we have really great cost controls within this business. We are continuing to be a very lean company. And our year to date operational expenditure of $7,900,000 is down 10% on the previous year. So we have a really good handle on that despite all the inflationary pressures that are around right now. We continue to operate in a very lean, very controlled manner there too. Last kind of key number here is the $3,000,000 cash number at the end of September. We have since collected more than $2,000,000 since since that. So we continue to to collect well. We utilized a million dollars of cash in q three for advanced payments to our our top tier podcast as a contracted advanced payments, and those are then recoupable against their revenue over the course of their contract. So we've seen some cash burn there, a significant amount of that due to those upfront cash payments to podcasters, which is then recoupable. And just as a reminder, we do have access to another 1,800,000 of of cash through an overdraft facility that we've had for the past few years and has continued to to be untouched to this to to this point. So those are the numbers.

7:55 I think, you know, we have we've had a challenging year at the company because of that ad market weakness and those minimum guarantee obligations that we're contracted to. But I think today is really about drawing a line in that and focusing on the future of this business, which is in a strong place because of the operational improvements that I'm going to walk you through in just a moment. To go a little deeper on that revenue, this slide, I I think, helps helps you you get a view on that. We have our three advertising products, our premium ad product, which is where the the host of the podcast delivers the advertising in their voice, and they endorse the products. It's a a very premium product. We have Showcase, which is our ad tech delivered advertising business, very efficient, very scalable, and is now delivering huge volume. And then we have our Sonic business, which is our creative agency business that works directly with brands around their advertising. So here you can see that the progress of those revenue lines.

8:57 Our premium business now makes up much less of our overall revenue, 58% year to date in 2023, down from 71% last year. Showcase is the fastest growing part of our business. We'll talk about that a lot more as we go through this presentation, but Showcase has grown 30% year on year and is a really strong part of our business, and we expect Showcase to continue to grow strongly going forward. And then Sonic now makes up 19% of our revenue, albeit with that smaller revenue share between Sonic and its brands. Just to go a little deeper on on that revenue share, you you can see the revenue shares here, premium at 22%, showcase at 41, and Sonic at 15%. Combined and and and across the business, that gives us a a group revenue share of of 24%, and that's a vast improvement over last year at 20%. Now that's the kind of contracted on paper revenue share at 24%.

9:57 We will talk about how we've improved that a little later in the presentation. But I think key point here, to go back to the previous slide and the numbers on there, is that that 24% revenue share that is impacted by those minimum guarantee obligations. So we continue to have to pay those those partners even if we are not delivering on the high enough revenue to take care of those minimum guarantee obligations. We still have to pay those. And that reduces that revenue share down effectively creating a gross margin of around 14% for this year. So that's the the key impact on on gross margin. And then EBITDA is those minimum guarantee obligations that that that we continue to pay. I just wanted to talk to you really, you know, about the state of the advertising market and the state of the state of the business. So some, you know, not an exciting slide, this one, but some key points on here just to walk you through. I think that the first one is that the ad market does remain challenging.

10:56 We have very weak demand in early summer, unexpected weak demand in early summer. We were seeing some pickup in the advertising space as we got through the spring, but certainly weak demand with July as being a low point for revenue. Now we have since seen month on month revenue growth since July. So August was higher revenue than July, September higher than August, and October already ahead of September. So we're seeing good sequential revenue growth. July does appear to be very much the low point for revenue, and we are taking things forward from there. The operational improvements I've talked to you about in just a moment will result in in strong q four performance. And as I said, October is already trending ahead of of previous months for for revenue.

11:45 In q four, we will get back to year over year revenue growth as well. So currently, we have $18,000,000 of revenue booked for q four. We've talked in our trading update today about going beyond 19,000,000. That will be back to year to year growth. Obviously, that will be a sequential quarterly growth as well. And I think the key point here is that will be the strongest revenue quarter since the ad market downturn. So the strongest revenue quarter in q four since early twenty twenty two. And that will be, you know, I think for me, a clear sign that the operational improvements that we have put in place are starting to kind of pay dividends and starting to get this business back in the right direction. Q4 and next year 2024, we were very clear that we will get back to an adjusted EBITDA profit position. That's due to those revenue increases that I've talked about and also due to lower minimum guarantee impact that we'll focus on shortly.

12:45 One item here, I think that, you know, I don't have too much detail on at this point, but we're we're starting the process right now is the 2024 upfronts, advertising upfronts. This is where we work with the key advertising agencies to to commit spend for for next year. We're just starting that process now, but but those advertising agencies are are confident about the state of the advertising market. They are confident that the brands that they represent and and and run advertising campaigns for will have budget growth in 2024. So we like the look of the ad market. We think there's going to be improvement there in 2024. And I think just to reiterate here is that again, we've maintained that guidance for 2024 a record revenue level. So we expect to get back to record revenue next year. $78,800,000 is the number that we're focused on and adjusted EBITDA profit of of $1,300,000.

13:41 So to sum that up, weak advertising market through to to to summer, strong revenue growth then as our improvements come into play, and this is setting us up for a good q four and a a record year in 2024. So you've heard me mention it a bunch of times already, but those operational improvements, what are they? How will they affect how will they affect the business? I will talk through those in the in the next few slides because I think they are very much, you know, very key to to drawing that line that I mentioned of of a challenging kind of past and a and a very positive and and bright future for for this company. The first of those improvements is is our network growth, how quickly and how strongly we are building our content network AUDIOBOOM because, you know, the the bigger and stronger we build that content network, the more advertising inventory that we have to we have available to sell.

14:37 And even in an ad market that that isn't strong, it allows us to take market share, and it allows us to to capture more of the advertising revenue that that is available. So you'll see here, we announced in the training update record monthly downloads just under a 127,000,000 downloads a month, and we expect continued growth into Q4 and to get that number around 130,000,000 downloads per month. So you'll see that the chart there, we've had strong growth over the past four years as we bring in new shows into that network and build the size of our network. We now reach more than 36,000,000 unique listeners every single month. So we have some real scale going through that network. And that's proven here on the right hand side, you'll see two rankers. That's the Edison Research Ranker, which which ranks the the the reach, the audience levels of of podcast publishers in The US. And on the far right hand side here, you can see the Triton Digital Podcast Ranker, and that one is measuring volume effectively. How many downloads each of those podcast networks is is producing every single month. And AUDIOBOOM has cemented its position as the fifth largest podcast publisher in The US behind the likes of Spotify and iHeartMedia, Wandering, Amazon giants of the audio space. So we continue to be very proud of that work and continue to be focused on moving higher up that rank as we build out that network.

16:04 I think it's also just worth saying that we ranked fourth in Australia, fourth in Canada, second in New Zealand. There's no UK ranker, but if we did, we'd be in second or third place in The UK as well. So we have strong global scale, but really in that key US market, we continue to build the size of our network and to be that large publisher with good influence in The US and connected to that network growth. I think one real key point here is how that growth of that network is leading for to us to have more inventory to to sell on a monthly basis. In October, we we hit a big milestone. This is a a huge number for the podcast space. In October, we are making available more than 1,000,000,000 monthly monthly ad impressions across the across the network. So, again, talking about huge scale and strong growth, we now are creating a billion ad impressions to sell versus 675,000,000 a year ago. So you can see the growth. You can see the growth in the size of the network, and then you can see the growth in the number of ad impressions that we are generating.

17:09 We are have been very focused over this last year of of extracting more advertising inventory from each download that we have. We now extract seven available ad impressions from every single download. A year ago, that number was five. So we are creating more to sell from the same number of downloads, but we're also lifting the number of downloads in the background too, and and that has got us to that 1,000,000,000 number. And we're doing that through signing new podcasts. These are just examples of some of the top tier shows that we've signed to the network just in in q three. These are all strong kind of top 200 podcasts in The US and and globally. We expect these shows to contribute more than 8,000,000 monthly downloads to the net to the network in in 2024, and we have a strong business pipeline, in in place as well. So we have, we've agreed terms, with a handful of other podcasts. We're just in the contracting phase on on those. And the new shows that we have agreed terms on and we'll sign in q four will also deliver significant growth to that network in in 2024.

18:20 So we're building the network. As I'll show you in a later slide, we're doing that on more favorable terms to to audio BOOM, more equitable terms to AUDIOBOOM. And really what these two slides are about showing you is that, you know, in the face of a weak advertising market, the improvements that we're making to the business will allow us to have more advertising inventory to sell and therefore more revenue opportunity as we move forward. The second of those operational improvements is about how we then sell all of that new advertising inventory. We recognised pretty early on in this week advertising market that that we needed to create more supply, and then we need to do a better job of of selling against that supply as well. So what you'll see here on the left hand side is the work we've done to increase our brand count. These are the number of advertisers that spend money with AUDIOBOOM on a monthly basis.

19:15 The total brand count has increased by 40% over the the the last year. And what that is showing is that brands continue to understand that podcasting is a good place for them to be, a good place for them to spend their money. But in this weak advertising market, they are spending less money. They have smaller budgets. They're committing lower budgets to the space, but they do want access to podcasting. So that's a great platform to build off. And our showcase marketplace has been a big part of building that platform of brands that we work with. Showcase is our advertising marketplace. It's a product that we launched around three years ago, and it's been a fast moving part of the business, now contributes more than 20% of our revenue every single month. And effectively, what Showcase does is is through our advertising technology stack that we have in the business, it connects buyers and and sellers effectively of of advertising inventory at massive scale, fully automated.

20:23 So on the supply side at showcase, we are putting around 675,000,000 available ad impressions into showcase from all of our podcasts, from our 8,000 podcasts and 130,000,000 downloads. We push all of that into the marketplace. And then we are bringing in demand monetization opportunity. So that's a programmatic ecosystem that that we've we've we've for automated ad buying. We have international sales partners in Australia and Canada and New Zealand and India and other key territories for us. They can come into Showcase and they can buy against our inventory in Showcase. Then obviously our internal teams can also sell in into Showcase as well, can bring monetization into Showcase. And that's led to 30% year over year revenue growth for this part of the the business. So we think Showcase is a a key area of of focus for us. A it's a key part of our business going forward, and it will lead to us optimizing, you know, how we monetize that that increased supply of advertising inventory that that we have.

21:30 On that demand side, one's key for me, just how we continue to bolster the monetization in showcase in Q3. We entered into a handful of new partnerships. DAX US is a big US audio brand. Amazon ads in The UK, BOOM Collective, you'll see them at the bottom there. These are all partnerships on the demand side. So those companies come in, they access our inventory that's in showcase and they bring brands in to buy against that inventory leading to higher fill rates and higher demand on Showcase and increase the revenue coming in through that source. So showcase is in a good place. That's one key factor in improving how we monetize that advertising inventory.

22:21 The second key factor is really expanding our customer base. And this is something many of you will have heard me talking about over the last six months. While Showcase is growing, you can see this on the left hand side, Showcase is growing in terms of the number of brands that advertise through Showcase. Our premium products, those host endorsements, those high priced advertising units where the host of the podcast is delivering the advertising message. The number of brands that are spending in that area has lowered since the ad market downturn. And the key reason for that is that the majority of those brands that that we're utilizing the host endorsement and paying the premium prices to do so, those are what we call performance brands. Those are brands that directly measure the ROI of each ad and they build their businesses via the sales that they get from the advertising. So brands you can see here, like SimpliSafe, BetterHelp, HelloFresh, they disrupt the brands, direct to consumer brands, they advertising podcasting.

23:19 They liked the host of the podcast delivering their messages. The audience trusts that host, the audience goes out and spends money on those products and they can track the ROI. Now they've been hit harder by the macroeconomic conditions and they have pulled back on the spending. So it became very kind of clear, I think early to me that we needed to widen that customer base. We needed to start to attract blue chip advertisers, those advertisers that are not advertising simply for immediate ROI. They are playing a longer game. They are building awareness of their brands. They are ensuring that when our customer wants to buy a new car, they first think of Ford Motorcars, for example, or when they need to buy new sportswear, they are first thinking of of of Nike. So we want to attract those awareness brands. We're doing the work to get into the major agencies that work with those awareness brands to build partnerships there.

24:14 Earlier on this year, we launched the unit at AUDIOBOOM that will will do this piece of work. And we're making some some good traction at this point. We're a few months in right now, and we are already now working with six of the top 15 agencies in The US for digital advertising spend. So you'll see some examples there at the bottom, but these are major advertising agencies. They work with blue chip companies. This is about widening that customer base and doing work through these major agencies. And it's a slow process and there's some good initial traction there and we will continue to kind of build this. And I think 2024, we'll see some significant spend out of these agencies for 2023.

25:04 Do certainly have money coming in from all of these sources and we've made those initial contacts and we've made those initial kind of test campaigns are coming through. I'm pretty pleased with how that's gone in the first six months of this year, I think widening that customer base and really making relationships and building the right relationships at those key advertising agencies is a sign of maturation of this business and also just a good first step in taking this into a new stronger and bigger place for AUDIOBOOM. So just to recap, I've talked about the improvements that we've made to build our network and to build supply of of advertising inventory.

25:57 I've also talked about how we then optimize the monetization of of of that supply. And then I think the third point is how we improve our work with talent so that this business becomes more profitable. And there's two kind of key points here that I want to make. The first one is around those contracted revenue shares. So how much AUDIOBOOM retains from every dollar of advertising spend. In, you know, 2019, 2020, 2021, there was a lot of pressure on that revenue share. Talent agents, Hollywood talent agents like WME, UTA, CAA, they were beginning to represent the top tier of podcast talent out there, and they were using their leverage to strike stronger deals for the talent that put pressure on the revenue share. And as you'll see here on the chart on the left hand side, our revenue share across the business dropped to 21, 2020% in in in that time.

26:54 In a healthy ad market, of of course, when we're meeting all of our minimum revenue minimum revenue guarantee obligations, that revenue share is a proxy for for gross margin in in in this business. There was that pressure on the revenue share that I've talked about, but now we are beginning to make very clear improvements in that revenue share when we are when we are making new signings to the network, when we're renewing with existing partners. And I think the other key part is that we are now also being able to improve our revenue shares by offering deeper relationships with the talent. So we are now offering them services like distribution, fur further production services, marketing services, all things that are unique to the AUDIOBOOM platform, we are now able to offer as part of that package to the podcaster.

27:46 And as part of that, we are able to negotiate a stronger revenue share. In 2023, that contracted revenue share is up to 24%. So you can see the work that we're doing already, you know, making an impact. And in 2024, that that contracted revenue share will will be 25% or above. So I think the quality of the creator deals that we're making is already improving, as you'll see here. And as revenue improves, that will have a strong impact on both the gross margin and also our bottom line. The second part of these improved creator deals is our exposure to minimum guarantees. As I said, we have a number of podcast partnerships with the real top tier of of podcasters that have a minimum revenue guarantee.

28:36 If revenue is low and we are not hitting those numbers, we still have to have to pay that minimum guarantee, and that hurts gross margin. That hurts EBITDA performance clearly. We have just, you know, in that that very buoyant podcast space, again, in 2020, 2021 and '2, there was a lot of pressure to create strong minimum guarantees to sign podcast to to the network. And there's since the the advertising market has has weakened, we've obviously been exposed to those minimum guarantees since then. But over the next few months, those minimum guarantees in those contracts that were signed at the height of the the bubble will drop away.

29:24 They will be renewed on more favorable terms to AUDIOBOOM, or they will will churn completely outside of out of of the business. So in the next few months, at the end of this at the end of this quarter, we see a significant drop in our exposure to minimum guarantees across 2024. Our exposure to those minimum guarantees will drop by around 75%. So that impact that we've had this year on EBITDA would that will drop by 70% 75%, I should say, over the next year. And then by January 2025, that minimum guarantee exposure will drop by 90%. Almost all of the pressure that we've had on our EBITDA number because of those minimum guarantee true ups will fall away by the end of twenty twenty four as we renew these contracts on more favorable terms.

30:15 So those three items combined, the increased advertising inventory and the strong scaling of the advertising inventory, the creation of better and stronger advertising products to optimise the revenue attached to the advertising inventory. And then the higher quality creator deals that we are making, that's standing us in great stead to go into a more positive place in Q4 to get back to year on year growth in Q4 in terms of revenue and then to achieve record revenue in 2024 and get back to EBITDA positivity. And we'll break there and Brad will pick up now to give you a more in-depth view on the financials in the business.

31:03 Great. Thank you, Stuart. So we've got couple of slides here which looks at revenue and cost and then we'll go on to our working capital and the cash update for the quarter. So firstly on revenue we can see here that a challenging Q3 quarter at £14,000,000 that is the lowest revenue quarter since the second quarter of twenty twenty one, however our expectation is that we bounce back in Q4 of this year with a revenue quarter which will be the highest since the second quarter of twenty twenty two at the start of the downturn, and the $19,000,000 that would be 36% up on Q3 this year and 3% up on Q4 last year, so importantly a return to growth. As Stuart said, 18,000,000 is booked, pounds 1,000,000 to go before the end of the year to get through $19,000,000 Our markets continue to be challenging, but to reinforce what Stuart says, operational work we have done and continue to do will allow us to recognise that increase in performance and that should be viewed as a positive when viewing this company is that we're able to drive a significant increase in performance despite those softer macro conditions.

32:11 Showcase has performed really strongly this year, has done for the last eighteen months or so, Q3 ending 30% up year on year, a more challenging quarter for Sonic at £2,300,000 however 50% of that revenue was in September and it continues to grow into Q4 where it will record a record quarter because of material amount of spend in relation to the NFL season, the fantasy sports games around it. As I've said continually through these investor presentations, our OpEx base continues to be very well controlled at £2,400,000 in Q3 that was our lowest lowest OpEx quarter of the year despite those wider inflationary pressures and we've done very well in the current climate to lower our OpEx costs by 10% reducing it from £8,800,000 for the first three quarters of last year to 7,900,000 for the first three quarters of this year.

33:11 Headcount that stands at 38 and that's at the lowest level since October 2021. Total year to date salaries and commissions of 4,500,000 that's £1,200,000 or 21% lower than the prior year and of that £1,200,000 £700,000 is due to lower salary costs and £500,000 is due to lower commission due to the lower revenue recognized this year. Technology costs including costs incurred for bandwidth and ad impressions, which is a material cost for us within that cost bracket, that's 25% up on the prior year at 2,200,000 year to date due to the higher volume of ad impressions and bandwidth this year, but the cost incurred is 9% lower than it would have been through contract negotiations earlier on this year to lower the rates per gigabyte incurred.

34:01 With that headcount of 38, we remain an extremely lean business, primed for further growth and we'll be able to recognise that growth in the final quarter this year and into next, following the improvements made this year to, very wide impressions, increase the number and quality of content partners we work with, reducing that minimum guarantee exposure which Stuart outlined just now that's very important. Further optimisation of these things will enable recognition of further growth next year. As and when there are further macro ad market improvements that's obviously extremely difficult to forecast when the macro ad conditions will improve we'll see that as an upside to our expectations and forecasts for the future. But when that does happen, you know, this company will continue to go from strength to strength because of that increased gearing effect on our top and bottom line because the OpEx base that we have is as optimised as it possibly could be.

34:56 In terms of working capital, the headline for the working capital is that cash has decreased by £2,300,000 in the quarter to £3,000,000 so let's go through the reasons as to why that happened. Firstly, as we have done historically over quarter end, customers we did withhold cash over the quarter end to preserve their own cash reserves. At least $500,000 should have been received in September and was indicated as such from a major customer, that was withheld over the quarter end and was paid in the first week of October. So we have collected that but just delayed on the receipt. Secondly, contracted to pay million dollars in upfront recoupable advances in August, which Stuart mentioned earlier. That's obviously had a direct impact on the cash held in the quarter. In addition, we made full payment of all creator minimum guarantees, including the onerous contract that was detailed in the half year report.

35:44 Thirdly, July and August were softer revenue months and that's impacted the cash held through softer collections in August and September. Many customers pay under thirty days now, especially in our subsidiary Sonix's relatively short turnaround in terms of the impact on cash. September collections of £3,500,000 were lower than the year to date average of 5,300,000 On a year to date basis we've collected £47,400,000 which is 104% to revenue booked, versus our three year average of 94%. So simplistically outside of that delayed customer payment we're approximately where we should be on collections and subsequently cash held. Year to date bad debt write offs and provisions in the P and L total approximately $60,000 which is 50% of our half year total due to good work on collecting previously provided for invoices so that balance remains immaterial as it has done historically as well.

36:41 For cash we are simply seeing the impact of lower revenue in the quarter plus the impact of servicing minimum guarantee true ups this year. We've since collected another £2,300,000 from our customers in October having collected another $300,000 today so that's an improvement on the £2,000,000 we went out with at 7AM this morning. Due to the impressive, you know, the death days in the company continues to be very impressive sixty seven days, as I say many customers paying within thirty days, so we'll start to see the impact of the return to revenue growth through cash collections from this point onwards as we go through Q4. So as we've said sequentially revenues increased from August to September and then into October collections for many customers being thirty days or less we're going to start to see that cash coming through within this very shortly.

37:30 We still have our recently renewed overdraft which Stuart mentioned earlier as and when we need it. What we need to happen now is our minimum guarantee exposure to reduce which Stuart spoke to earlier. It will start to happen from January 2024 onwards. We need the revenue projections to be met for that revenue growth to flow through the cash collected and we need our collections process to remain on point as we go forward into next year. I'm confident in that process working because it's very efficient and has done for the last few years. Hopefully that's given you a good update of revenue, opex, cash in terms of where stand at the moment. And I'll be back for the Q and A at the end of today's session. Back to you Stuart. Thank you, Brad. Hopefully that has given you some good insight into both performance year to date in 2023 and also really where we are focusing our operational focus on to to to move back into a positive place at the end of this year and and into next year. But if you need any more detail on anything we've spoken about in the last few slides, put a question in now. There's still time to get questions in, and we'll answer some of those towards the end of this.

38:43 The next section, the next few slides are really about our business model, and this is probably for anyone that's new to the business. Doesn't doesn't fully know AUDIOBOOM in the space that we operate. And so I'll walk you through that one, and then we'll get back to to looking at 2024 and and beyond audio boom. So I think this is, you know, key one despite that ad market downturn. The podcast industry is growing fast and is expected to continue to to grow pretty quickly. Revenue through podcasting and as advertising as well as other forms of monetization is expected to quadruple over the next seven years, moving from a $4,000,000,000 global revenue business industry, I should say, to $16,000,000,000 in in in 2030. So strong growth is is projected for the podcast space that we operate in. We are a leading independent podcast company. We're a pure play podcast platform, and we're well positioned to to maximize, you know, our capture of of that value over the the next seven years.

39:49 Our model is is kind of very simple. We have a technology platform that sits at the heart of audience, advertisers, and creators and connects all three of those. So without AUDIOBOOM sitting in in the middle of of that dynamic, there really is no value to to to capture. AUDIOBOOM connects creators and content with advertisers and distributes to to to audience. And you need all three elements to come together to have that value. And we do this at scale and we do this in a very strong and significant way and very successful way over the past five or six years. And over that time, have delivered very strong growth through that model. We've delivered average 65% revenue growth every single year since 2017.

40:45 And that model does work. And as you've seen here, we are now enhancing and improving that model to take into account the weakened advertising market. So we continue to focus on making that model work in podcasting, and we feel we have a very significant part to play in podcasting going forward. So three very kind of simple slides, I think, there on the AUDIOBOOM model. We're part of a fast growing industry that's gonna quadruple over the coming seven years. We play an important part in bringing creators, advertisers, audience together at scale through the platform, And the model works and has worked and will continue to work in the future as we amend and refine that in the face of a weaker advertising market.

41:31 So just a handful of more slides before we get onto the q and a section. And and these slides are really looking at where our focus is to to build for the future. I've touched on many of these points as as we've gone through the presentation, but I wanna reiterate them because I really do believe that today is, you know, that there's a line being drawn here, but between a kind of a challenging period for the business because of the macro and a very positive future for the business because of those improvements that that we've been making here at AUDIOBOOM. So, you know, first focus for us is to continue to grow that AUDIOBOOM creator network. We know that the signings that we made in q three will add more than 8,000,000 monthly downloads to the network in in 2024, But it's the Q4 signings that we'll add on top of that as well. So we have terms agreed with some top tier podcasts that hopefully we'll be able to announce in the coming weeks that will add a further 5,000,000 monthly downloads to the network in 2024.

42:31 So we're creating really good scale within that network. We have the strongest ever new business pipeline. We are continuing to work every day with key talent agents at CAA, WME and UTA. They bring us great opportunities to partner with their talent, with their creators. We're doing that on more favorable terms to AUDIOBOOM. That's helping us to build the size and the scale of our creator network as we go forward. And then point two here is really is the extraction of that inventory from the downloads that we have, and that will continue to scale very fast. I think this milestone of 1,000,000,000 advertising impressions in October is a real significant point for us. It's starting to get some real scale through the network.

43:21 We are extracting more impressions per download than we ever have been. That's, you know, the real operational leverage that we have within this business to create more supply from each download. And next year and in Q4, in fact, and then again next year, we do expect to see both record audience reach and also record download and inventory levels running through the platform. So size of the the network will increase. The amount of inventory that we have to sell will increase because of that that work we are doing. Showcase, we've talked about the success of showcase and Brad touched on it too, that 30% year on year growth. We expect showcase to grow above 20% again next year. We keep adding those demand side partnerships and we keep adding more inventory and the more advertising supply into showcase.

44:13 And we believe that showcase will be an important part of the business growing more than 20% in 2024. So not only are we creating more inventory, we are monetizing that inventory more effectively going forward. We've talked about the expansion of that customer base. That is clearly a key part of of our focus right now. We launched a a new team earlier in the year to focus on building partnerships and relationships with those blue chip customers, the ones I high you know, some of the ones I highlighted earlier, like Ford Motorcars, Nike, Procter and Gamble, these big advertisers who are less impacted by macroeconomic conditions. That work is ongoing. I'm really pleased just last week that Danny Farman joined AUDIOBOOM to lead our brand sales as a vice president here in in The US.

45:04 He's previously of SiriusXM, a huge radio and audio business in in The US. And Danny will come in and lead some of those those brand partnerships that that that we have, and he will really drive that ad agency business going forward. As I highlighted earlier, we were already just in the short space of time since launching this this part of AUDIOBOOM. We're already working with six of the top 15 digital advertising agencies The US. The work that Danny and the team will do there will develop that further and get us into more of those large advertising agencies and build campaigns through those relationships even faster in 2024. Revenue share improvements is a key one. We talked about it a little earlier and how we'd improve that revenue share that we have from around 20% last year to 24 this year through more favorable contracts, being able to provide more services like distribution and marketing and production so that we can hold onto a higher share of that advertising revenue in those talent contracts.

46:15 We'll continue to do that and we will see further improvement in that revenue share in 2024, getting that to 25% and above. The quality of our partnerships will will improve significantly. And then finally, as as I mentioned before, through those renewals, through those re signings, and through new signings of of podcasts, we will reduce our exposure to those minimum guarantees that have impacted our profitability over this past eighteen months. So as I said before, across next year, those minimum guarantee true ups that we've been making will fall away by around 75%. And then by the 01/01/2025, so just over a year away, they will fall away by 90% as we resign and renew contracts on more favorable terms to audio boom. So less impact on that minimum guarantee.

47:11 And what does that mean? Well, that means two things. I think that means first thing is in in q four of this year, we will get back to year on year revenue growth. Q four will be at least $19,000,000 of revenue. And I detailed this here on this last slide. Just don't wanna get ahead of myself here, but I just wanna show you this last slide. All of these factors come together, the 20% network growth, the billion plus monthly advertising impressions, the growth and the continued growth of of Showcase, that work we're doing with those blue chip customers, and then things like the seasonal demand that we get from the NFL and the holiday period, all of that comes together and that delivers $19,000,000 of Q4 revenue back to year on year revenue growth, sequential quarterly revenue growth.

48:02 And of course, what we are really focused on at this point is 2024. And those things coming together, those improvements that we've made coming together will deliver record revenue in 2024 for AUDIOBOOM of $78,800,000 On top of that revenue, then we add in those improved revenue shares that we have. We add in the decrease in the minimum guarantee exposure and that improves the EBITDA numbers. So we get back to EBITDA profit in Q4, twenty twenty three. And then obviously that focus on full year adjusted EBITDA profit in 2024 as a result of those improvements. So to recap and to leave this today, I think we are are kind of coming through and have had that challenging period for the business because of the ad market downturn.

48:58 We recognised very early that we needed to put in a new strategy to improve the operations of the business in case the ad market did not did not improve. Those, those those operational improvements are now coming through, and they will lead to a strong future for AUDIOBOOM. 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 right hand corner of your screen. But just while the team take a few moments to review those questions that were 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 did kindly mention at the start, we did receive a number of pre submitted questions ahead of today's event. And as you can see there in the Q and A tab, we've also received a number of questions throughout your presentation this afternoon as well. So thank you to all of those on the call for taking the time to submit their questions. And, Stuart, Brad, if I may just hand back to you just to read out those questions and give your responses where it's appropriate to do so, and then I'll pick up from you at the end.

49:59 Thank you. Okay. Thanks, Jake. I think first question here, I'll pick up from Jack C. He says, how many podcast renew renewals do you have in the next year and how significant are these? Yeah. So I think that we have a a podcast network of 8,000 podcasts. So we are continually and constantly renewing renewing contracts with our our podcasters. But, really, I think the focus on this question is is on the the key ones there. Next year, I I will pinpoint four key podcast renewals. And and when I talk about those, those are shows that are worth more than $1,000,000 in in annual revenue. That would be a a key renewal for us. So we have three of those pretty early on in 2024, in the first months of twenty twenty four, and then one that is around halfway through the year. We are already in negotiations with those three that renew in the first part of twenty twenty four. And we're in a positive place with those renewals.

51:03 We do expect to renew the majority of those key renewals. We have a great track record in renewing partnerships with our key podcasts. So, yeah, we do expect to move into 2024 either with two or three of those renewals already wrapped up and signed or at least, you know, a good way through a positive negotiation with those shows. Second question here, well, two kind of similar questions. One came in from John Botani and similar one just came in in the Q and A. There's no name attached to it, but one says, how is the advertising market right now? And the other question says, are you being overly optimistic by calling July the bottom of the advertising market? I think we did kind of cover much of this in the presentation, but certainly worth a few more thoughts.

51:59 The market remains very weak when compared to 2021 and the first half of twenty twenty two. That July low point was because of some very unexpected, I think early summer softness, although there's more seasonality right now coming in Q4, which has good demand. I think July, yes, we are right to kind of call that that the bottom. We are seeing small improvements since then, but really we are not seeing major improvements at this point in the advertising market. We are really operating now as if the current state of the ad market is the new normal. And so what we have been focused on, I guess, for almost a year now is improving that business model, is improving the operations and processes within the confines of that new normal. So the ad market is weak. It's continuing at this level.

52:53 I've talked about all the strategy for improving the operations, you know, while the ad market is weak. And I think that this work kind of means we can successfully move back to growth and profitability even within this current ad market. Right? And then if the ad market does show improvement and does get better in the next year, then we have even further upside to the numbers that we're talking about in 2024. So key for me was to, you know, start to treat this ad market as the new normal, improve within that so that we are perfectly placed to both get back to growth, but also capture that upside if there if there is improvement. Thank you for those questions on the ad market.

53:39 Brad, I'll I'll throw this one over to you. This one came in on the platform ahead of the presentation, but it says, can you give more details about the onerous contract that was announced in the last company update in July? Yeah, of course. Yeah. So as you say, we went through this in detail, the half year. If you want see that detailed explanation, we've got a link to that July presentation on our PLC website. We've also got the half year report as well that was published. In summary, the onerous contract provision that was created at the end of June was for one individual contract with a material minimum guarantee, that was signed when the podcast industry was very buoyant in the first part of twenty twenty two. The terms that were agreed at that point, were above the ad rates that can be demanded right now in this software ad market and the contract was incurring a loss. So in line with accounting standards, provision was prudently made for the future loss as at the end of June.

54:40 That contract ends in July 2025. So from July 2023 to July 2025, any loss incurred on that specific contract will be unwound against the provision. We've included that below adjusted EBITDA in order to distinguish between this contract and the rest of the business. At the half year, a $7,000,000 provision was created, and at the full year, as again December, this will be approximately £5,000,000 as losses incurred from July to December will unwind against that provision. As with any provision, we'll perform an assessment for the reasonableness of it by assessing a range of future growth scenarios on that contract and we'll provide a provision update once we have completed the, audit next year. If anyone needs any more information on that or wants to go through it, specifically bradaudibulin.com, please email me and we can go through it in detail then.

55:43 Okay. Thank you, Brad. I think we have time for a couple more. These two connected. The first one says, given the challenging year you have had, is the company fairly valued right now? No. No. It's undervalued. The share price is is at the same level as when this management team took over the business four years ago. At that time, the revenue was $11,000,000. We've increased revenue more than six times since then. We've reduced costs significantly. We have a clear strategy. We've increased our market share. We've executed on that strategy. And while, you know, the recent period has been more challenging, I think this business is in a completely different place than it was four years ago when when it had the same value. So so it is undervalued today. Right? And I think the other thing that we're seeing now is is there are more comps to to to make here. There are now two other podcast businesses that are publicly traded, Acast and and and PodcastOne.

56:48 So much easier to to kind of make that comparison. PodcastOne is on Nasdaq in The US. Acast is on Nasdaq Nord. Both of those are trading somewhere around the one and a half X revenue multiple. So while it's clear, I think in this market, valuations are not strong for podcast businesses right now versus some of the M and A transactions of 2021 and 2020, where these transactions were happening at a four to six times revenue multiple. And the public markets are valuing podcast one and a cast at, you know, a one and a half times revenue multiple. What is clear is that the AUDIOBOOM is significantly undervalued against a cast and podcast one, you know, our current valuation metrics. So yeah, you know, we are undervalued.

57:45 You know, we need to get back obviously to revenue growth, to EBITDA positivity again and show why this company is so undervalued. But yes, today against when you compare to where we were four years ago and we compare to competitive businesses, we are certainly undervalued. And I think we've got one minute left. So just this last question is somewhat linked. It says you have mentioned listing in The US, but we have not heard anything since. Is there any talk if this will still happen? And if so, when, you know, we get this question almost every time we do these presentations about listing in The U. S. And so I have talked about it recently in here, but I do want to be clear that we've, we haven't stated, we have not stated that we are actively pursuing a U. S. Listing Rather, you know, I've talked about that we are rightly doing our work to understand it, to understand the processes, the logistics of it, and to also understand the the the value proposition of a US listing.

58:50 If I go back to that last question, I think, you know, it's worth highlighting the the podcast one Nasdaq listing since they since they listed in in early September. Their market cap has dropped around 75%. So, you know, as I said, they're they're still valued more positively than than we are, but it does highlight, I think, that it it's just it's not a given that a US listing would deliver more value than AIM does right now in this market. So it's something we'll continue to evaluate, particularly I think, you know, in relation to the wider sentiment and the macro economic environment, because that is really going to dictate the value attached to that maneuver. And I think we are pretty much out of time here. So obviously, as Brad said, you can be in touch with any further questions you have, but I'll throw it back to you, Jake, to wrap up. Perfect. Stuart, Brad. Thank you very much indeed for addressing all of those questions that came in from investors this afternoon. And, of course, we'll be able to give you back any further questions that do come through immediately after the presentation has ended, are just for you to review to then add any additional responses, of course, where it's appropriate to do so, and we'll publish all those responses out on the platform.

1:00:06 But, Stuart, perhaps before really just looking to redirect those on the call to provide you with their feedback, which I know is particularly important to yourself and the company, if I could please just ask you just for a few closing comments to wrap up with, that'd be great. Thanks, Jake. Yes. Look. I think we recognize the the challenging environment that we've been operating in. I think what I've tried to get across to you to to today, and I hope you'll understand, is that we have been very much focused in this time on improving the model, of improving our our our operations so that even if this ad market doesn't improve, we are best placed to to continue to grow and continue to to go forward. The podcast space is is gonna quadruple in size over the the next seven years. We're perfectly positioned to to be a big part of of of that growth. We will get back to to to to to growth again in q four. We will get back to EBITDA positivity again in q four. And I think 2024 is is gonna be very bright for for AUDIOBOOM in terms of record revenue and EBITDA too.

1:01:06 So thank you for for all of you your support. I think during this this this challenging time, we've tried to be, I think, as as open and transparent as as as possible. And I think that goes, you know, that goes along with the the future, statements that we're making here and and and our positivity around, the the future of this this business. Stuart, that's great. And thank you once again for updating investors this afternoon. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order the management team can better understand your views and expectations. 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.

1:01:55 That now concludes today's session. So good afternoon to you all.