Earnings Call: H1 2023

Jul 19, 2023

Quarterly report

Good morning, and welcome to the Audioboom Group PLC interim results investor presentation. Throughout this recorded presentation, investors will be in listen-only mode. Questions are encouraged and can be submitted at any time using the Q&A tab situated on the right-hand corner of your screen. 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 would like to submit the following poll. I would now like to hand you over to CEO Stuart Last. Good morning to you. Thanks, Alex. Hello, everyone. Thank you for joining us today. This is our trading update, our July trading update, looking back at our H1 2023 performance and expanding on the trading update that we published this morning. Thank you again for joining us. Many of you will recognize the format that we have here. We'll give a few slides as an overview about the business, about our model, about what it is that we do and our core operations. Then we'll dive a little bit into the H1 results, look at the financial performance breakdown, and expand the business and how we've been doing, and then look ahead at the future operations and progress that we're seeing. We will get into that. I think, the first thing and- Hi there, Stuart. We have just lost your connection. If I may just request control. Ladies and gentlemen, please do bear with us as we try to reconnect Stuart to the meeting. Oh, Stuart has just come back in. Stuart, if I may just turn on your camera. Ladies and gentlemen, please do bear with us as we try to reconnect with Stuart. Hi there, Stuart, can you hear us well? Shall I carry on, Alex, while- Yeah. Brad, if you'd like. Yeah. Yeah. Thank you. Waiting for Stuart to rejoin. Thanks, everyone, for joining. I'm Brad, CFO. Been CFO here at Audioboom since March 2018. Chartered accountant, various roles at other companies focused on media finance. Let's get stuck into the presentation. For those who are joining for the first time, Audioboom operates in a very exciting space. The total addressable market within the global revenue of podcasting, expected to be around $4 billion this year. Expected to increase to around $16 billion by 2030. Clearly a space which is growing very quickly. Audioboom is a leading pure-play podcast platform that's operating within that space. Audioboom powers podcasting. We sit at the center of these three different aspects of what we offer. Audioboom has a platform. It distributes all of its content to those different consumption points, Spotify, Apple Podcasts, YouTube, wherever it may be. Our platform distributes all that good podcast content to those platforms. We have great content on our platform. Great podcasts like Formula 1, No Such Thing As A Fish. We have all that content on our network, and we distribute that accordingly. We link the advertisers there, that third pillar. We link the advertisers to the content creators, and we monetize that podcast content. We typically enter into revenue share agreements with those podcast creators, and I will come to that shortly in terms of the different revenue streams and different margins within it. We sit at the center of that ecosystem. We have three core beliefs. It's a creator medium, advertising-funded, and distributed media as well. That should give you an overview in terms of what we do. You can see our historic revenue performance here. We've performed very well over the last few years. We've grown significantly, CAGR there of 65%, increasing from $6.1 million to $75 million last year. We have adjusted expectations, sort of think of adjusted expectations to around $70 million for this year. That's slightly lower than what we were expecting this year, and that's because of the softer ad market that we're working within currently. But still, if you look at the performance over the last few years, that growth has been significant with a transition to EBITDA profitability in 2021. So clearly growing very quickly in this space as well. Thanks, Brad. I think you might be able to hear me now. It's Stuart Last again. Can you hear me okay? Yes. Great. Thanks for picking it up, Brad. I think key for me is that last slide, which is just highlighting how strong our model is. The fact that we've grown 11X over the last five years through this model. This model works. This model is strong, and it will deliver future growth as well. Not only just revenue growth, but this model has allowed us to outperform the wider podcast market. So you see on the left there, that's an Audioboom versus the industry, the U.S. industry chart there, and it's just showing average outperformance of the wider industry every single year for the past five years. In that time, Audioboom has become the fifth-largest podcast publisher in the U.S. So, a really strong fifth position there. There's only four networks or publishers larger than us, and those are giant broadcasters, Sirius XM, Spotify, iHeart, and Amazon. So to be fifth position in amongst this group is just a fantastic achievement. Again, all due to the model that we've built at Audioboom. We continue to deliver strongly on that model. In fact, in the past five years, we've delivered more than $180 million of revenue to podcast creators. Podcast creators are really at the heart of our business. They drive our platform forward with their incredible content. We monetize that for them. We've been able to bring very, very strong value to our creators over the past five years. On the other side of the marketplace, we have delivered more than $230 million of campaigns for advertisers and brands in that time. The model, the platform is very effective at doing exactly what it should be doing, which is connecting content with advertisers and monetizing that and bringing value all the way down the chain. So hopefully that's a good look at the model. The clear messages are that we have a very unique model. We sit at the heart of the podcast space. We do a very important job of bringing together advertisers, content, and listeners. We've been very successful over the past five years of doing that. We play an incredibly important role in a medium that is growing very fast and is set to quadruple over the next seven years. Now we'll focus down a little more on the performance and look at H1 2023 and go into a little more detail there. Firstly, we will walk you through the numbers that we announced this morning in that trading update. Revenue of $31.8 million during the first half of 2023. We have been very clear that this is down from the comparable period, in the first half of 2022. It is a difficult comparison to make. Yes, the dollar number is down, but there are two clear and very, very impactful changes across those time periods. In the first half of 2022, we worked with a podcast called Morbid that was a top five in the world podcast, a very significant contributor to revenue, and that contributed a lot to that higher number in H1 of 2022. Secondly, we are really comparing very, very different ad markets. 2021 and then the first half of 2022, it was a very, very buoyant advertising market. High pricing, high demand from advertisers. The advertising market fell away very, very quickly in the second part of last year, and that has continued into H1 of this year. When we look at that H1 to H1 comparison, we are really comparing very, very different operational environments. I think one key number that I want to pull out and highlight to you is the 2021 H1 number of $22.7 million. In a two-year period, you can see, there is still very, very strong growth, around 50% growth over two years. By looking, I think, across that wider period of time, we are able to just flatten out and smooth out the peaks and troughs caused by this changeable advertising market. Good growth over a two-year period of 50%, and that $31.8 million of revenue is our start to 2023. On the EBITDA side, $300,000 of adjusted EBITDA profit. Again, down from the H1 2022 number. That EBITDA number is impacted by a number of things. Obviously, the ad market impact on revenue. Lower revenue means that our adjusted EBITDA number is lower. We have a small number of our podcasters who have a minimum revenue guarantee attached to their contract with us. We are obligated to pay that minimum guarantee to the podcaster, even if the sales against their individual show are lower than projected. There is a level of true-ups for us to make those minimum guarantee payments to the partners. That, again, puts that downward pressure on the adjusted EBITDA. Obviously, we are working in a high inflation environment right now. We have had inflationary pressures on our operating costs. I think we have done a really good job of combating those inflationary pressures. Brad will talk a little more about those a little later on. All in all, that adds up to impact that EBITDA and bring that down to $300,000 in the first half of this year. One point you may have seen, of course, in this morning's trading update, was a provision that we have created for one single onerous contract that we have in the business. That is a contract that was signed really at the height of the advertising market in the first half of last year. That is a contract that we do not expect to deliver any profit on over the course of that contract, and we have created a provision for that. Brad will talk in more detail about that one a little later in the presentation. Finally, our cash position. It remains relatively healthy at this point, $5.3 million of cash in the bank. That is up $200,000 on the last quarter of March 31st, 2023. We have generated cash in that last quarter, despite paying advance payments to some of our podcasters, that we then recoup over the lifetime of the contract. Additionally, we have another $1.9 million available to us in an overdraft facility. At this point, our cash is healthy. We have the overdraft facility as well for our current growth trajectory and growth plans. We are funded for the future. To break down the revenue part of our business a little more and to give you a deeper look at the model and what is going into our revenue here, we have drawn out this slide for you. I think what this is doing at the top is it is highlighting our three core revenue generators. One is our premium advertising model, the second is Showcase, that is our ad tech, an automated ad delivery model. Thirdly, there is Sonic, and that is our brand platform. Sonic works directly with advertisers and brands to execute their campaign spending. Our premium ad model, that is those high-value host endorsements where their ad is delivered in the voice of the advertiser. That has traditionally and historically been the biggest contributor to our group revenue, and it remains so, although, because of the growth of the other areas of the business, that has come down in 2023. Historically, that has been delivering around 70% of the group revenue. So far in 2023, the premium ad product has been delivering up 59% of the group revenue. That is the bit of the business that has been most impacted by the challenging ad market. I will go into more detail on why that is and what we are doing to combat that in the coming slides. Showcase, the automated advertising sales, it is an ad tech-driven product that continues to grow quickly. It is a real success story for Audioboom. Delivered just 12% of our revenue in 2022, and is delivering around 21% of our revenue so far this year. Showcase continues to grow strongly. Sonic is contributing strongly too at 20%, up from 17% last year. The revenue shares that you see underneath each of those products, that is our contracted revenue share. That is how much revenue Audioboom keeps after sharing the revenue with the podcasters, and that is the contracted amount. The premium ad product has a 21% revenue share. Showcase, that revenue share is higher because of the efficiency of the product and the fact that we are using that product across 8,000 podcasts. The smaller podcasts, we can create more favorable contracted terms with them to deliver more of the revenue share to Audioboom. Sonic at 13%, has the slimmest of the revenue shares. Sonic works and operates off of a traditional ad agency model, in and around the 12%-15% revenue share. But combined and blended, that contracted group revenue share in 2023 is 24%, and that compares two years ago to a 21% contracted revenue share. We have done a big piece of work within the business to improve those revenue shares across the business. That has been through recontracting, renegotiating contracts, improving the terms that we create for Audioboom. We have done a good job there. But what you are seeing in the results that we put out today, is the pressure on that revenue share. From the contracted group revenue share of 24%, in reality, we have moved to a 20% gross margin because of the impact of those minimum guarantee obligations that I spoke to on the last slide. We continue to pay out those minimum guarantees that we have with our larger podcasters, and that has brought down the gross margin to 20% during the first half of last year. I think the key message here is when the advertising market returns and improves, we will be working on that improved 24% group revenue share. We have made big steps and big strides, I think, to getting into that position. The next couple of slides do break down the revenue operations and the revenue performance during the first half of the year. The first chart here on the left-hand side is our global downloads number. The second chart is our eCPM. These are two of our KPIs. You will have seen these over the past few years. We update these on a quarterly basis. The key point here is that revenue is a combination of these two data points. Revenue is really a combination of downloads and then eCPM, with eCPM being the value that we extract from each 1,000 of those downloads. Those two things combine very clearly and very simply to create a revenue number. Our downloads performance has been very strong, and that has been the story of this first half of the year, is that operationally, we have made great progress. We have moved our monthly average download number to 126 million. In Q3 of last year, that number was just 108 million, and in Q4, that was 110 million. We have seen very strong growth in that monthly downloads number in 2023. In May of this year, we hit a record number of 135 million downloads. Great consumption metrics there on the download side. You will see from the eCPM part that that is where we have fallen behind in the first half of this year. The eCPM dropped to $41. That is $41 extracted from every thousand of those downloads, and then an improvement in Q2 to $43. In a buoyant and healthy advertising market, you will see consistently that eCPM number is above $50, between $50 and $56. In the weak advertising market that we are currently experiencing, that eCPM has now dropped into the lower 40s. eCPM is really a combination of pricing and demand. The higher pricing that we can charge and the higher demand to buy advertising in our podcasts leads to that higher eCPM number. That eCPM number is around 25% lower in this weak ad market versus the strong ad market of last year. What I think is the key point here is really the improvement that we have made in Q2. We are increasing that eCPM. That means we are improving the pricing and improving the fill rates on our advertising, and we will see a further eCPM improvement in the second half of the year. That eCPM is heading in the right way, albeit it has been weak in the first half of the year because of the challenging advertising market. The second part of this analysis here on the revenue performance looks at customers. I think that's the key area of why the eCPM has been impacted in the first half of the year. Our brand count, the number of brands that advertise with Audioboom, that number keeps going up. It's up to 8,000 brands per month advertising and buying advertising space on Audioboom podcasts. We've seen a very strong growth on the overall brand count at Audioboom. Brands are very interested in podcasting. Podcasting is still healthy. Podcasting is still performing for them. The second chart here really breaks down the impact on the ad market here. This breaks out the change in brand count between our premium advertising products. Those high-value host endorsements, the product that has been delivering the highest and the biggest contribution to our revenue over the past five years, and then Showcase, the automated ad product that we've built over the past two years. On the premium ad product, we have lost 26% of the brands that were advertising on Audioboom a year ago. Whereas in Showcase, we're seeing fantastic growth, 62% more brands advertising through Showcase than a year ago. It's clear that it's the premium, the high-priced advertising that is suffering in this advertising market, and that low premium demand is impacting the eCPM on the last slide. To break that down even further, we can take a look at why that's happening. The clear thing that we're seeing here is that those historically strong brands for podcasting, they are performance advertisers or direct response advertisers. They are often direct-to-consumer brands. They are disruptor brands. They're in the startup phase. They are selling their products directly through their podcast advertising. They are looking for an immediate ROI on their podcast advertising. Now, those brands have been impacted the most by global economic conditions and high inflation. They are pulling back their budgets, and many of them, as you've seen, 26% fewer on Audioboom, many of them are stepping away from podcasting entirely at this point. Those smaller brands that have historically and traditionally been working in podcasting are cutting their advertising budgets. Our goal is to grow our awareness brands business. These are much bigger brands. These are brands that don't need that direct return on investment through their podcast advertising. They are building strong sentiment and awareness of their brands like Ford and Pepsi and Procter & Gamble. In May, we launched a new team that will focus directly on opening up that wider customer base. That bigger customer base will improve the eCPM, will improve the demand. These brands are less impacted by global economic conditions, too. That unit launched in May, and I'll give you an update later on in this presentation as to the progress there. I think that the clear message here is that we very much recognize the areas of the advertising space that are most effective, and we've already put it Most affected, I should say, and we've already put in plans and new teams to combat that and to grow a new customer base that is less impacted by the current economic circumstances. I'll throw here to Brad to pick up for the next couple of slides. Thanks, Stuart. Hi again, everyone. We've got a couple of finance slides here. We'll be giving further insight into OpEx trends, what we've done to reduce it in the first half of this year. Give you more detail on that contract provision as well, because there's been quite a few questions about that this morning. We'll have some information on that, and then we've got some good updates on the working capital cycle and how that continues to perform well. We can see here our progression in terms of revenue and OpEx over the last couple of years, and we can see that OpEx continues to be relatively flat. This is adjusted OpEx before any depreciation, interest, share-based payments, or any restructuring costs. This shows how the business is operating before these other costs. Stuart's given you the good overview of revenue, the contributions and the margins, but it's pleasing to see that Q2 is 6.5% up on Q1. Q2 was also higher than Q3 last year and was 90% of the revenue reported in Q4. OpEx continues to be, as you'd expect, very well controlled, despite those wider inflationary pressures that we're all experiencing. We've done very well, I think, to lower our OpEx costs by 11%, reducing it from $6.2 million to $5.5 million in the first half of this year. How have we done that? Main reduction has come from our material cost category, staffing and commission costs. At this point last year, we had 47 heads. We're now at 39, so we've reduced staff by 17%. The sales operation has been restructured. We've removed production heads and the associated marketing costs from Audioboom Studios. As we move to focus on offering production as a service, and also removed a couple of heads from Sonic as well to make that more efficient. Staff costs and commissions have decreased by $1.1 million, with half a million coming from the reduced headcount and $600K from the lower commissions due to the lower revenue and the slight restructuring of that commission program. We've worked well to restrict that cost. Other costs reducing initiatives, we focused on that technology cost bucket, which is the second biggest cost category. The main cost reduction there, or the saving that we've achieved, is on the rates that we pay for bandwidth and ad impression costs from our supplier. As we're delivering a higher volume of those things, downloads and ad impressions, we've secured more favorable rates. Had we not done this, then the cost would have been around $100,000 higher than what we've recognized. Again, we've done a good job to restrict that cost bucket. We remain with 39 heads, extremely lean, primed for further growth when the ad market is strengthened. No major investment is needed into the technology stack that we have or significantly higher number of staff. When the markets do return, we'll see that impact flow through both top and bottom line, obviously. In terms of the provision. Today we've announced that provision for the onerous contracts that Stuart mentioned briefly earlier. That was an individual contract that was signed during that buoyant part of the podcast industry, first part of 2022. In line with accounting standard IAS 37, we're required to provide any contract which is deemed to be loss-making. I've detailed this further in note 9 of today's announcement. If you would like to read that and ask any follow-up questions, then please do so. It's note 9 in today's announcement. The provision of $7.1 million created in relation to that individual partner contract. Despite downloads for that contract continuing to increase as other shows have, the downloads continue to increase on that show. The ad rates that have been commanded historically and the future ad rates are likely to be lower than those modeled when the contract was signed due to advertising markets being more challenging, as we've said. In light of those revenue growth projections being lower, it's unavoidable that the contract will generate a net loss through to its conclusion in July 2025. The contract recorded a net loss of $1.8 million in the first half of this year. If you see the income statement, what I've done is treated that and the provision as an exceptional cost. You'll see a number of $8.9 million on there, which is the loss in the first half of this year, plus the provision. I've done that because I want to treat this contract separately and display the rest of the business in terms of how that's operating. That's why that's been treated as an exceptional cost, so we provide a more accurate reflection of the performance in the period for the rest of the business. It's right that that provision is created now. There are no other loss-making contracts in the company, and it's been created because we're incurring that loss on the contract by truing up to that minimum guarantee level. Creating the provision means that any future true-ups will not impact gross margin. That will be unwound against the provision. We've used different growth assumptions in terms of high, medium, low growth assumptions to calculate that provision, which has led to the provision of $7.1 million being created today. Looking forward to the end of the year, what we'll see on the end of year financial statement is that that provision number will decrease between now and the end of the year because we've got six months there where the minimum guarantee true-ups will be unwound against that provision. My estimate is that provision number will be around $5 million by the end of the year because we've got six months of unwinding to go there. It's obviously quite complicated. Look, there's a note in today's announcement, note 9, if you've got any other questions, then brad@audioboom.com, please contact me and I can talk you through it. In terms of the working capital cycle, headline is the cash increase by $0.2 million in Q2 over Q1, so we end on $5.3 million. We've collected another $2.7 million from our customers in July. Good statistics through the first half of the year. We collected just under $33 million, average of $5.5 million a month. We collected 103% of revenue versus our three-year historic average of 94%. Collection's still good within the company, performing very well, which has fed through to the debtor day of 72, which is comparable to the 68 that we had at the end of December and at the end of June. Settling there around that 70 mark. We try and get it below 90 because we work with—we collect from advertising agencies, which typically pay on 90-day terms. Bad debt expense in the period, 127K, 0.3% of revenue. Continue to have a very minimal level of any kind of write-offs or provision despite that challenging macro environment. You are obviously concerned about the ability of customers to pay, but we are still collecting very well. We have had that cash reduction in the first half of the year from the $8.1 million down to $5.3 million. We have paid $1.2 million advances to retain talent in the first half of this year. We have also had that loss-making contract of $1.8 million in the first half of the year. Plus, we have also settled everything in relation to the seasonally stronger Q4 as well. We have had some expected reductions in cash, but obviously to step up from Q1 to Q2, albeit marginally, is encouraging. In terms of future cash utilization, we have got a further $1.2 million contracted for advanced payments in the second half of this year, and obviously, we have got to facilitate that onerous contract as well. We have recently renewed that $1.9 million overdraft with HSBC, which is a good endorsement for us. That is there should it be needed as well. Look, in conclusion, business continues to do a good job on controlling the costs that are incurred. There is a cost base that flexes there as we start to see things, revenue increase. There will be more commissions incurred as the downloads increase. That line will increase as well, but we are doing a good job in terms of controlling those, and once this ad market strengthen, we will see that go through to top and bottom line. We provided for that onerous contract, which is the correct thing to do, and allows the business moving forward to report its underlying performance, and that working capital cycle continues to operate as expected, delivering some good consistent metrics there across the last 18 months or so. Any other questions on any of that finance information, put them in the question box or email me afterwards. But yeah, back to you, Stuart. Thank you, Brad. Just a reminder, we will try and get to as many of your questions as possible at the end. I think we have three or four more slides before we get to those. You can go and submit your questions now before we get into that. I think this final stage of the presentation really is showing how our operational progress is coming together. We have made very good operational progress over the first half of the year. That has not been necessarily seen in the financial results, which is obviously frustrating to us. But in a handful or more of key areas, we are demonstrating good progress, and I will walk you through those now, and I will walk you through the future focus of the business as well. The first one really is something that I touched upon earlier, and this is the improvement in our advertising revenue shares. This is creating more favorable contracts for Audioboom, so we retain more of the revenue from each of those advertising campaigns that runs on the network. Network-wide, our contracted advertising revenue share is now at 24%, up from 21% two years ago. We are increasing that network-wide revenue share because of the increased revenue contribution from Showcase that has a higher 41% revenue share attached to it. We are improving our contracts with podcast creators. When we are renewing those, we are doing those on more favorable terms to Audioboom. Also there is an enhanced Sonic contribution there from clients on the Sonic side that is improving the Sonic revenue share also. That is a big step for us. What that really means, as I said before, is that gives us a clear pathway to improve our gross margin, and then our profit, obviously, when the advertising market improves. So you are not seeing necessarily that come through today because of that weak advertising market and that pressure on the gross margin because of those minimum guarantee payments that we make. But as we clear that, we will then go into a place where we are working on a higher gross margin because of this improvement in the advertising revenue shares that we have. I think that is good progress. The second part of the progress is around audience. I have already kind of highlighted the download growth. To get to 135 million downloads in May, from 103 million in the month of December, is fantastic. We are doing that by adding more shows, by driving audience, by marketing across the platform, using our large megaphone to cross-promote to audiences, and that is really highlighting, I think, the marketing platform that is sitting within Audioboom. We do not necessarily talk about it too much. We do not use it and highlight it as much as we should, but it is a very powerful marketing platform that can really drive audience and increase download numbers from within. And the same with the unique listener numbers. So we now as of March 2023, reach a record 38 million unique listeners on a monthly basis. Again, big progress there from December 2022, when that number was just 28 million. So in the matter of months, we added 10 million unique listeners. Great consumption levels, great reach levels. The strength and the size of the network is in a really good place as we move into the second half of the year. And we are doing that, much of that growth in consumption and listening is because of the expansion and the consolidation of our creator network. I said at the top here that creators are really the heartbeat of this business. We look to sign and to work with the biggest and most creative podcasting talent out there. And already this year, we have signed a number of tier 1 podcasts to the network. We have renewed some of our larger show partnerships as well, like the Formula 1 partnership. Tiny Meat Gang is a very cool and very big group of podcasts out of the U.S. And we will continue to grow that creator network. We'll continue to expand that, which will increase the audience levels, which will then in turn increase the inventory and the advertising availability on Audioboom. All of these fundamentals are moving in the right direction. Inventory, I just talked about, but that's a key point for us as well, is how we expand the level of inventory that we're getting here. This is kind of an operational leverage point of view. We are creating now more than 7 available advertising impressions from each download on the platform. From each of those 135 million monthly downloads, we now create 7 advertising impressions from each of those versus 5.3 per download a year ago. That's a big change. We create more available impressions per download. That's more advertising for us to sell. Again, as we move out of this challenging ad environment, that will lead to greater performance in the future. How are we doing that? Well, a number of ways. One is the renegotiation and the reworking of the contracts with our podcasters. We contract them to deliver a higher level of advertising within their shows, albeit with the mindset of making sure that the product for the audience is not too full of ads. If any of you have heard radio in the U.S., it's a pretty horrible product. It has around 23-28 minutes of ads per hour. As you'll see really from our 7 advertising impressions per download, that's a much, much, much lower level of advertising. It makes the product still very strong for the consumer and for the listener. We contract shows to deliver higher ad loads. We've also further rolled out our AdRip inventory creation tool. This is a very unique tool. No one else in the podcast industry has this. This allows ads, those host endorsement ads that are baked into the fabric of the podcast and delivered within the podcast. It allows those to be ripped out automatically with no effort from the podcaster at a later date, and then replaced with brand-new advertising through Showcase. The AdRip tool is very powerful, and it's leading to those higher inventory numbers. Of course, we are always talking to our podcasters. We're always educating them about the new tools that we have, about the ways that they can improve their monetization. Because of that, we will create more than 11 billion total ad impressions this year, which is a tremendous scale and really fantastic progress, to go from that 5 per download to more than 7 in just a year. I talked earlier about us recognizing that the core group of direct-to-consumer brand awareness, startup disruptor brands that had been advertising in podcasting, they were suffering because of the economic environment. We moved relatively quickly, I think, to launch a new team within Audioboom that is dedicated on finding those new customers, finding those bigger brands, those blue-chip brands, those brand awareness advertisers who are less impacted by current economics to expand our customer base effectively. That piece of work is underway. First of all, the first step in there was restructuring all of our revenue operations to enable that to happen. I was really pleased to bring Jenni Skaug, who was leading Sonic at the time, into a more expanded role as Chief Growth Officer back in January. She is now responsible for all of Audioboom and Sonic revenue and is doing a fantastic job in pretty challenging conditions. Jenni oversees all of that revenue operation. In May of this year, to launch that new unit, we hired a really fantastic operator called Jim Lally. Jim is a very experienced salesperson, previously at the New York Times, New York Public Radio, and a podcast platform called Market Enginuity. He will lead the growth of our brand awareness revenue unit. We are already seeing some good traction. It is a long project, and it takes a lot of education to get into those bigger advertising agencies and those traditional advertising agencies and educate them about why podcasting is so good for their brands. Progress is happening there. We are seeing traction, and I look forward to updating you on how that is going in the second half of this year. Finally, we talked about it many times in this presentation and previously, but Showcase, our automated ad product, our ad tech marketplace, just continues to grow strongly, up 35% in terms of revenue from this same period a year ago. The contribution to the group revenue is almost double what it was a year ago. I think the key parts there with Showcase is this is a two-sided marketplace and Audioboom is building out both sides. We are building out the supply side. There are record download numbers, there are record advertising inventory numbers. That is leading to some really strong supply in that marketplace. 660 million advertising impressions were made available in Showcase in the month of May, which was just some fantastic scale for brands to come in and to explore. On the demand side, the monetization side, we continue to build out our partnerships on that side. Recently launched partnerships there with Bauer, a big media company, Bauer Nordics, Icon Intervision is a Latin American media company, Audiohook, Audio on Programmatic or ad networks that all bring advertiser demand to that marketplace. We match that up through the ad tech with the downloads, with the supply side, and that will continue to lead to strong Showcase growth over the coming years. So really pleased with the continuation there in Showcase. I think you will see from these improvements that we are making and the progress that we are making on the operational side, that a return to growth is really not far away at this point and even if the advertising market does not roar back and takes longer than expected to improve, we are still in a position of growth in the second half of the year. This slide really sums that up. All the things that we are doing at the top, we are improving and have improved our download metrics across the business. 20% at least download growth versus last year. So we have more downloads. We are then creating more inventory from those downloads. So we are now creating 7 available advertising impressions per download. Then we add more customers through that brand awareness launch in May. We have more downloads, more available inventory and more customers to buy that inventory. Showcase continues to grow on both sides, so more monetization across Showcase. Then we are getting into the strong period of seasonal demand as well. We are very strong around the NFL season in the U.S., the football season in Europe, the holidays from Thanksgiving through to the end of the year. So those parts, that progress all kind of comes together. That leads to increases in pricing, increases in demand because of the inventory and the customer levels that we are creating here. That will increase our eCPM in the second half of the year. That key number for how we extract value from our network, and that in turn will lead to H2 growth on an annual basis. We will return to meaningful growth in the second half of this year as we put all these pieces together. I think to sum up, and this is the last slide for us before we get into those questions. Frustrating financial progress in this first half of the year that the advertising market is really stopping that operational improvement really being crystallized, but we continue with those operational improvements. We continue to build our model. Our model works. It has delivered 11x growth in the last 5 years. It will continue to work. We are now just amending it, adjusting it and improving that model so that it delivers us growth in the future. Stuart, Brad, thank you very much indeed for your presentation. Ladies and gentlemen, please do continue to submit your questions using the Q&A tab situated on the top right corner of your screen. While the company take a few moments to review those questions submitted today, I would like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A, can be accessed via your investor dashboard. Stuart, Brad, as you can see, we have received a number of questions throughout today's presentation, and if I may hand back to you and kindly ask you to read out the questions and give responses where appropriate to do so, and I will pick up from you both at the end. Thanks, Alex. There has been a number of questions on, I think, the health of podcasting. First one from Peter was around negative press about podcasting. Is it no longer as healthy as it once was? Is podcasting still a growing sector? The answer is yes, it is still healthy. It is still a growing sector. The first slide here addressed some about the total addressable market is expected to quadruple over the next 7 years. So no change there. There was a recent study, it was published around a month ago by Edison Research in the U.S., and they found that 42% of Americans now listen to podcasts on a weekly basis. That is up from 38% a year ago. So just in the last year in the U.S. market, there is around 50 million new regular listeners to podcasts. So audience continues to grow. Although we are in a weak advertising market, what we need here is advertising demand and rates to return because the audience growth is still there. That is the key. That is what we are continuing to look for, signs that the advertising market will improve and when those improvements will take place. As with Audioboom, the wider industry is healthy from a listening and a consumption point of view. We just need the ad markets to come back. I think a similar question here, which is about Spotify having spent nearly $1 billion, much of it is on celebrity podcasts that have not worked out for them. Is this specific to Spotify? They have spent a lot of money, tens of millions of dollars on signing well-known celebrities to deliver podcasts for them. That is Harry and Meghan, I think the Kardashians, the Obamas, several celebrities that are not podcasters, and that strategy has not worked out to them at this point. I think back on an earlier slide that Brad was looking at when we broke down that Audioboom model, I highlighted, I think, three key beliefs to the Audioboom model on that slide. One of those was really around our belief that this is an independent creator medium. That is authentic voices from creative talent, who have the ability to deeply engage with their listeners. That belief continues to be proven out. This is a great example of that. You cannot turn a celebrity necessarily into a podcaster. They need to be an authentic creator. They need to be an authentic podcaster. Podcasting, I think it is a hits business at this point. Those tiny percentage of large shows are continuing to drive high revenue, or the biggest chunk of the revenue in the space, much like the music industry. We are all very much focused on finding those next hits and being the publisher that delivers those next hits because of that. For Spotify, they look to do that and to deliver those hits through giant celebrities, and that did not work out for them. For us, the way we do it, to find those hits, it is through recognizing and cultivating independent creators, and I believe that is the most efficient and most likely to succeed route to find those hits from authentic creators. Next question I have here is from Sarah. It was pre-submitted. It says, "How is AI impacting podcasting, and how is Audioboom using it?" It is a good question, and in May was a big podcasting event in London, and this was one of the key questions that was floating around leadership at that podcasting event. I picked this question next actually because it relates to many of the points I just made about creators and authenticity. I think one of the things that I do not believe in is that AI will play or should play a part in the content creation process. That is an art form that is best left to the best creative talent in the world. But no doubt, AI does have a part to play in podcasting. We've built this business through a lot of automation in the platform, and that's been a key factor in why we've been able to scale with low headcount, low cost base. That automation has been key, and I think AI will support those processes, those automation processes for us. I think one early example of how we're experimenting with it is in our advertising business. Previously, the process to create ads was fairly time-consuming. It required access to recording studios, a turnaround time to get ads recorded and delivered back to us ready for kind of publication or for campaign execution. Through AI, what we're able to do is receive a script from an advertiser, and then within moments we can have an AI-generated voice create that 30-second ad that's ready to be used in Showcase. I think the key part here is that AI can improve our processes, it can remove costs from the business, and I'm pretty sure that this time next year I'll have some other examples for you, too, of how we're using AI at Audioboom. We've had a few questions on this one, and I'll throw to Brad here. This is an example of one that came in today. Previously, we've been told shareholders will be getting a dividend. Is this still going ahead? Yeah. To take that one, Stuart. The board previously indicated in January, earlier on this year, the intention to introduce a progressive dividend policy with a maiden dividend in respect of the current financial year, i.e. 2023, being declared and paid in 2024. Given what we've published this morning and given what we've gone through in this presentation here today in terms of that more challenging advertising market, going beyond what we expected when we announced that the first part of this year, it's right that we say that it's the intention to review that progressive dividend policy for the 2024 financial year and onwards. Obviously, that's disappointing to say that, but I'm sure it's come across in the numbers today, the reality of what we're experiencing this year. So it's right that that process goes forward and we review that from 2024 onwards. Thanks, Brad. One more here. There's a few that's similar. One from Murray J., another one that was pre-submitted. What's the probability of more onerous contracts if the ad market doesn't improve? Similarly, can you give more details of how you've adjusted the approach taken to calculating minimum guarantee offers to podcast partners? Yeah, I think two parts here. First one is that we're not expecting any further onerous contracts. Really, the one that we do have just relates to a very specific moment at the height of a very strong advertising market. Also, with that, it was a three-year contract that was signed. It was a very competitive process to sign that show, and it was a three-year contract. Within those podcasts that I mentioned, where the minimum guarantees were not being achieved and we were trueing up. They were not loss-making contracts, but we were trueing up on those minimum guarantees and therefore that's impacting the gross margin. Those were not signed fully at the height of the previous ad market. Also they are shorter term contracts. They have less time left on those contracts at this point, so they will be up for renegotiating over the coming months, in which case they can be pulled back into less risky terms for Audioboom. I don't see a time or a place where there are further onerous contracts within this business. Then in terms of how we look to create minimum guarantees going forward, I think the way we calculate and look at those minimum guarantees is really based on the advertising market. In the buoyant ad market of 2021 and then the first half of 2022, advertiser demand was so high. It was high enough that we would be confident of filling more than 90% of the available advertising slots in a top-tier podcast. When we go through the process to sign those bigger shows, those tier 1 shows, we would create a strong deal with a kind of a punchy minimum guarantee attached to it based on advertising demand. Now, we wouldn't do that at 90%, of course, but we would do it at a high enough level to win those deals. Once we saw the ad market decline, and I think I pointed it out earlier in this presentation, we saw a 25% reduction in demand levels. That's a big change. Now, we're operating under very different conditions. We obviously calculate those potential minimum guarantees that we can offer to podcasters in a very different way. Demand is 25% lower, so simplistically, we're just using a much more conservative level of advertiser demand and pricing when we are calculating what those minimum guarantees can look like. I think the key part is that we are also thinking beyond. More and more, we are thinking beyond those minimum guarantees. We're thinking about what we can offer those big podcasts purely beyond the financial guarantees. That's our technology and distribution that many of our competitors don't own and operate. It's a really fantastic selling point for us is the technology and distribution that we have that we can offer those podcasters. Our marketing, I kind of talked about that megaphone that we have of 38 million unique listeners on our platform, so we can enable our big podcasts to utilize that marketing megaphone. Then our production services as well through Audioboom Studios. That's what we do for Formula 1. We have a very strong partnership with Formula 1, and we co-produce their podcasts and enabling and helping support those big tier 1 podcasters through Audioboom Studios on the production side will also add value to what we're able to offer. I think our offers will be lower to podcasters moving forward. We're not in the same market that we were 18 months or 2 years ago, so those offers will be lower. But we'll also be able to offer further value because of the model that we have, because of the technology that we have. I would say here right now, our new business pipeline is actually stronger than it has been at any time in the past 3 years. I don't believe that the lower minimum guarantee offers will impact the growth of the network and the growth in the business and the partnership deals that we bring to the platform. I know we have one minute left, so Alex, I'll throw back to you. Thanks. Thank you, Stuart and Brad, and I think you have addressed those questions you had from investors today. Of course, the company will review all questions submitted today, and we will publish those responses on the Investor Meet Company Platform. Perhaps before redirecting investors to provide you with their feedback, which one is particularly important to the company, Stuart, could I please ask you for a few closing comments? Yeah. I think the key thing today is that we are all frustrated that the financial progress doesn't reflect the operational progress in the business. As I think you've seen, we've made strong operational progress in a number of areas over the past year and particularly over the last six months. That progress is setting us up to emerge in a very strong place. It's setting us up to get back to a growth phase in the second half of this year. Our model, the Audioboom model, has delivered 11x growth in five years. That model still works. That model is strong. We're adding to it. We're improving it. We're adapting it for this tricky and challenging marketplace that we're in. But the model works, and that model will continue to work in the future. It will continue to keep Audioboom growing. As I think we've shown today, we will get back to that growth in H2 of 2023. That's great. Stuart, Brad, thank you once again for updating investors today. Could I please ask investors not to close this session, as you will now be automatically redirected to provide your feedback in order that the board can better understand your views and expectations. This will only take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team of Audioboom Group PLC, we'd like to thank you for attending today's presentation and good morning to you all.