Earnings Call: Q4 2022

Jan 23, 2023

Earnings release

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&A tab that is just situated on the right-hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all of the questions submitted today and publish responses where it is appropriate to do so. Before we begin, I would like to submit the following poll, and if you could give that your kind attention, I am sure the company would be most grateful. I would now like to hand you over to CEO Stuart Last. Good afternoon, sir. Thank you, Jake. Hi, everyone. Thank you again for joining Audioboom, to get the latest updates. It is good to see some familiar names and faces and also, lots of new names here today as well. Welcome, and as I said, thank you for joining us. For those of you that are familiar with the way we present this each quarter, we will start off with a section on our business model, the industry that we work within, how the company operates, and I think that will be a really good way to look at things for those that are new to Audioboom or a good recap for those of you that have not been with the company too long. Section 2, we will dive into the numbers and look at the information from the trading update that we released this morning, go a little deeper on the KPIs and the financials of the business. The third part of this, we will look ahead at 2023, and we will talk about where the company is focused, what we are working on, what we are planning, and how 2023 is looking. As Jake said, right at the end of this, we have time for a Q&A session. We had some questions that came in advance. We have those, and we are also very happy to take some questions, so you can add your questions in that area on the right-hand side of the screen as we go. We will now get started with the presentation. As I said, first thing to do, I think, is to introduce ourselves to those of you that are new to Audioboom. I am Stuart Last. I am the Chief Executive Officer. I have been the CEO of Audioboom for the past 3 years, and it has been a fantastic run of growth for the company. Before I was CEO, I ran operations for Audioboom based here in New York City, and I have been with the company since 2014. Before Audioboom, I worked at another podcast ad tech company, now called Voxnest, and that was a company based in New York, a very successful podcast ad tech company. Before that was at the BBC working on their digital audio plans. So, 15 years deep in podcasting at this point and really excited, I think, to keep leading this business forward, and taking it to new levels. Hi, everyone. I'm Brad Clarke, CFO here at Audioboom. I've been in this position since March 2018, so it will be five years very shortly. I've got around 15 years of experience in financial roles at three other organizations before Audioboom, all focused on finance within media. Prior to Audioboom, I was at another AIM quoted company called Brave Bison. Prior to that, I had various financial roles at News UK, publisher of The Sun and The Times newspapers, and I qualified as a chartered accountant with Grant Thornton. Stuart says it's a great company that we work for here, great industry, good trading update that we put out this morning. Yeah, look forward to speaking to you in a short while on some of the detail around the finances of the company. So back to you, Stuart. Thank you, Brad. Yeah, let's dive into the business model and the operations of the business. Really, this first slide that I want to show you really just highlights what Audioboom does and the mission behind the business. This is actually the front page of our website. So if you ever go to audioboom.com, our mission is really out there for you all to see. We power podcasting for creators and brands. So we deliver value to podcasters, so they can continue doing their work and growing their audience. We deliver value for brands, those advertisers and companies that want to connect to audience, they want to connect to talent and execute their advertising campaigns across podcasting. We've been very successful with this mission. To date, we've delivered more than $150 million of value to our podcast creator partners. We've delivered and executed more than $200 million of brand campaigns since 2018. So that mission is front and center of everything the team at Audioboom is doing. We've been very successful in that, and we think there's a great future ahead in the fastest-growing and fastest part of the media industry. How Audioboom delivers that value is really key, and that value is delivered through our platform, which does one very important thing. Our platform connects audience, creators, and advertisers. So those are the three key parts of any media organization. Creators working with advertisers is great, but unless there is audience connected to that for the advertisers to reach, then there is very little value. Creators may have strong audience, but if they are not able to access advertisers and brands, again, there's very little value there. Audioboom is integral to bringing these important parts together. We sit in the middle of that. Our platform connects them. So wherever the audience is, whether the audience is listening through Spotify or YouTube, Apple Podcasts, we're able to connect them to the 8,000-plus creators and podcasts on Audioboom, and then we connect them with the advertisers to deliver value across all three parts. This business model is really born out of three core beliefs. One is that podcasting is a creator medium, so it's independent creator focused. It's not being taken over by major media businesses and producers of content. That is being proven out. We've seen just over the past year that many of the larger media organizations that have stepped into podcasting have either paused their work in podcasting or have made layoffs, such as at CNN recently. The focus really has been on independent creators. It's a very open medium. Those independent creators are very authentic, very organic. They can connect to large audiences, and Audioboom does a fantastic job of delivering value for them. Our second belief in this business model is that this is an advertising-funded medium. Again, that's being proven out. Very little use of subscription or payments for content. Audiences are used to having podcast content available for free and supported by advertising, and they are happiest using and consuming podcasts in that way. There's very little driver for audiences to pay for content at this moment in podcasting. Then thirdly, our core belief is that this is a distributed form of media. Audioboom content and our partner content is available everywhere the audience exists. Again, whether that's Spotify, YouTube, Pandora, iHeartMedia, a host of listening apps. Our content will be in all of those. We believe that this is not a kind of a ring-fenced medium, that the content should be out there. It should be reaching audience wherever they are consuming. So those three core beliefs drive the business model. The business model is about delivering value to the audience, to creators, and to advertisers. We are delivering that value and making those connections between the three through the Audioboom platform. To give you an overview of what that platform is, it's vertically integrated, it's a cloud-based engine, and it's very scalable. At the core of this platform is a content management system. That's where our creators will upload their podcasts. We will host that audio. We will distribute that audio with one click out to all of those listening endpoints that I mentioned earlier. Then we gather the analytics from each of those listening apps back into Audioboom. We consolidate those in an analytics dashboard. The podcaster, the creator, they can use those analytics to understand their audience and to get insights into how that consumption is happening to improve the quality of their content. Then our sales and our revenue teams can use that analytics dashboard to inform their sales strategy. So that's the core part of that platform is the CMS. On top of that, we have developed an advertising technology stack so that when we are distributing all of that content, our ad tech is finding the best pricing and delivering and executing that advertising very seamlessly and again, very much at scale. So we've developed an ad server that actually fires in ads in real time into and around that content seamlessly. We have a Yield-Op system. That Yield-Op system is, as I said, finding the best pricing. So it's looking at all of the buyers for that piece of advertising inventory. In a split second, it will decide where the best offer for that piece of advertising inventory comes from, and we'll sell it at that highest price. We have a tool called AdRip. This is a creator tool so that the creator can add new advertising inventory in their back catalog. We can continue to monetize the back catalog of content for creators. Then we have Showcase, which is our marketplace, our advertising marketplace. We make all of our advertising, all of our content supply available to advertisers all around the world, the biggest advertisers in the world through Showcase, our advertising marketplace. So that ad tech stack sits on top of our content management system and begins the monetization process for us. And then lastly, on top of that ad tech stack is a system that we have called LIRICAL. It is a Salesforce-based, a bespoke Salesforce-based build, and that is an inventory management system. It runs the ad execution. It automates the billing process. It is a business and sales intelligence tool so we can understand our inventory levels, the fill rates across them, the pricing that we should be using to sell our content. As I said, it automates the whole billing process, so we are very lean on the finance side of the business. And that really just gives us really great intelligence into everything else that we do. So those are the three core parts of the Audioboom platform that is so integral to delivering value to our creators. And really that is now driving some significant scale. So running through that platform are more than 8,000 podcasts or 8,000 podcast channels. That content being created in those 8,000 podcast channels is being downloaded 130 million times every single month. Obviously, the more downloads that are happening through our platform, the more ad inventory there is available for us to sell. And we are currently reaching more than 34 million unique listeners around the world. So some really great scale developing in that platform, and that is building every single month. This chart is really showing you how we view our creators and the content model in Audioboom, but really this also represents podcasting in general, I think. Which is to say that to the left-hand side of this chart, you are seeing a very few podcasts delivering huge audiences and a very kind of quick drop-off as you move to the right, a long tail of content effectively. More podcasts, each delivering much smaller individual audiences, but coming together to put some very strong volume in place. So at Audioboom, we have our premium network. This is our biggest 200 podcasts, and that you will see here on the left-hand side of this chart. 200 podcasts, each one of them will deliver somewhere between 30,000 downloads to 2 million downloads per episode. So some huge individual shows within that premium network of podcasts. These are the shows that we focus on, mostly through our advertising teams. We work with them on a revenue share basis. And the business development to sign those top-tier podcasts, those big podcasts, that comes through our relationships with the Hollywood talent agents, WME, UTA, CAA, the biggest three of those Hollywood talent agents. So they bring us opportunity to work with their clients and the large podcasts that they represent. We put together a partnership deal with those large podcasts, and they come in and they come in as part of our premium podcast network. We also have Audioboom Studios, a smaller part of our business, just around 30 podcasts. Those shows deliver between 30,000 and 200,000 downloads per episode. A lot of that work in Audioboom Studios is to co-produce podcasts, and one of the biggest partnerships that you will know about that we have there is with Formula 1. So Audioboom is the official partner of the Formula 1 podcasts. We work with the team at F1 to co-produce two of their podcasts, Beyond the Grid and F1 Nation. And we provide recording and engineering of that audio, the post-production and the distribution, and also the commercial services there. So it is a very successful partnership and really represents what we do within Audioboom Studios. We have our long tail network. That is the rest of the 8,000 podcasts that sit on our platform. These are much smaller shows. They have up to 30,000 downloads per episode. Many of them pay us a subscription fee of $10 or $20 a month in order to use our platform and to use our tool set, but they also take advertising within their content as well. We do not focus too much on the acquisition of those shows. That is happening organically. Those shows are finding out about our platform and coming to us and signing up for accounts with us. We are adding their ad inventory to our platform to monetize as well. Again, just an overview there, I think that is helpful of our creator network and our content model. This is our revenue model within the business. This breaks down each of those key revenue strands. At the top, you are going to see the contribution that each of those revenue strands makes to our overall group revenue. At the bottom, you are seeing the gross margin on each one of those revenue lines. I will just walk you through those. Audioboom Studios part I just talked about, where we are co-producing or producing content in-house. 30 shows, as I said, and obviously because of the small number of shows, it is a relatively small contribution to our overall revenue, 4% of our revenue contribution. As you can see there, that has remained steady over the past two years. We do have a stronger gross margin on our Audioboom Studios work of 27%. That is because in many cases, we are controlling the production costs there. If we are working on a revenue share basis because we are adding the production as a service, we can create those relationships on more favorable terms than we can in other parts of the business. That is Audioboom Studios. Our premium network, those top 200 shows, they are always a big driver of Audioboom revenue. Over 60%, 61% of our revenue came through those top 200 premium shows in 2022. That is down a little on 2021. As you will see, we had a great successful year with Showcase and Sonic that began to deliver more of our revenue contribution. Premium sales, premium network, top 200 shows just remains the core part of our business going forward. Comes with that slimmer gross margin, 17% last year. That is slimmer than it has been before as we have in the weak ad market. We have had to pay some costs for minimum guarantees that were not achieved, and that has brought the gross margin down. What I mean by that is for a handful of our biggest shows, we deliver them an annual minimum revenue payment, in this down ad market, which I will talk to a little bit later in the presentation. We have on occasion missed some of those minimum guarantee payments. We still make the payment to them of that minimum guarantee amount, but we have not hit the required revenue. That has weakened that gross margin on the premium ad model. As the ad market improves over this coming year, we expect very quickly to get back to a place where we are delivering the full obligation on the revenue needed for those minimum revenue guarantees. Showcase is our automated ad tech part of the business. That is the advertising that is delivered automatically through the ad tech. We open up all of our ad inventory into a marketplace, and then buyers on the other side of that marketplace are buying and bidding to buy that ad inventory at scale very, very efficient. It is a really successful part of the Audioboom business over the past two to three years since we launched. Showcase revenue is now making up for 14% of the group revenue, up from 11% in 2021, and a minimal percentage in 2020. Showcase is growing fast, and we are very excited about the future of Showcase within the business. It also comes with a much stronger gross margin than our premium network. This is because we are using Showcase across the entire roster of 8,000 podcasts, not just those top 200. What that means is that the top 200, those shows are being signed to Audioboom via those Hollywood talent agents of UTA and CAA and WME. They are able to deliver more favorable terms for their clients, whereas in Showcase and for the remaining 8,000 podcasts that use the platform, Audioboom has more favorable terms in those agreements. That is why Showcase comes with that higher gross margin, and I am pleased that that is becoming a bigger part of the Audioboom business. Sonic is our platform for brands. It allows advertisers and brands to use a tool set to advertise in podcasts directly. The work at Sonic is done directly with the brand and with the advertiser. Again, it has been a fast-growing part of the Audioboom business over the past three years. Launched really in 2018 and is now at 20% of our overall revenue. Very pleased with the progress at Sonic. 14% gross margin on Sonic. Those of you who have joined us on previous presentations will have seen that gross margin lower in and around the 11% or 12% mark. We have worked really hard, I think, at improving that gross margin in Sonic, and we feel like we are in a much better and happier place with the gross margin at Sonic. That gross margin will always be a little lower than the creator side of the business because we are working directly with brands and giving the brands a platform and a tool set to utilize podcasting. We are aligning the gross margin there with a traditional ad agency commission or gross margin structure. The gross margin there will always be a little lighter than the rest of the Audioboom business, but I am very, very pleased with the growth of Sonic over the past few years. For subscriptions, that is not subscriptions for our audience to pay to listen to content. This is a subscription for a podcaster, a creator to use the Audioboom platform and the Audioboom tool set. Again, very small part of our business in terms of the revenue that it generates. Just 1% of revenue comes through those subscriptions. We are not actively marketing that platform. As I said before, the sign-ups, the podcaster sign-ups for that subscription platform, that is happening organically. But it does have a high gross margin, 91% gross margin. Very few costs associated with that subscription model apart from some bandwidth and distribution costs there. Hopefully that gives you a good overview of each of the revenue lines and some of the changes that are taking place across those revenue lines, particularly the growth of Showcase and Sonic and those two parts of the business becoming a bigger part of everything that we do. That's a good overview, I think, of the business model, where we sit in the industry, and everything that we do internally. Next, we will take a look at the performance over the past year and focus down on some of the detail that we put out in our trading update this morning. I will start off by walking you through the key numbers in that trading update. Firstly, $75.5 million of revenue in 2022. This was a record revenue performance for the company. Growth of 25% over 2021, where we delivered just over $60 million. That 25% annual growth was a significant outperformance of our competitors. We outperformed the wider podcast industry by 67%. The wider podcast industry was projected by PwC to grow at 15%. Once again, we've outperformed the wider industry. That growth, that 25% annual growth and that $75.5 million revenue number, we did see a significant impact on that by the ad market downturn caused by global macroeconomic conditions in the second half of the year. We believe that the ad market downturn impacted our revenue potential by around 20% for 2022. Looking at the adjusted EBITDA profit for 2022, that profit stands at $3.6 million. That's record adjusted EBITDA profit for the business, 16% annual growth over 2021 when we delivered $3.1 million in profit. That EBITDA, again, impacted by the ad market and the revenue impact that we saw because of the downturn in the ad market. But obviously that growth in the EBITDA is lower than the revenue growth. We're not seeing any type of gearing, and we're not seeing a full flow-through of that adjusted EBITDA growth. Brad will talk a little bit more about that later on in the presentation. But obviously, EBITDA is impacted by the lighter revenue, but also those partner minimum guarantee payments that I mentioned before. Where we are paying the obligations that we have on their minimum guarantees, that's a direct impact on the adjusted EBITDA. Then also we're obviously coping and managing inflationary pressures on our operating costs as well, particularly across the second half of the year. $3.6 million of adjusted EBITDA, still a record number for us, but impacted by some of those factors. Finally, $8.1 million of cash at the end of 2022, which was a significant step forward from a year earlier. We generated $5.1 million of cash during 2022, up from that $3 million a year ago. That's the highest cash position reported by the company. Obviously, critical at this time in an uncertain world to have strong cash on hand. Very pleased to report a record cash position of $8.1 million. It goes without saying that we're fully funded at this point for the current growth plans. We have a further $1.8 million available to us in an overdraft facility as well. Access to around $10 million of cash puts us in a strong position to cope with anything that's thrown at us going forward. Let's talk about some of the key points around that 2022 performance, both in terms of revenue and just overall operations. I think the first one to highlight, which we talked about a little earlier, was the Showcase performance. The revenue growth of Showcase, that automated ad product, was 70% in 2022. While the wider business grew at 25%, Showcase on its own grew at 70% in 2022, which is a fantastic result. That is growing because of two things. One is the supply that we're putting into that marketplace. Last year, we made 4.1 billion ad impressions available within that marketplace. That number was enhanced really by two things. One, our tool called AdRip that we launched just over a year ago and how our creators are now using that AdRip tool to create new ad inventory in their back catalog so that we can continue to monetize content that is five or 10 years old, and that's adding to the volume of ad inventory that we make available there. Secondly, we are upgrading our creator contracts to ensure, A, that they use AdRip as a tool. We contract them now to use AdRip as a tool to make more ad inventory, and also to use Showcase alongside the premium live read ads that the shows take. Showcase is becoming something that our creators love to use. They see the benefits of using Showcase. We're now contracting our creators to use Showcase. We're having them utilize our tools to create more ad inventory all the time. That's the first driver of that Showcase performance. The second driver of that Showcase performance is what we do on the demand side and the buying side and the advertiser side. We add new demand-side partnerships in there, and we've added a host of new demand-side partnerships this year from Amazon to Spotify to The Trade Desk to some international partnerships as well. That improves our fill rates to above 55% for the year. On one side, on the supply side, we're adding inventory, and then on the demand side, we are adding monetization partners to buy that inventory from us. Second part and second key point, I think, is the further expansion of our creator network. That's that premium creator network, those top 200 shows. We are continuing to firstly add new shows into there. Just last week, we announced five new top-tier shows that are joining our creator network. The Tim Dillon Show is kind of a monster of a show, one of the top comedy podcasts in the U.S. and delivers millions of downloads every single month. Myths & Legends, Nateland Podcast, Minds of Madness, Sinisterhood, all top-tier podcasts that come with a built-in audience that we can monetize from day one. Our second announcement, just last week for that creator network was the multi-year renewal of some of those key partnerships that we already have there. Mike Rowe, RELAX!, Two Hot Takes, three big shows all in our top 15 biggest shows. We've now renewed those partnerships, and we continue to work with those shows for many years to come. Just expanding and consolidating that creator network remains a key focus for the business. And then finally, just on this section, I wanted to just mention the growth of Sonic, our brand platform as well. Again, has grown faster than the wider Audioboom business. A growth of 37% in terms of revenue in 2022. Sonic is doing a fantastic job of scaling that business. So we are scaling through a focus there on premium clients, bigger brands that we can access that can come in and use that platform. Brands who are spending more than $100,000 a month in podcasting are now utilizing that platform to access ad inventory in podcasts globally. The other thing that we are really doing with Sonic, which is making some good strides, is to align Sonic and Audioboom more through our ad tech. So Sonic are able to utilize the same ad tech that Audioboom utilizes to scale campaign reach. They are able to increase automation that just helps with the growth of Sonic, and improve the ROI for their clients, so that those clients' budgets can increase, and we can just drive more revenue through the Sonic platform. So a great year for Sonic. A great year for Showcase, and I am pleased that the creator network continues to grow quickly. I want to put some of the performance and those numbers into perspective. We know that they were impacted and restricted somewhat by the wider ad market conditions in 2022. But this chart on the left is showing Audioboom's growth over the past five years against the wider podcast market growth. I touched on it before, but growing at 25% in 2022 was a significant outperformance against our competitors and against the wider industry. The wider industry only grew at 15%. That is the fifth straight year that we have outperformed the industry, and we believe we will outperform the industry again in 2023 to do six years in a row of outperformance. In that time, we have taken market share, the Audioboom market share, from less than 2% to greater than 6% across that time, which is something we are very immensely proud of, I think. Our target is to get to 7% over this next year. So continued outperformance of the industry despite those weak ad market conditions, I think is a big achievement. On the right-hand side here, this is a ranker of the largest podcast publishers in the U.S. That is a key market for us. As you will see here, Audioboom is the fourth-largest podcast publisher in the U.S. This ranker is from Edison Research. This is not an opt-in ranker. Some of the podcast rankers that are out there, the podcast companies need to opt in for, but this Edison Research ranker measures all podcast consumption and all podcast businesses that are out there. So Audioboom very firmly here, they are the fourth-largest podcast publisher in the U.S. for the past year. Again, if you look at the names that we are competing with here, we are doing something very special to be fourth around Sirius XM, Spotify, iHeartRadio, NPR, which is the BBC of the U.S., Wondery, which is an Amazon company, The New York Times. These are the huge media companies with billions of dollars to spend. So the work that we are doing is, I think is, as I said, very special and super proud of the team here, for putting us into that fourth position in terms of U.S. podcast publishers. Let's drill down on those three KPIs that we update each quarter. These are really KPIs that are really focused on the core part of the Audioboom business. The first of them is global downloads. Obviously, global downloads equals ad inventory. So the more downloads, the more ad inventory we have to sell, the more revenue that we can drive. This chart looks a little different. You'll see two lines on this chart. The green line is the overall line. The pink line is the line that we have here measuring downloads when we remove Morbid. Morbid was a big show that was on the Audioboom platform until May of this year. It's one of the biggest shows in the world. Unfortunately, Morbid left the Audioboom network when its contract came to an end in May. I want to show this chart with that pink line in place because that really focuses the underlying growth of Audioboom. Obviously, the delta between the two lines is what Morbid was delivering every single month. But if you focus on that pink line and then the route forward, you can see the underlying growth in Audioboom is good. That would be 20% year-on-year growth, Q4 to Q4 with Morbid removed there. Also I want to highlight, I think that Q4 had 9% growth over Q3 of 2022. So download growth is heading in the right direction. The underlying growth has always been there. We would expect those new signings, those five new signings that I talked about on the last slide, to add around 8 million monthly downloads to this chart once they are fully up and running and fully in place on the Audioboom platform. In total, across 2023, we're expecting somewhere around 1.6 billion downloads of Audioboom content across the year. So, pleased with the continual uptrend of that global downloads KPI. Brand count measures the number of customers that we have, the number of advertisers that are buying ad inventory through the Audioboom platform. We have changed this metric a little since you last saw it. Because of that success of Showcase, we are now including Showcase advertisers in this brand count number. Previously, we were only showing the advertisers, the customers that we dealt directly with through our in-house sales team. Now, this KPI will include the brands and advertisers that buy our content through the Showcase marketplace. So that's why you'll see the change there. But I think the best thing about this is the sharp increase in the number of those customers, 47% annual growth in the number of brands advertising across Audioboom. Now, we will likely see a seasonal dip in Q1 of 2023. That's to be expected. You can see that actually on that chart last year, that dip from 4,000 to 3,700. But we'll get that this year again. But all in all, just very fast growth on that brand count number there on that KPI. Finally, eCPM, that's our optimization metric. eCPM is the value that we are able to extract from every 1,000 downloads on our network. So, really looking at optimization and value. We are extracting currently, in Q4, we extracted $55 for every 1,000 downloads. If you focus in really, I think, on the right-hand side of this chart, you will see really strong growth through to the end of last year when we hit that number of $56 per 1,000 downloads. You then saw the Q1 seasonal drop-off, as to be expected, down to $51 per 1,000 downloads. Q2 of last year was a record number, $57 per 1,000 downloads. Then the ad market downturn kicked in Q3. It reduced that number to 50, but I am really pleased that things are heading back in that right direction at $55 for Q4. That is because of that sequential revenue growth that we have seen from July onwards each month grew in terms of revenue across the second half of last year. That is reflected there with the $55 eCPM number. Like brand count, we will see that drop off again in Q1. That is seasonality. Then we will head back in the right direction in Q2 onwards in 2023. Also worth noting, I think there just on the eCPM number, we really are a premium business. We are extracting almost double the value from each 1,000 downloads that some of our competitors are extracting. We see that from a couple of those companies that are publicly traded. They release similar stats, and we see that we are extracting almost double the value per 1,000 downloads than our competitors. So, I am really pleased with the KPIs across this quarter and this past year, apart from some seasonality in there and obviously the impact in Q3 of last year of the weaker ad market, those KPIs are all heading in the right direction and setting us up for good growth in 2023 also. Brad, I will let you pick up for a few slides here. Okay. Thanks, Stuart. Hi, everyone again. Next few slides focus on some financial information. Just to update everyone on the full year. Obviously, done this throughout last year every quarter as well. The first one here, we can see our revenue and EBITDA progression over the last five years. So we have positioned ourselves among the leading podcast companies in the world. Recognized revenue growth, which is above the wider podcast industry for a fifth year in a row and increased our market share. We transitioned this company from a loss-making position to one that now has recurring adjusted EBITDA profitability, and that has all been achieved with access to fairly limited resources, which is good performance from everyone in the company. 2022 was our strongest year yet. Revenue increasing by 25%, adjusted EBITDA increasing by 16%. Cash grew by over $5 million. To be able to say that we are growing faster than our competitors, to be profitable, when many other tech-based entities and many of our competitors are loss-making, to say that we are cash generative, we have a very healthy balance sheet, especially in this economic climate. There are some very good messages to be able to deliver to investors today. We said the results are not initially what we expected when we came into this year, and we set our expectations for this year. It is a smart business that we have built, so when that top line does not quite get to where we expect it to, there is a cost base that flexes below it. We can come on to costs very shortly. Working to ensure 2023 will be another record-breaking year for the company, and we have announced today that we have made another strong start with our forward pipeline of advertising bookings as well. Going on to revenue and costs, we can see the revenue trend over the last couple of years, and it is encouraging that we have seen that recovery that we mentioned in Q3 that started in August and September. That flowed through to the final quarter, where revenue increased by 14% quarter on quarter. In terms of growth across the revenue mix, there has been impressive growth statistics across that revenue mix. The categories that Stuart took you through earlier on, the premium network growing by 16% year on year, 70% growth, really good on marketplace, and 37% growth within Sonic. That entity has actually trebled its top-line revenue in 24 months, going from $5 million to $15 million in a couple of years, which is really good performance. Revenue grew at 25%, as we know, year on year, but OpEx increased at a slower rate of 8% year on year. Q4 2022 was 25% lower than Q4 of 2021, 32% lower than the first two quarters of the year. I suppose you are asking why. How have we done that? As I have mentioned before, there is flexibility in that cost base. Material costs within Audioboom being staff and technology costs, the material cost categories within the business, they do vary dependent on performance. Lower tech costs are incurred if there is lower bandwidth being utilized, which we saw in the second half of the year versus the first. Staff cost flex as well. A lower revenue equals lower sales staff commissions and for non-sales staff remuneration as well. That also varies depending on results delivered in the year. We have seen that cost reduction in the final quarter of the year. If you are new to this business, it is not a business that is lumbered with high recurring costs or stock, for example. It does not have a high headcount. When there are those macroeconomic challenges, which we have seen this year, we are well-placed to weather those. I think as well, the benefit, if we were to go back to the previous slide, but the benefit of the company being in a loss-making position up until 2021 is that we have had to make this company work with constrained resources. We have implemented excellent financial discipline within the company, good financial processes as well that are able to support that growth. As we go through that growth phase, that discipline in terms of cost control, those are things that are well instilled within the company. With OpEx, we don't stand still. We're constantly reviewing that. Stuart will give a bit more detail on those small staffing changes that we made last week. Our headcount as of now is 39 versus 45 as at the end of December. Those types of decisions that we make, they're always done to make sure that our available resources are allocated to the areas that we expect will drive maximum growth for the business. In terms of working capital, this is my favorite slide of the deck. My finance team in the business are relentless in their work to ensure we get maximum benefit out of the working capital cycle. Again, another function of being that loss-making company a few years ago, that's installed really good discipline into the company as we go through that growth phase now, which is great. This is the fifth successive quarter where I've said we've increased our cash reserves. At the end of December, we held $8.1 million in cash, $0.1 million up on Q3, $5.1 million up on a year ago. The majority of our cash reserves are held in dollars. Company recognizes over 95% of its revenue in the U.S. We invoice and receive the majority of our billings in dollars. $8.1 million excludes a $1.5 million multi-currency overdraft that we have available to us as well. We've got around $10 million available to utilize within the company as well. In terms of collections, particularly in December, last two weeks of the year, very, very strong. It took us to $17.6 million for the quarter. Total collections were 52% up year-on-year. We averaged $6.4 million a month. Over the last three years, we've collected an average of 94% of revenue booked in the year. All those statistics are really good, really pleasing statistics. It's really good as well that the growth we're recording has come without taking any unsustainable credit risk as well. There's a very low level of bad debt write-offs, very small relative provision for bad debts within the company as well. In the quarter, collections were $0.6 million higher than our payments. In the quarter, all material podcast payments were settled up to the end of November, commissions were paid, advances totaled $0.1 million in the quarter, taking us to $2.1 million for recuperable advances in the year. That was up from $1.9 million in 2021. The strong collections enabled the debtor days to decrease to 68 for December. That's 26 lower than the 94 we reported in December of last year. That's particularly pleasing, given we've implemented a new accounting system in the year. We're now a three-person finance team. That implementation was challenging, but it's pleasing to see that has had an immediate positive impact with those process improvements immediately coming through within Audioboom. We'll roll out those automated debtor chasing processes and the quicker payment runs into our subsidiary, Sonic, in 2023 as well. Overall, when you're looking at this business, in summary, working capital cycle, that continues to function very well as it has done over the last few years, but even more so now. Company has more cash reserves than any other point in its history, fully funded for our growth currently. Cost base that flexes in part to the revenue and ad pressures that we recognize grew faster than the wider podcast market. In summary, we're as well positioned as we could be heading into 2023. I'll leave it there and hand back to you, Stuart, for the final few slides. Thanks, Brad. I think that also answered a few of the questions that have come in, but if there are any more questions, probably now is the time. I've got two more slides left, and then we'll get to a few questions just before we end here in about 12 minutes. Future focus then. I think let's just talk about the ad market trends. Obviously, the ad market trends have played a big part in our performance over the past six months. We saw a very quick weakening of the ad market back in June of last year. July was our revenue low point, and then we saw month-to-month revenue growth across the rest of the year, with December individually having the highest revenue since May. Revenue per month heading back, obviously, in the right direction. Q4 of last year, seasonality in the ad market, Q4 was buoyed by the NFL season, World Cup, Thanksgiving, and Black Friday here in the U.S., and also Christmas. As I said before, Q1 is always seasonally softer. We see it every year at Audioboom that the Q1 is seasonally softer. We will see that in Q1 again this year. In terms of the wider trends, I do expect the U.K. advertising market to be slower in 2023. That has a bit of a lag, I think, over the U.S. market that was impacted first by global economics. But only 5% of the Audioboom revenue is exposed to the U.K. advertising market. I think the positive part is that the U.S. advertising market will steadily recover over the years. It's not going to be an immediate early year recovery, but I expect to see a steady recovery in the U.S. ad market across the year. Just as a reminder, 90% of our revenue is exposed to that market. Podcast industry outlook. PwC are projecting that U.S. podcast revenue will grow 8.1% in 2023. Again, we are targeting to outperform the industry for the sixth straight year, targeting that growth in market share to 7%. In terms of progress, we are making good progress there despite operating this year in a much weaker advertising market. Our current advertising bookings for 2023 are above $44 million at this point. You can do the math on this, but over the past five years, we've averaged, at the end of January, our bookings number has been 53% of the final revenue number at the end of the year. I've seen a couple of questions just come in on that. We usually average 53% of the full year's final revenue number at the end of January. Right now, at this point, we're at $44 million. I think that is good progress to where we're going for this year and is certainly showing a route to some good growth again within the business. One discussion I saw on some of the message board, bulletin boards this morning was suggesting that that $44 million that we have booked is actually a red flag because we had $44 million booked at this point last year. There was a suggestion that that wasn't focused on growth. If you think about last year, we had $44 million booked, but the second half of the year decelerated and showed very little bookings growth in the second part of the year. This year, we are coming off that base of $44 million now, and we are seeing improvement in the ad market across the year. We expect to see an acceleration in those bookings across the year. That is a path to growth and is certainly not a red flag in any way. I believe our progress at this early stage of the year, operating in a weaker ad market where brands are being more conservative and are not planning as far into the future, as far into 2023 as they have done previous years, I think that's a good position and a very pleasing position to be in at the end of January. In terms of operations, the focus for this year, Brad kind of touched on it, but we are very focused on the management of our operational costs this year. Mainly to make sure that the resource that we do have is pushing in the right areas. Last week we did implement a headcount reduction. Six heads left the company, as Brad said. We are down to 39 heads, which is the lowest point in the company for some time, but certainly doesn't impact operations in any way negatively. We've got a lot of automation into the company in that time. We figured out how to scale this business. We continue to work with a lean headcount, much leaner than many, many, many of our competitors who have headcounts in the hundreds. That was one step that we took last week. I think the other kind of big one is really the renegotiation of some of our third-party technology costs that we have, like ad servers, some ad tech, IT platforms. Those were successfully renegotiated, and the savings across those two points there are more than half a million dollars. We have definitely a focus there on our operational costs. Part of that headcount restructure, I think, is giving us the ability to reinvest into one key part of our business, which is our sales organization. Audioboom has a very small sales department. Again, compared to our competitors, we have a seven-person sales team split across the U.S. and the U.K., and they are very much focused on one particular type of advertising for podcasting. That's a direct response advertising with direct-to-consumer brands that can measure the ROI and the impact of their ad campaigns. They tend to be smaller, more disruptive brands with smaller budgets, but have been a real core part over the last five or six years of podcast advertising revenue. The restructure allows us to refocus what we do on the sales side. We will invest into that sales team, add to that sales team and build out a new sales unit that will now be focused on brand awareness. When I talk about brand awareness, these are generally bigger, more established brands and advertisers, much bigger budgets, much more blue-chip organizations. They are working with larger advertising agencies, and they are budgets that we have not been accessing to this point. We haven't had the sales team focused on that type of advertising sell. We will develop that brand awareness sales team, and they'll be tasked with capturing budgets from those larger brands and larger agencies. To make that restructure work and to refocus what we do on the sales side, I'm pleased to let you all know that Jenni Skaug, who was previously launched and was leading at Sonic, and has grown Sonic from a zero-dollar business to a $16 million business over the past three or four years. She will be promoted to Chief Growth Officer, and she will lead all of our revenue-driving activity across Sonic and Audioboom in the future. Jenni's worked very closely with me over the past three or four years, and she's fantastic at what she does in podcasting. I think what we'll also be able to do is have Jenni have a much closer relationship with investors and shareholders. We can have her join one of these meetings in the future to talk about sales strategy and revenue growth strategy, which I think will be a great thing for us to be able to do. We're restructuring and we're reinvesting into our sales organization to make the revenue-driving part of the business even stronger. Another core focus is around the opportunity to increase our signings of tier 1 podcast creators. We announced a slate of new signings last week, but I think in this current market, there are fewer competitors that are able to offer the best creators out there guaranteed financial support and strong financial packages. I think we are able to offer those shows, the talent, those creators good strong financial packages. We'll be able to sign a higher number and a higher level of tier 1 podcast creators than we have been able to during the upmarket of 2020 and the early part of 2021. I expect to see some really strong growth this year in our creator network because of that opportunity. Finally here, I think just to say that one of those cost management focuses is really the refocus of Audioboom Studios. We're going to shift our approach around Audioboom Studios. We have been developing original content and original IP that comes with higher upfront investment costs, very risky, high marketing costs to market and to launch those podcasts. We will shift the focus of Audioboom Studios to be a production-as-a-service unit for Audioboom. So if you think about the way that we work with Formula 1, we are offering production to Formula 1 as part of a wider partnership with them. We produce their content, but we are also distributing that content and monetizing that content for them. So that will be the shift in focus of Audioboom Studios to remove those upfront higher risk development and marketing costs in Audioboom Studios. I think just to summarize on 2023 and beyond, we expect steady improvement in the ad market in the U.S. We expect to outperform the wider podcast market once again for the sixth year in a row. We have made great progress there with $44 million booked today, and that has given us a good path to strong growth again this year. Focused on operational costs, restructuring and investing into sales to drive that revenue. We think there is a great opportunity there as well to sign more and more top-tier podcast creators to the network. I know we have done a full hour, but we have not had a chance to do any questions. Jake, if possible, can we still fit in a couple of questions at the end here? Stuart, absolutely. Brad as well, thank you very much indeed for your presentation this afternoon. Stuart, Brad, as you can see, we have had a number of questions throughout today's presentation. Thank you to all of those on the call for taking the time to submit their questions. Stuart, if I may just hand back to you just to respond to those where it is appropriate to do so, and I will pick up from you at the end. Thank you. Yeah. I think maybe we will just focus on four or five of the most popular ones that have come in, perhaps, as I know we are up against it with time. First one is how do investors assess the value of the new shows that you announced last week? Yeah. It is a good question to think about the value that they would deliver. I think the simplest way to answer that is to look at our eCPM KPI, the value that we extract from 1,000 downloads. That figure for Q4 was $55. I guess in that example if I tell you like I did earlier on, that those new signings will start to deliver around 8 million downloads per month to the Audioboom network. If you take that $55 eCPM number across those 8 million downloads, I guess that is giving us somewhere in the region of $400,000 a month, so maybe $5 million a year in terms of revenue attached to those five shows that we talked about earlier. That is probably the best way, I think, to understand the value of any of our signings, is to look at any download data or information that we give alongside those, and then put that eCPM number across that. Next one, Jack C. has asked this. I saw it from a couple of others as well. It kind of relates to the last one, but it says, "How do you improve the eCPM, as that appears to be one of the keys to faster growth? What factors go into that eCPM?" Yeah, obviously, it is operational leverage when you think about that eCPM. You could have the same number of shows with the same number of downloads, but if we are able to really extract value from that through operational leverage, the three things that we are talking about, and that go into making that eCPM number, one is the number of ad slots in each piece of content. Two is the price we can sell each ad slot for, and three is how many of those ad slots we do sell. That would be our fill rate. Improvements to each one of those compound, and they will lift that eCPM number. Out of the three that I talked about, pricing is the one that we will not improve greatly. I think the market is deciding the pricing there, and our pricing is already pretty strong versus the market. We are not going to improve that pricing greatly. We are really more focused on increasing the number of ad slots in each episode, and then also improving fill rate. How do we do that? I think the first one when it comes to increasing ad slots is something I talked about earlier, which is when we are renewing those contracts or making new contracts with our creators, we stipulate a higher number of ad slots within their content. We are not just limiting those to mid-roll ads anymore. We are contracting pre-roll ads and post-roll ads. We are contracting people to use AdRip to create more ad slots within their content anyway. Our medium-term goal in number of ad slots is to, I guess, have a 6 to 1 ratio. So six ad slots for every piece of content. In 2021, that number was below four, so that would be a significant step up, and again, speaks to that operational leverage point there. Then fill rate is really going to be improved by increasing our sales resource, which I just talked about. We invest in our expanded sales team in 2023, and being strategic about who they are selling to. As I said, our current sales team is focused on one set of customers, direct response brands. The team that we invest into, the team that we build, will be focused on selling to larger, more established blue-chip brands that will be accessing a whole new type of customer, and that will be incremental fill rate over what we already do. Those three things together, improving two of them through that focus and investment, that will compound, that will lift the eCPM number, so we start to deliver more value for every 1,000 downloads. Brad, I'll give this one to you. Tony F., and a couple of others asked this, "What are your plans for utilizing the cash that you now have available in the business? Yeah. I saw that one coming from Jack C. as well. on the cash, obviously cash is something that I'm absolutely obsessed with. I think today we've highlighted the efficiency of our working capital cycle. We've spent the last five years trying to perfect that working capital cycle as best we can. We've obviously made that transition from cash conservation when we were loss-making into now being cash generative and profitable, and obviously they present different kind of requirements and challenges, if you like. I think in terms of the resource that we have available to us, obviously we've mentioned the changes we made structurally. We funnel our resources to the areas in the business that are going to drive the most growth. Outside of that, there are things that we as a company continually monitor as well. Obviously the signing of new agreements with podcast partners and the financial commitments that come with some of those tier 1 partners. That's an important part of our growth going forward and capital utilization. There's a lot of M&A in podcasting as well. Is that something that we can ourselves benefit from? We're continually looking at opportunities on that side. I think third area is assuming we have a sufficient level of cash reserves and that they continue to grow, we continue to have a healthy balance sheet. Are we going to be in a position to be able to pay dividends to shareholders as well? That's something that we're going to review as well in the future. But overall, number one priority is obviously to make sure we have the healthiest balance sheet that we can. And at this point in time, we do have that. Should there be any other areas to exploit, given the things I've just mentioned, then as and when we do those, we'll update the market as we always do. Thanks, Brad. Quick one here says, "You've included subscriptions as a revenue stream for the first time. Is there a reason for doing this? Are you planning on growing this part of the business?" Not really. It was really included for the first time because that chart otherwise always adds up to 99%, and we're always left with the question as to why that adds up to 99%. We just added that subscription model into there at 1% so that it looks a little clearer. I don't think there's any major focus on growing that at this point. Mainly because there are many other podcast tool set companies out there that offer their tool sets for free, so it's not really an area that we would focus on or look to grow. Maybe one final one here just says, "On the Triton podcast ranker, downloads for the U.S. appear to decrease in recent months. What's the reason for that? Should we be concerned?" Actually, I've also seen this as a discussion point over the last few weeks, I think on some of the bulletin boards, so it's worth answering. I think nothing to be concerned about. There's a strong level of seasonality in our download numbers, especially in Q4. Particularly with that number, which is a U.S. number. November in the U.S. is affected by the extended holiday for Thanksgiving. Our content creators will often use that as a week to take a break, so there's less content to listen to. Plus, around holidays, listening is generally soft also. We see that same thing happening in December. Although it's more of a global trend around Christmas. If you then look at November and December and compare it to September and October, when the maximum number of people are back at work after the summer holidays and school after the summer holidays, you're of course going to see a seasonal change in that time. I would just recommend not looking at individual months. That's why we do our downloads KPI as a quarterly number. It smooths out any individual months. In that KPI, just as a reminder, you can see that Q4 did grow against Q3, so it was up 9% against Q3. The best comparison to make is an annual one. Because of the seasonality look at the whole quarter versus a year earlier, that will always give a true reflection on growth. No, don't be concerned. Downloads are heading in the right direction and continue to head in the right direction. The new content signings will add to that as well. We're all good there. Back to you, Jake, I think. I think we've overrun significantly. Stuart, thank you. Thank you very much, and Brad as well, thank you very much for addressing all those questions that came in from investors this afternoon. If there are any further questions that do come through, we'll be able to give these back to you immediately after the presentation has ended for you to review to then add any additional responses, of course, where it's appropriate to do so, and we'll publish all those responses on the Investor Meet Company platform. Stuart, perhaps before redirecting those on the call to provide you with their feedback, which I know is particularly important to yourself and the company, if I could please just ask you for a few closing comments to wrap up with? That'd be great. Yeah. Thank you, sir. I've taken up a lot of your time today already, and we've overrun, but I do appreciate you all joining us today. Appreciate the continued support of this business. It is a really great business. We have a really good future ahead of us. Yes, we've been working in a challenging environment in the second half of last year. But when you look at the fundamentals in the business, the model that we have, the progress we've made on that mission to deliver value for our creators and brands, and the understanding that we are continuing to add new revenue products and grow each of those revenue products, and add creators and shows at scale to Audioboom. I hope you can see that we have a path of growth ahead of us, and we think momentum in the wider ad market will begin to pick up again across 2023. We'll continue to outperform our competitors. This is a real special business. The team here are fantastic. I think 2023 is going to be a positive one. Stuart, that's great, and Brad as well. Thank you once again for updating investors this afternoon. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in all that the management team can better understand your views and expectations. This may take a few moments to complete, but I'm sure will be greatly valued by the company. On behalf of the management team of Audioboom Group PLC, we would like to thank you for attending today's presentation. That now concludes today's session, so good afternoon to you all.