Audioboom falls to a loss after advertising squeeze – could it rebound?

Audioboom (BOOM) shareholders have been on a wild ride over the past 18 months. The shares peaked at 2,260p in spring 2022, but crashed shortly afterwards, and are now worth little more than 200p. 

The podcast publisher has been wrestling with a number of challenges, but the state of advertising markets is the biggest. Markets in its key territories “weakened significantly” in mid-2022 and have continued to struggle in 2023.

The type of companies that tend to advertise on podcasts has exacerbated the problem. “Podcasting's core customer group of 'direct response' or 'performance marketing' brands... have been particularly impacted by the downturn,” Audioboom explained. 

These brands are generally smaller, direct-to-consumer companies, and track the performance of each podcast advert they buy. Given the difficult economic backdrop, their budgets have decreased by a quarter.

Audioboom is suffering as a result. Revenue was down by over a fifth year on year and the group fell to an operating loss of $10.6mn (£8.1mn). As a result, its maiden dividend has been pushed back until next year. 

This can’t all be blamed on poor advertising sales, however. Management also reported a hefty “one-off” cost of $8.9mn relating to an onerous contract. Meanwhile, an extremely popular true crime podcast called Morbid left the platform last May. Morbid generated $7.5mn of sales in the previous period.

Generally, however, Audioboom still seems popular with podcasters and listeners. Global monthly downloads reached a record 135.2mn in May and the group has a host of new exclusive partnerships with creators. 

Crucially, the group is also debt-free. While it is struggling at the moment, therefore, we remain hopeful that this Aim-traded minnow could rebound when macro conditions improve. Hold. 

Last IC View: Hold, 723p, 19 Jul 2022