Audioboom's platform is easily scalable

Audioboom (BOOM) connects podcasters with advertisers. The appeal of the company is obvious; platform businesses are asset light and benefit from network effects, which means once they gather momentum, they can scale quickly. On top of this, the podcast market is growing quickly and is expected to keep expanding as more people get access to smartphones.

These forces combined to drive impressive growth at Audioboom last year. Revenue increased 125 per cent to $60.3mn (£47.3mn) – which significantly outpaced the wider industry. Top-line growth helped it achieve an adjusted cash profit of $3.1mn, a swing from a loss of $1.8mn last year.

Both the number of downloads and the amount of revenue generated from each download is increasing. Average monthly global downloads rose 39 per cent to 113mn in the fourth quarter, while average revenue per download was up 39 per cent to $56 per 1,000 downloads.

To improve the return on advertising investment, Audioboom officially launched its Showcase product in November – but it was operational across the year. Showcase allows Dynamic Ad Insertion. This means new ads can now be inserted into back catalogues of episodes. Around 50 per cent of consumption comes from back catalogue episodes.

Another area of investment is in production. Audioboom is now producing some of its own shows and creating others in partnership. For now, not too much is being sunk into production. Recent results at Netflix offering a somewhat cautionary tal about the pitfalls of investing heavily in content. Purely platform services attract less hype but they also come with less risk. 

The global podcasting market was valued at $11.46bn in 2020 and is expected to grow at a CAGR of 31.1 per cent from 2021 to 2028, according to Grand View Research. With a growing market and a scalable platform, it makes sense that Audioboom trades on a pricey 2023 PE ratio of 80.

The question is whether appetite for advertising spend will remain? Business confidence is falling in the US and UK as inflation grows, which could mean a cut back on such spending. Hold.

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