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Podcast profits surge at Audioboom

Global monthly downloads are up 35 per cent year on year
July 19, 2022
  • Focus on high-margin podcast production
  • Advertising downturn could hamper growth 

Audioboom (BOOM) seems to be doing everything right. The Aim-traded company has an inventive business model, connecting podcasters with advertisers, distributing shows across a variety of platforms, and producing its own content. 

Podcasts are now big business, and the group is growing fast. Global monthly downloads have risen by 35 per cent over the past year, and revenue almost doubled in the past six months. This helped it to achieve adjusted Ebitda of $2mn (£1.66mn), up from $0.2mn in 2021.

Audioboom’s cash position has also strengthened and debtor days have fallen, suggesting it is getting better at collecting the money it is due.

Gross profit margins have shrunk slightly, from 22 per cent in December 2021 to 20 per cent in 2022. This is not necessarily alarming, however. The group has a mix of revenue streams, contributing a wide range of gross margins. Audioboom Studios, for example, contributed a 31 per cent gross margin in 2022, and management said this will be a “key area of focus” going forwards. In contrast, the growth of  “sonic influencer marketing” – which has a margin of just 10 per cent – has affected group-wide figures.

Advertising revenue more generally is worth paying attention to, however. Average global revenue per 1,000 downloads rose by 12 per cent in the first half of 2022, and the group has already secured advertising bookings of more than $68mn for 2022 – 13 per cent higher than the entirety of last year's revenue.

However, management expects the advertising market to be “further tested” by the economic downturn and has noted a softening in advertiser demand for the third quarter of 2022. It added that it is too early to report if this will continue into the fourth quarter.

Given Audioboom’s hefty valuation – it has a forward PE ratio of 38 – this might be cause for concern. Hold. 

Last IC View: Hold, 2,067p, 25 Apr 2022

AUDIOBOOM (BOOM)    
ORD PRICE:723pMARKET VALUE:£118m
TOUCH:720-726p12-MONTH HIGH:2,279pLOW: 721p
DIVIDEND YIELD:nilPE RATIO:17
NET ASSET VALUE:107¢NET CASH:$5.28mn
Half-year to 30 JunTurnover ($m)Pre-tax profit ($m)Earnings per share (¢)Dividend per share (¢)
202122.8-0.46-3.00nil
202240.90.574.00nil
% change+79---
Ex-div:-   
Payment:-   
£1 = $1.20