7digital Group plc (AIM: 7DIG), the global leader in B2B digital music solutions, today announces its preliminary results for the full year ended 31 December 2017.
- Excellent progress made in building the business and solidifying the Company’s leading position in the rapidly growing streamed music market
- 7digital is now the premier supplier of business-to-business music and radio streaming services to corporates in sectors including retail, telecoms and the automotive industry, who are looking to strengthen their consumer offering
- Established position within the music industry – all the major labels are now customers of 7digital
- Organic and acquisition-led growth has positively impacted the financial performance of the Company with strong contributions seen across all revenue streams
- Operational savings already realised and the process is continuing into 2018
- Transformative deal with MediaMarktSaturn (“MMS”), Europe’s largest retailer of electronics and entertainment, to build their digital music services in 15 countries
- Successful acquisition and integration of 24-7 Entertainment (“24-7”), the only remaining significant business-to-business European competitor, expands client base which now includes MMS and Danish telco TDC
- 50% increase in revenues to £16.80m (2016: £11.21m)
- Improving sales momentum with licensing revenues up 74% at £11.61m (2016: £6.67m)
- 63% reduction in adjusted EBITDA loss to £1.60m (2016: £4.31m)
- 33% reduction in adjusted operating loss to £3.76m (2016: £5.60m)
o including one-off costs of acquisitions and share-based payments, unadjusted operating loss reduced to £4.97m (2016: £5.46m)
- Gross profit margin now 72% (2016: 69%)
- The Board is confident that the Group will be able to operate within its existing financial facilities with additional support from two major shareholders
- Momentum continued into H1 2018 with H1 total sales, before full consideration of revenue recognition, up 57% to £9.33m (2017 £5.93m)
- The Directors believe that the further convergence of the acquired businesses in 2018 will lead to operating profit and positive cash flow
- New interim CFO in place and recommended improvements to financial reporting systems being implemented
Simon Cole, Chief Executive of 7digital, said: “2017 was a transformative year for 7digital where we have solidified our leading position as a business-to-business platform in the rapidly growing market for streamed music and radio services. As expanded on in the Chairman’s Statement, we have put a difficult situation behind us in the publication of these results, but I believe we are in a very healthy position to continue our growth, as reflected in the figures, deliver on our strategy and reward shareholders.
“The Group continued to expand its customer base which already included nearly 50 companies across an increasing range of geographies, strengthened its relationships with the music industry, with all major labels now customers and improved the quality of its business through the visibility of its revenues. This was highlighted in particular by the acquisition of our major competitor 24-7. This not only increased our European penetration, but also led to expanding our contract to deliver new music services for MediaMarktSaturn, Europe’s largest electronics retailer, who also become a key shareholder.
“7digital is one of only two companies in the world to be able to provide full white-label streaming services to businesses who want to use music as part of their offering. Our product is sought after because of our catalogue of 60m licensed tracks and our platform on which new music services can be built quickly. We have a strong pipeline of business which is enjoying increasing momentum and a Board which remains committed to growing profitability again in 2018. The enlargement of the Group has significantly strengthened our market position and will bring materially enhanced revenue against a fixed cost base and a clear path to profitability. I look forward to providing further updates on our progress as we look to fully capitalise on our leading technology.”