7digital (AIM:7DIG), the global leader in B2B end-to-end digital music solutions, provides the following update on trading for the year ended 31 December 2019.
The second half of the year was a period of transformation for the Company with a new Board, additional funding, further cost reductions and a revised strategy utilising 7digital’s market-leading technology to capitalise on the growth in music streaming. The Board is pleased to report that this strategy is performing well and the Company expects to report results for the full year 2019 in line with management expectations.
During the year, the Company stabilised itself having secured an additional £2.1m of funding in September 2019 which, together with the intended £1m debt facility notified at that time, will bring total funding to £5m since June 2019. Management have completed a comprehensive cost reduction programme, which has decreased the operational cost run rate by over 50% since the beginning of 2019. This includes a company reorganisation as well as improving technology efficiency using cloud services. As a result, the Company expects to report that it has successfully delivered annualised cost savings of over £7.0 million.
The new year has also started positively with new contracts signed, a healthy pipeline and renewals negotiated. The Company has secured much of its expected revenues for FY 2020 and, consequently, is on track to achieve operational profitability by the end of Q2 2020.
Specifically, 7digital continues to win new business as it uses its flexible technology, its global music catalogue and music industry expertise and relationships to provide music solutions for enterprises and music service innovators. This includes supporting leading guitar manufacturer Fender in the launch of Fender Songs, and offering its music-as-a-service platform to power the music experiences of brands such as Universal Music Group and Triller. Furthermore, revenues from 7digital’s direct-to-consumer content have also been stable, due to an increasing demand for Hi-Res tracks.
CEO, Paul Langworthy, stated: “We are extremely pleased to see 7digital emerge from the last year as a leader in providing B2B digital music technology to a wide range of enterprises and markets. By combining our global catalogue with our cloud-based flexible technology platform, we continue to enable music industry innovators to reach new digital music consumers as well as target enterprise clients that want to better promote customer engagement and reduce churn through compelling music experiences.
“The Company continues to make a positive impact on powering streaming music opportunities in developed and emerging markets. This, together with a substantially improved financial position, healthy pipeline, client renewals, and rigorous operational management, gives me confidence that 7digital is well positioned to execute on our strategy and continue to lead the growth of music streaming.”