Q2: Acast continues to take market share with 130% net sales growth

Second quarter 2021 (Q2 2020)

• Strong net sales growth of 130% compared to Q2 2020
• Net sales amounted to SEK 226,635 thousand (98,454)
• The gross margin was stable at 37% (37%)
• A material improvement of the Adj. EBITDA margin to -21% (-45%) after eliminating mostly IPO related costs
• Adjusted EBITDA of SEK -46,638 thousand (-44,301)
• The operating loss was impacted by IPO related costs and was SEK -84,951 thousand (-51,439)
• The net loss for the period amounted to SEK -179,743 thousand (-58,858) which was impacted by the accounting treatment of the repayment of a quasi-equity instrument as part of the IPO
• Listens reached 880M (701M) and ARPL improved significantly to SEK 0.26 (0.14)

Significant events in the second quarter of 2021

• Number of shows on the Acast platform reaches 31,000 including key signings across the globe such as The Young Turks (US), Jocke & Jonna (SE) and Irish Times (IE).
• Continued roll out of Acast+ Beta generates significant insights and confirms how the product is creating value for podcasters and Acast.
• Conclusion of Initial Public Offering on Nasdaq First North Premier Growth Market strengthening the balance sheet with SEK 1.2 Bn in primary proceeds from a new share issue.
• Repayment of European Investment Bank (EIB) quasi-equity instrument.

Comments from the CEO: Acast continues to take market share with 130% net sales growth

Acast is powering ahead with a strong second quarter. Compared to the second quarter of 2020, our net sales grew by triple digits at 130% to MSEK 227 — reflecting our strong value proposition to podcasters and advertisers which is propelling us forward to take market share in an already fast-growing industry.

During the quarter we welcomed thousands of new shows to our network, taking the total number of shows to more than 31,000 by the end of June. Included were some key content signings from across the globe: The Young Turks (US), Irish Times (IE), Jocke & Jonna (SE), El Universal (MX), Equity Mates (AU), Montreux Comedy Festival (FR), Edeltalk – mit Dominik & Kevin (DE) and Canadaland (CA).

Listens reached 880M in Q2-21 and our ability to monetize our listens took a significant leap with ARPL reaching SEK 0.26 (0.14). We measure this metric not just for our benefit but for that of our podcasters, as the better we get at monetizing listens, the more money we can share with our creators — and we know it is imperative that our interests are aligned.

Our net sales growth was a strong 130% and it is great to see how all our markets are contributing. Europe delivered 174% net sales growth in Q2-21 versus Q2-20, Americas 65%, and Other markets 79%. In Europe growth came from all our locations, even in those where we already hold significant market share such as the UK and Sweden, which I believe illustrates that there is no such thing as a ‘mature market’ when it comes to podcasting. In the Americas I’d highlight that numbers are heavily impacted by currency, and the underlying organic net sales growth figure was 84% for Q2-2021 versus Q2-2020. This growth was primarily a result of our successes in the US where podcasters and advertisers continue to gravitate to our platform - which has become one of the biggest in the US market - but our operations in Canada and Mexico are also starting to gain momentum in a great way. All in all, I’m very pleased with the progress made across all our markets.

Our gross margin remained stable at 37% (37%) in Q2 and our operating expenses showed significant scaling – growing at a slower pace than our revenues – resulting in a materially improved Adj. EBITDA margin of -21% (-45%). All segments delivered a positive local profit contribution ‘CBIT’ and it is the first time all three have done so in the same quarter, giving us another milestone to celebrate.

I’ve also been very pleased with the progress of our Acast+ beta testing. Acast+ brings a whole raft of new monetization options to podcasters, including the ability to offer ad-free streams, extended episodes and bonus content to paying subscribers, without limiting the listeners ability to access that content from their app of choice. And, so far, our partners that have introduced Acast+ are seeing, on average, a revenue boost of 20% on top of their usual income. In addition, we’ve seen that adding paid subscriptions is not impacting podcasters’ ability to command advertising and sponsorship for their shows. Instead, incremental ad revenue growth can partially to be attributed to increased awareness of their podcast, due to their PR push around the introduction of new membership tiers resulting in total listens to the public episodes also increasing.

In June, the IPO we had been preparing during the spring was concluded. Much work went into this initiative in addition to our day to day activities and I was proud to see how all our teams came together to deliver this outcome all whilst running a business growing triple digits. It is really a testament to how far we have come and how robust our operations are. The capital raised as part of the listing will help us in our quest to build, champion and supercharge a thriving, profitable, fair and sustainable open ecosystem for the world’s podcasts, and to empower the Creator Economy. We’ll do this through both organic and strategic growth initiatives. The proceeds have also contributed to repaying a loan to the European Investment Bank and whilst the repayment presents as a financial cost it has not had any significant impact on equity since draw-down.

In 2021 we’ve seen continued support for our value proposition from creators and advertisers alike, because they understand that this is the most profitable and sustainable way forward for the podcasting industry. And, following a strong Q2 across the business, Acast now has the second half of 2021 firmly in its sights.

Ross Adams, CEO

Report presentation

CEO Ross Adams and CFO Emily Villatte will present the report in a conference call and webcast today 18 August at 10:00 CEST. The presentation will be held in English and will be concluded with a Q&A session.

Link to the presentation: https://tv.streamfabriken.com/acast-q2-report-2021

Telephone numbers for the conference call:

Sweden: +46850558365
UK: +443333009268
US: +16467224903

Link to report

The full Interim Report is available on https://investors.acast.com/