Wednesday, December 6th 2023

Audioboom Group PLC

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Is Audioboom set to BOOM ?


“…But with strong Q1 figures, and consistent rumours of a takeover, is this a stock on the verge of moving again? Shares have fallen all the way back to £10 though they rallied strongly towards the end of last week. Does that portend another surge…”


Audioboom (AIM:BOOM) is one of AIM’s unabashed success stories, successfully riding the podcasting wave to consistently achieve stellar growth. The storm that has beset the markets, and particularly the tech sector, over the past few months has taken the edge off the relentless rise in the company’s share price. But with strong Q1 figures, and consistent rumours of a takeover, is this a stock on the verge of moving again?

The rise and rise of the podcasting sector


Simply put, BOOM connects podcasters with advertisers. The company has grown to become the fourth largest podcast publisher in the US, handling some 8,000 content channels and 3,000 advertisers, and serving more than 126 million episode downloads each month to 34 million listeners. The platform provides commercial services for its ‘Premium Network’ of 250 leading podcasts, including US shows such as Casefile True Crime, Morbid, True Crime Obsessed, and The Morning Toast, and UK broadcasts such as No Such Thing As A Fish and The Cycling Podcast.

BOOM allows partners to distribute their content through a host of other services as well as their own platforms, including Apple Podcasts, Spotify, Pandora, Amazon Music, Deezer, Google Podcasts, iHeartRadio, RadioPublic, Saavn, Stitcher, Facebook and Twitter. BOOM takes advantage of the lightweight, scalable networks available to today’s digital platforms, which give it scope to continue to add podcast channels, advertising campaigns and listeners at minimal cost. The company still employs just a few dozen staff.

In addition to facilitating publication for third party material, the company publishes its own content through Audioboom Studios, which includes Dark Air, narrating the life of fictional talk-show host Terry Carnation, F1: Beyond The Grid, RELAX! and Covert. Earlier this year Audioboom’s UK production team launched the popular Devils in the Dark podcast, which topped the UK’s True Crime Chart and broke into Apple’s top 15 podcasts.

Late last year the company introduced a significant upgrade to its advertising technology, Showcase, which makes it easier for brands to target advertising campaigns to listeners based on demographics, location, content types and keywords. The tool was augmented by an ad automation technology called AdRip, which makes it possible for advertisers to monetise BOOM’s extensive back catalogue, which accounts for half of the platform’s consumption – some 58 million downloads per month. Once an episode is 90 days old existing ads are replaced by fresh ads each time it is listened to in the future, ensuring the continued value of legacy content to advertisers. In this way Showcase complements BOOM’s Premium advertising service, focused on the network’s best performing 250 shows.

Audioboom’s ‘defining year’


BOOM’s progress, and that of the wider podcasting industry, has been underlined by a series of impressive updates this year. The company’s annual report, published earlier this month, stated revenue of $60.3m, up 125pc on 2020 ($26.8m), year-on-year growth outpacing the predicted wider industry average growth by 108pc. BOOM reported a maiden annual net profit before tax of $1.7m, against a $3.3m loss for the previous year, and a 39pc increase in average monthly global downloads to 113 million. The average brand advertiser count for Q4 was up 32pc on Q4 2020. Group cash stood at $3m (2020: $3.3m).

BOOM’s momentum has continued this year. Q1 revenue was up 107pc on the previous year, to $19.7m, and the company recorded a recorded adjusted EBITDA profit for the quarter of $0.9m (2021: $0.03m). Average global monthly downloads were up 45pc, rising for the ninth successive quarter to 126.2 million, reaching a record 131 million in March. Showcase had helped secure advertising revenue 151pc greater than the previous year, contributing $1m each month, equivalent to 11pc of total revenue. More than $60.5m of advance revenue for 2022 had been collected by April.

Describing 2021 as ‘a defining year for the business’, CEO Stuart Last said the company’s market share had now reached 4.5pc, up from 1.9pc five years ago, making it the fourth largest publisher in terms of audience reach, and the fifth largest in terms of downloads. Noting that BOOM had outperformed the industry’s growth in each of the past four years, by an average of 70pc, he expected the company to to take advantage of continued growth in the sector, quoting a study by the Interactive Advertising Bureau projecting the US market to have reached $1.3bn in 2021. 2022 had begun with the renewal of key content partnerships with Casefile True Crime, Mile Higher, Strange & Unexplained, Lights Out and The Sesh, and NZME, a leading New Zealand radio and media company, had become a Showcase ‘monetisation partner’.

A takeover target?


Unsurprisingly BOOM continues to be associated with possible takeover bids. Last summer asset manager All Active Asset Capital said it was in talks to take the podcast company private, valuing it at 1,200p per share, a (then) premium of 36pc. And this February Amazon and Spotify were reported to be considering rival takeover approaches. A Sky News report indicated that an approach from either of the two media giants was likely to be pitched ‘at a significant premium’. Spotify, it was suggested, saw a potential acquisition as a means of moving on from the furore generated by key podcaster Joe Rogan’s controversial views on Covid-19, which led to luminaries including Neil Young, Joni Mitchell and Crosby, Stills & Nash ditching the platform. There has no been further news of a bid, though Mr Last used his CEO statement in BOOM’s latest annual report to say that the company’s ‘business model, structure and financial performance provides strong optionality on our future path’, adding that its ‘global scale and ownership of technology and content production will make us an attractive proposition for major media or technology businesses looking to fast-track a leadership position in podcasting.’

BOOM’s fundamentals certainly seem robust. The company has worked its way into a strong position in a fast growing market forecast to grow at a CAGR of 31.1pc through the 2020s. Innovative solutions like Showcase and AdRip are further evidence that BOOM, along with the rest of the sector, is working out ways of turning impressions into advertising revenue, a defining challenge in an industry where listeners still expect free content. That said, with giants like Amazon and Spotify investing ever more heavily in the sector the possibility of new, exclusive and paid-for content is becoming more tangible.

The immediate cloud on the horizon is the possibility of a recession, in both the US and Europe, that may oblige advertisers to cut spending. BOOM’s share price was a stellar performer through 2021, rising from just over 200p to 1,000p, and it continued to rise this year through the teeth of the storm that blew away other tech stocks, topping 2,000p just last month. It has since fallen all the way back to 1,100p, though it rallied strongly towards the end of last week. Does that portend another surge? Perhaps not in the current market climate, but investors looking to take positions in a tech market that may now be bottoming out would do well to follow the BOOM story, a company with a proven cutting edge in a growing market, and one most definitely on the radar of the world’s largest media companies.