Audioboom Group (LSE:BOOM) — 2022 Q1 Trading Update

0:01 Good afternoon, ladies and gentlemen, and welcome to the AUDIOBOOM GROUP PLC investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and could be submitted at any time via the q and a tab that's just situated on the right hand corner of your screen. Please simply type in your questions at any time and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all of the questions submitted today and publish responses where it's appropriate to do so. These will be available via your investor me company dashboard, and we will notify by email when these

0:31 are ready for your review. Before we begin, I would like to submit the following poll. And if you'd give that your kind attention, I'm sure the company would be most grateful. And I'd now like to hand you over to CEO, Stuart Last, and CFO, Brad Clark. Good afternoon. Thank you, Jake. Hi, everyone. Welcome to AUDIOBOOM's q one twenty twenty two update. It's it's fantastic to be here. Really happy to be able to tell you more about the business after what is really a fantastic quarter of growth for the company, you know, fourth successive quarter of of triple digit growth. You know, we have great KPIs, very strong growth in our our EBITDA profit. I'm just excited to be here today, I think, to to tell you all about what we've been doing on over the last quarter to look ahead to the rest of of 2022 and to answer some of your questions. So make sure you you send those questions in.

1:25 We'll get through as many as possible at the end of the presentation.

1:29 And the first part of the presentation is for anyone that's new to AUDIOBOOM. So welcome to you if you're new to the company and you're here to find out more. We'll take a look at our business model, where we sit within the industry, and and and and a look at our strategy. But first of all, a couple of introductions for you, for those that that don't know us yet. My name is Stuart Last. I'm the the chief executive of of AUDIOBOOM. I've been the CEO for the past two years. Before that, I was the COO of the company and launched us here in in The US. I'm I'm based in New York. Launched the business here successfully back in in 2015. Before AUDIOBOOM, I worked at another podcast and ad tech business called called VoxNest, also based here in New York.

2:19 And before that, was back in London at the BBC driving their digital audio strategy. And joining me today is Brad Clark, our CFO.

2:29 Thanks, Stuart. Hi, everyone. Thanks for joining today. Yeah. I'm Brad, CFO here at AUDIOBOOM. Been with the company since March 2018, so into into year five now, which is which is great. It's a privilege to be able to say that. Obviously, the company's changed a lot over the last few years, but, you know, this has really been the last eighteen months or so where the growth really has taken off, you know, with record results last year. You know, the share price has improved significantly over the last fifteen months or so, which is really pleasing to see as well. So, like I say, we've already been for the last five years. Prior to that, I was with another good AIM coated company, Brave Bison, for a couple of years. And prior to that, I was with News UK, publisher of the The Times and The Sun Newspapers amongst other things for five years in various roles there. But it's this role really in this this company which has been the the best part of my career so far. It's great to see your company doing so well.

3:28 Back to you, Stuart. Thanks, Brad. So Brad will be back in in a moment to give you all a kind of an in-depth view on on some of the financials. But I'll kick off here today, and we'll take a look at the business model and and the operations of the business. This is just an overview of of podcasting and the podcasting space, and AUDIOBOOM plays a a vital part in podcasting. We power podcasting. We connect advertisers with content, and then we connect that with an audience. So podcasting is effectively a, you know, a three sided marketplace. Each of those components is obviously is very important in its own right, advertisers, content, and audience. But without someone in the middle to to to bring them all together, to join them together, it just doesn't work. There's no there's no value there. So AUDIOBOOM is, and the platform, is is bringing those three components together and creating and maximizing that value. You know, we we're connecting the content with the advertisers, and then we distribute out to to the audience globally. And it's the combination of of those three elements and AUDIOBOOM sitting in the middle of it of it, really driving those connections that that that creates value in podcasting. So we play a very important integral role in podcasting.

4:43 And and at the heart of that is the AUDIOBOOM platform. So this is a cloud based, very scalable engine, and it's it drives our content business. So that platform is separated into three elements. It's a content management system where podcasters and creators upload their content, manage the publishing of that content. They distribute through that content management system out to Apple Podcasts, out to Spotify, out to Google Podcasts, those connections with the audience. And then we gather and collate all of the analytics and the data coming back so the podcaster and the creator can learn about their audience and and design their their content around that audience, and we can use that data to sell advertising to to drive value for the show. The second part of that audio room platform is really our advertising technology stack. So that's the ability to serve dynamically serve advertising into those podcasts.

5:40 It's a yield up system that finds the best pricing for for those for the advertising inventory from all of our various demand side sources. It's a new piece of technology we launched last year called AdRip, which replaces old ads with new ads so we can keep refreshing the back catalog and making money for our creators out of that back catalog. And it's our new marketplace showcase, we launched in November of last year, which connects content up to a variety of of demand side sources, and that's scaling very quickly for us and is proving very successful and is growing its contribution to group revenue. The third part of that AUDIOBOOM platform is our inventory management system. It's called Lyrical. It's built on the Salesforce platform. This allows us to actually execute that advertising to make sense of the inventory that's available across our 8,000 podcast channels. It gives us great intelligence around the pricing and allows us to drive pricing higher. It automates the billing process and just creates a a level of automation from start to finish in the in the sales process that allows us to stay very lean and and and ahead of our competitors. So those three elements create the AUDIOBOOM platform. Sitting on on top of that is is our content business, and and that's today 8,000 podcast channels running through AUDIOBOOM and then being distributed out to all those listening destinations.

7:05 It's being downloaded. That content is being downloaded more than a 130,000,000 times every single month, and we reached 34,000,000 unique listeners. So we have some really great scale in that platform today. But as you'll know, it's growing very quickly, and it's it's it's very scalable without a lot of further investment. So we can take this to 25,000, 50,000 podcast channels. We can take it to a, you know, a 500,000,000 or a billion monthly downloads and a 100,000,000 unique listeners without having to invest too heavily in that platform. So the it's the platform that that that drives the business. And as I said on the previous slide, it's the platform that really links together the the market, the podcast market, connects creators with advertisers and distributes out to audience.

7:53 This is a little view on on how we treat content within the business and and how we make money for for for the business and and for our creator partners. Our content model is is is is pretty straightforward. We have AUDIOBOOM Studios. That's the creative and the production arm of AUDIOBOOM. That's creating shows in house that we that we develop ourselves, that we produce ourselves, that we own the IP for, or that we coproduce with our partners. For example, we are the the producer for the official Formula One podcasts. That's all done in house with AUDIOBOOM Studios. So that's a smaller group of shows. But as I'll I'll show you later, it's very valuable to to the business and an area of investment going forward. The AUDIOBOOM Creator Network is a much wider group of of over 7,000 podcasts.

8:41 These are either hobbyist creators at at the bottom end or professional podcasters at the top end who are who are seeing their shows being download loaded hundreds of thousands or or even millions of times per episode. So that's a a wide group of creators. They are producing their shows. They are marketing their shows. They have great audiences already connected to their to their to their shows. And then beneath that, the widest group of of podcasts is the wider podcast landscape, and we're able to to monetize podcasts that are not exclusive to the AUDIOBOOM network as well. So this could be any podcast in The US, The UK, or or or globally as well. Those top two tiers, AUDIOBOOM Studios, AUDIOBOOM Creator Network, that's all being powered by the AUDIOBOOM platform. The podcast landscape sits outside of that, but we have ways to to monetize and and and to to grow revenue from from that also.

9:33 Alongside that is our advertising model. 99 of the of of the revenue that we see within the group is coming from one of our three advertising models. So we have our premium sales unit. That's our high value bespoke sales that that is sold against individual episodes and individual podcasts. It comes with high CPMs and high high unit pricing. We're selling that against AUDIOBOOM studio shows and then the top 250 shows within that AUDIOBOOM creator network. Showcase, which is our global marketplace, this is an ad tech advertising solution. It's automated. All of our podcasts in AUDIOBOOM Studios and the AUDIOBOOM Creator Network flow through that marketplace.

10:18 We connect them with various demand side platforms, programmatic programmatic ecosystem, sales teams in Australia, in Canada, in Europe. And this is a lower value play. The the pricing is is at a lower level, but it's a it's a volume play. It's about scale. We see it as a a kind of a secondary advertising model. It's great for for monetizing back catalogs and and and older content. And as I said before, it's growing very quickly for for the business right now. And then the third part of our advertising model is is sonic influencer marketing. It's a unit that that that we operate. They're based in in in Texas, in Austin, Texas. And they are actually that's a platform that's able to to monetize any content. So it can monetize AUDIOBOOM Studios. It can monetize our creator network, but it also has the ability by working directly with brands and advertisers in monetizing and accessing advertising inventory within any podcast in the world. So it has the ability to go out and and to make that connection with some of the biggest podcasts in the world that don't belong to the AUDIOBOOM network.

11:22 And again, Sonic's now in its third year and is is growing very successfully and is having a fantastic 2022 so far. Quick look at those revenue contributions that I I touched on earlier and and and also the gross margin from each of those areas of of of the business. So AUDIOBOOM Studios is is there first. It's a, you know, it's a small contribution to today when it comes to to revenue just contributing around 3% of the group's revenue, but has a very strong gross margin when compared to to the the rest of our business. It's the most premium of all of the the the the content that we work with. And because we are in in control of the development and the production cost around those shows, we're able to drive a higher gross margin there for for AUDIOBOOM studio shows. And that's also why I said before, it's a very big and important area for AUDIOBOOM going forward.

12:16 We'll be investing further into AUDIOBOOM Studios after we launched The UK arm of AUDIOBOOM Studios last year. We'll grow that 3% contribution over the the the the coming years. Our creator network is is obviously key for for driving a significant amount of that group revenue. It's responsible for 70% of the the revenue that we that we see at AUDIOBOOM. Comes with a slimmer gross margin. It's more competitive to sign and and and to work with those shows, particularly at the top end of those shows in the in the creator network. So it has that slimmer 21% margin, but it's an area of fast growth, and it's very lucrative to to to the business. Showcase, automated marketplace, has that slightly stronger gross margin. We're able to create a stronger gross margin when we are monetizing back catalogs for our for our shows and for our creators.

13:09 That that very quickly, the contribution of of showcase revenue is hitting 11% for in this first quarter, up from under 10% last year. So we're seeing good growth in in the marketplace. It's very efficient, and it's the it's the part of the business that will will grow very strongly over the the coming years too. And then sonic influencer marketing responsible for 16% of our of our revenue has that that slimmer much slimmer gross margin. It works directly with the brands and is working on a very traditional kind of advertising agency gross margin and and and commission structure. So it has the slimmest gross margin within the group, but it's again, it's growing very quickly and contributing after, you know, now now in its third year significantly to to group revenue.

13:59 So let's go ahead and and take a quick look at q one, which I said before was excellent quarter for us. That momentum from from 2021 has just continued in into q one. It's traditionally a much slower and soft period in terms of advertising spend. We haven't seen that as much this year. Although, obviously, it's it's the the the quarter revenue is slightly down on on q four of last year because of that seasonality in advertising spend. But year on year, fantastic growth, the 107% growth on that on that revenue line, getting us to 19,700,000. And that's, as I said before, our fourth quarter of triple digit revenue growth. So just continuing that momentum in into to to to 2022.

14:46 And, you know, one of the you know, just for some background, I think, on the the softness of of advertising spend in in q one. One of the, you know, I think one of the the key kind of factors there is that we work off The US broadcast calendar, and that first quarter of the year is effectively a twelve week quarter rather than a thirteen week quarter. It includes the the week between Christmas and New Year, which is extremely soft both for content creation and therefore inventory, and therefore, also for advertiser demand. So effectively, we've we've done $19,700,000 across a twelve week quarter, and and and obviously, comparing that against q four of last year, a very strong high demand thirteen week quarter. I think we've we've we've we've done very well just to to keep up that that strong demand and to deliver another excellent quarter of revenue.

15:43 Adjusted EBITDA profit, just under a million dollars, so significantly higher than the $30,000 of EBITDA profit this time last year. So really starting to see the gearing effect there and the delivery of close to $1,000,000 of of profit. That's the fifteenth consecutive month of of EBITDA profit. So we're in a place now we're very confident of, obviously, never slipping back into to loss making quarters, loss making months. And we just continue driving that that that profit forward. And we're in a great place when it when it when it comes to cash. At the end of the quarter, we had $3,300,000 in the bank. We saw another 2,900,000 come in in the first week of April, and Brad will give you an update on cash position and and and future of of that working capital in his section in just a few minutes.

16:35 So we're very in a very healthy place. We're fully funded for the the growth trajectory that we're on. We are able to invest that money back into content creation and other parts of of the business where we see faster growth. And and probably since since I've been CEO and since Brad's been with the company, this is, you know, the healthiest place we've been when it comes to to to the cash in the bank. Just to set that performance, I think, in in in some kind of context, I talk a lot about how we outperform the wider industry, and and both of these charts are are really highlighting that. So the chart on the left is showing our revenue growth against the industry over the past four or five years, and you'll see our our q one growth is significantly faster here than the the wider podcast industry. The The US industry is projected to grow around 30% this

17:27 year. We're growing over a 100% so far. So once again, and for the fifth year in a row, we continue to to beat our competitors to grow faster than our competitors. And that's highlighted in that chart on the the right hand side. This is the the Triton Digital US Podcast Ranker. It highlights the the biggest podcast businesses in The US. And this is showing off, and and this is charted by US weekly reach. So how many unique listeners we reach in The US every single week. And as you'll see there, again, we were the fastest moving, fastest growing company in The US during 2021 into 2022. So going significantly quicker than our competitors, moving up that ranker, taking market share. Our market share is close to 5% now after after being just hovering around that 1% mark just just three or four years ago.

18:19 So we're on a a great path, great trajectory, and and and everything's in a in a strong place to to continue that that path as we go forward. So what were the the key drivers of that successful quarter in q one of twenty twenty two? Well, I think, you know, the first first thing I wanna highlight is just the success of our AUDIOBOOM Studios launches. So those shows we develop in house, those shows that come with the the the stronger gross margin. We set up and launched a UK production arm in the second half of of last year, having already had a US production arm for for a couple of years. And Devils in the Dark was our our first UK production, which launched in in February of of of this year. That show very quickly got to number one on The UK true crime chart.

19:07 It reached the top 15 on the overall Apple Podcast chart. So we're seeing great success from the work we're doing in AUDIOBOOM Studios, which is very pleasing to see, and it's obviously an area we'll continue to to invest in. In our premium network, that area of the business that drives 70% of the revenue and is responsible for for significant growth, I think the successes in that first part the year have been around the renewal of of long term exclusive contracts for some of our key shows. So we've put together and and and have had signed long term three year deals with with our top top 10 shows, including Case File, Mile High, Lights Out The Sesh, Strange and Unknown Explained. These are all key contributors to to our revenue, and it's just great to deepen our relationship with those shows and and and be working with those shows for for the next three years.

19:58 Pricing is is something that we've done a lot of work on to to increase over this past quarter. Now I talked about it being a soft softer quarter for for advertising spend due to that shorter shorter structure of of the quarter. But our biggest shows, our top 25 shows, the shows that really perform for the advertiser, that deliver great ROI for the advertiser, those are in very high demand, and we've been able to drive pricing as a result of that. So our pricing for those top 25 shows in the first quarter was over $14,000 for each individual ad slot in one of those top 25 shows, and that compares to a year ago when those ad same ad slots were selling for for just over $6,000. That's a 121% annual growth in the pricing that we're able to see in each of those individual ad slots for our top 25 shows.

20:50 I talked earlier about showcase being an area of success for us. That's our automated ad tech based marketplace. You know, a 150% growth versus the revenue we were seeing through our ad tech a year ago, and that's now contributing. Like I said before, 11% of group group revenue versus 9% from from last year. So it's it's growing faster. It's scaling quicker than the rest of the business, and it's also very efficient. It comes with with lower costs to to operate than our other sales models too. So very pleased with the the way that Showcase is an area that we're focused on on on improving as well across 2022. And then feeding into showcase is is our work with our international monetization partners. So as you'll probably recall last year, we started working with ARN in Australia to with Rogers Media in Canada and with IdeaBrew Studios in in India to to monetize those next three biggest markets for us.

21:48 In this quarter, we signed a partnership agreement with NZME, who are a big media and radio group in New Zealand, and they will be monetizing New Zealand inventory for us. That's our sixth biggest market. We are the second biggest public podcast publisher in New Zealand, and we now have a a monetization partner that will be that will be delivering us value on all of those listens that are happening in New Zealand. So those are the the key drivers for for the for the success of of early twenty twenty two.

22:23 Just going a little deeper on that financial performance, and you'll see here the the the quarterly revenue and and EBITDA performance. I think, again, just to highlight the seasonality of of of q one, you'll see the drop from q four twenty twenty one into q one of twenty twenty two, just a slight drop on on the revenue there. That is, as I said, seasonal and usually happens. If we go back to the to the left hand side of this chart, you'll see that drop off between q four of twenty nineteen and q four of twenty twenty. So that's just repeating that that same pattern, that same seasonality in the ad market. I think the the one of the key things to point out here is that it didn't happen between 2020 and 2021, and that was because of the the COVID impact and the subsequent rebound that was still happening in the ad market in in q one of twenty twenty one. So last year, we didn't see that drop off q four into q one, but but previously, we have seen that pattern, and that is that is is a kind of a seasonality that happens across the the entire advertising market, not just in in in podcasting too.

23:31 All of our key performance indicators were strong in in in the first quarter, so it fills us, obviously, with with with great optimism that these will continue to go up, and these are all drivers of revenue for for performance for the business. Global downloads, obviously, that's a proxy for how much advertising inventory we get to sell every single month. That global downloads number was up significantly, 45% annual growth in in q one of twenty twenty. We reached a record single month of downloads of a 131,000,000 in in March. So our global downloads number is going from strength to strength, and and is growing every single quarter. And that that data is is verified by by Triton Digital, and that's in compliance with a metric that all podcast companies have to have to use, which is the IAB's podcast measurement standard.

24:24 Our brand count dipped slightly from q four, and as I said, that's due to softness in, you know, that slight softness in the ad market in in q one, and also the the twelve week broadcast month effectively in in the first quarter as well. So we see a slight drop off there in the number of brands that that we work with, but still our second highest quarter on on on the brand count. So these are brands that are advertising within our premium network of of shows. We work with many thousands more in our in showcase in our marketplace, but these are the brands that we we work with directly for our our premium network. And then eCPM, that's the value we extract from every 1,000 downloads on our network. And again, you'll see a drop off there, and that's a function of of two things, really. That's the the function of the number of downloads across the network increasing very, very quickly across q four of last year and q one of of last year of this year, combined with that that softness in in the revenue number in in in q one. So, you know, we have some work to do, I think, there to to get caught up again. There's always a lag between growth in downloads and then us delivering, you know, strong value against those downloads.

25:40 We will start to see that eCPM number rise again in q two and q three of of this year as well once we once we catch up on the sales process. It's only once you know how many how much inventory and how many downloads that you have available to sell that you can optimize the the the sale of of that inventory, and that does impact that ECPM number. But very still comparing very favorably at $51 to our competitors. We we know from one of our competitors, Acast, who released their results publicly, they're working off a $31 equivalent ECPM. So significantly stronger than our competitors in in that particular KPI as well.

26:25 And I'll I'll let Brad take over for a few minutes here to to go a little deeper. Great. Thank you, Stuart. So, yeah, hopefully, everyone can see that the growth story continues here at AUDIOBOOM. And, yeah, next few slides, we'll look at revenue, costs.

26:44 Next slide looks at what the working capital cycle of the business as well. We've gone through these over the last couple of quarters, but we'll update that for the for the first quarter of this year. But just before we dive into that, a couple of dates for your diary so you know what's coming up. April 25, so a week on Monday, that's when our final twenty twenty one numbers will be will be published. We, of course, told you on the January 10 in record time what 2021 looked like, but we've got the formal release of those on on the April 25. And then in July, we'll obviously update you on the first half of the year as we always do. But for now, let's look at Q1 in a bit more detail. Obviously, the headline statistic of revenue increasing by 107% year on year. Fantastic growth.

27:29 On the OpEx side, that did increase by 47% year on year from three point sorry. Sorry. From 2,100,000 up to 3,100,000. We'll explain why shortly. From q four to q one, obviously, from 2.8 to 3.1, let's say, a a 10% quarter on quarter increase. And just to build out some of the percentage increases across those revenue lines that Stuart mentioned, obviously, we've got that mix of of of revenue revenue streams that we have within the business. 70% of our revenue comes from that premium advertising on the creator network that we that we specialize and, you know, are experts in selling that form of advertising. That grew by a 116% year on year. Pleasing growth from the marketplace, that now contributes 11% of revenue. That's up from 9% in q one of last year. That grew by a 151% year on year. My biggest percentage that I'll give you today is that if you actually look back to q one of twenty twenty, we booked just over $200,000.

28:34 We booked 2,100,000 in the first quarter of this year on that line. So that's 925% growth q one twenty versus q one twenty two. So clearly, that area of the business is is becoming more material in terms of the overall revenue mix, which is pleasing. 3% of revenue comes from studios. That grew 26% year on year. And another pleasing growth statistic from Sonic as well. That contributes 16% of revenue. That grew by 90% year on year when they reported $3,100,000 of revenue in the first quarter of this year. Now Sonnet reported 5,000,000, just over $5,000,000 of revenue in the whole of 2020. So to report 3,100,000 in the first quarter is pleasing. We do have a small amount of subscription revenue as well in the business. We don't talk to it here because it's less than 1%, around point 7% of revenue.

29:25 So around three and a half thousand subscribers paying 10 or $20 a month to to be able to use the platform. But obviously, that's a a less material part of our business which we don't actively invest in. So pleasing growth statistics across the board, across the revenue streams. Looking at OpEx, 19% of our OpEx relates to technology costs, you know, the costs that are required to to run the AUDIOBOOM platform. The material cost within that is the hosting and and and download cost of content. So when you go onto, you know, the place where you download your podcast, be that Apple or Spotify, wherever that may be, AUDIOBOOM are incurring the costs for you downloading that content. So that's the material costs that we have within technology, that technology line. There was a 52% year on year increase from point 4,000,000 to point 6,000,000 in the first quarter of this year.

30:18 And that's mainly due to the significant increase in downloads year on year. So downloads up to a 131,000,000 in March. There's a 45% year on year increase in downloads. Obviously, that flows through to the p and l. So as you see this business grow, as you see those downloads grow, typically, the download costs that we budget on is around naught point one one, naught point 12% of the actual download number. So it's a 100,000,000 downloads. You're looking at a $100,000 of Rough rule of thumb there. But as you see, this business continues to scale. That's one of the variable costs that we have in the in the business. 65% of of OpEx relates to salaries and sales staff commissions. There's a 44 year on year increase on that line from 1,400,000 to 2,000,000 in the first quarter of this year. That's mainly due to the fact that we've got more heads within the business.

31:14 So throughout the last year, there's been incremental increases in headcount in sales, ad ops, production, Sonic as well. So headcount was 43 at the end of March versus 35 at the end of March twenty twenty one. So still at 43. I view this as a very lean and streamlined organization.

31:40 And also the cost increase on that salary line, also due to cost of living increases applied across the team from January 1, plus also slightly higher commissions paid in the first quarter this year versus the first quarter last year. Now as you look forward for this business, the OpEx is fairly settled. No plans to significantly increase that headcount from 43. But the variable costs that you'll see going forwards are, as I've just mentioned, those download costs. They'll vary with the number of downloads that we that we that we record. Also, variable will be commissions linked to the amount of revenue that we booked that we booked and also promotional costs as well. So any new show launches that we have from AUDIOBOOM Studios, there'll be an associated promotional budget to let people know that show has been launched.

32:32 And it's good to see that the The UK production arm is is starting for its content. The first one, first major one being that Devils in the Dark, new show that was launched in the first quarter. So good to see some new shows coming out of that UK production unit. Stuart also talked through the EBITDA quarter on quarter movements, point 9,000,000 in the first quarter of last year. This is 30 k in the first quarter of last year. I've seen it written, it's 300 k in the first quarter of last year. It wasn't. It was just $30,000 in the first quarter of last year. So significant growth there. We did report a $1,900,000 EBITDA profit in the final quarter of last year. Obviously, at 900,000, that's decreased. What are the reasons for that? Well, there's been higher OpEx in the first quarter of this year. So 200,000 higher salaries and commissions in first quarter of this year as we've increased that headcount from the fourth quarter, higher commissions, also the cost of living salary increases as well.

33:33 In the first quarter of this year, we also provided for a small number of invoices which went over one year old. It's our policy to provide for anything that goes over one year old. We believe we will fully recoup those invoices because they're due from one of our largest customers. In line with our policy, provided for those in full. So that was a $100,000 provision there. We fully expect to recoup that and that will come back to the P and L hopefully in Q2. Also, on that gross margin line as well, that was lower in the first quarter of this year. A couple of reasons for that. First one being we accrue for music licensing accruals in case we are required to pay any music licensing cost for music paid in podcasts.

34:18 We don't at the moment, but we prudently accrue. So at the end of last year, we released our accrual relating to 2020. So we hold a full year provision for 2021, but there was a release in the fourth quarter in relation to 2020. And also as well, in the last quarter of last year, we released provisions against podcast partner contracts with minimum guarantees where the inventory and value was weighted into the into the fourth quarter of last year. Having met those guarantees, we were able to release those provisions that we had built up during the last year. So those are the main reasons why that EBITDA number shifted from 1.9 down to point nine in the final quarter of sorry, in the first quarter of this year.

35:04 So on to the next slide where we look at the working capital of the business and some insights here that I can give you. Now all things being equal, when I come into the first quarter of the year, I view this as the toughest quarter for the business in terms of the pressures on the working capital and the cash requirements within the business. Now the reasons for that, you you've just come out of the seasonally high q four where you've, you know, you've recorded those record revenues. Everyone's happy. Great top line growth. But, obviously, subsequently in in in the following following quarter, you need to pay your record revenue shares to those to those partners as as well deservedly so. So you've got that pressure in in the first quarter to settle those record revenue revenue shares. We also have a number of recoupable advances that we pay to attract and retain leading talent that we work with. A number of those are due in the first quarter.

35:57 They are recoupable, as I say, but there's a a timing impact on the cash flow, which we have to manage. And also as well, we pay staff bonuses relating to 2021 as well in the first quarter. So there's a number of number of pressures there. We need to make sure that our processes that we have are on point. And We've spoken at length before in terms of this business is ready to scale significantly. From this graph, we can see if you look at Q1 twenty twenty one versus Q1 twenty twenty two, across the three different categories that we can see here revenue, cash collected, payments made Across all those three lines, there's been roughly a £10,000,000 increase across each of those lines. So revenue 9.5 to 19.7. Cash collected 8.5 up to 18.3.

36:43 Payments made up to 19.8. Same business, same processes, but we're now obviously processing 10,000,000 more on each of those on each of those lines. So that's an indication to me that, you know, that what we've built here is is scalable and can handle the growth that we that we're recording. Know, pleased to say that the cash that we hold increased by 300,000 from 3,000,000 at the end of December to 3,300,000 at the end of March, despite all the pressures that I've just outlined. But it could have been even better. What we've noted is that because of the amounts that we're billing and the amounts that our customers owe us, in my view, they are managing their own balance sheets and withholding cash until we're past the quarter end, which is why in the trading update, detailed the fact that we collected £2,900,000 in the first week of April.

37:42 We normally see collections weighted towards the second half of the month. So, you know, to collect 2,900,000 is a high number to record in the first week of the month. And actually, we've collected another million dollars in the first three days of this week. I must mention, of course, that that $3,300,000 number does include the exercising of warrants by our very supportive chairman, Michael Tobin. So we exercised and held warrants in the company, which led to circa $1,500,000,000 coming into the company. But overall, like I say, the processes that we have in the company to be able to record that quarter on quarter increase in cash is pleasing. And actually, well, this morning, we've had confirmation from HSBC that they have confirmed a GBP 1,500,000 multi currency overdraft for the company as well.

38:35 So not that I expect us to utilise that. We expect the cash reserves of the company to grow, but to have that extra security, extra funding available to the company to invest as it sees fit and also the external validation by our bank as well in terms of implementing that overdraft as another endorsement for the company. So that's good news there. Collections, good in the quarter. Over 18,000,000 for the first twelve weeks of the year. Over 6,000,000 a month. However, unlike q four where collections outstrip payments in the first quarter, the reverse happened because of those material commitments that outlined earlier.

39:17 Good downward pressure on those debtor days, down to 77 from 94 at the year end. And a similar pattern as last year with debtors increasing at a higher rate than our creditors. Debtors increased by a million dollars. Creditors increased by $400,000. So, you know, overall working capital of the business is good. Balance sheet of the company is good. As Stuart said, there's more cash in the bank than any time than I've been here. But like I say, the processes that we have in place within the company are working very, very well. Fully funded for the current growth trajectory of the company. Yeah, look forward to updating you further on the company's progress in July when we release that interim statement. Back to you, Stuart.

40:04 Thank you, Brad. Just reminder, we've got a couple of our slides left and then we'll do as much of a q and a as we can fit in before the end of the hour. So I get questions in now, I guess. Although still a a few minutes to to do that. And then I'll just finish off the the presentation here by, you know, having a quick look at the rest of of 2022 and and where that that focus is. You know, I I think one key stat that that is is very pleasing to us and is fantastic for understanding the the future of of the business is this this this top number here, this $60,500,000 of advertising bookings that we already have contracted for for 2022.

40:51 So, you know, as a reminder, our entire revenue on on 2021 was 60,200,000. So we already have more revenue booked for for this year than we than we saw in the entirety of of 2021, which is just a fantastic place to be at at the end of q one. And when you think about the cadence of of those bookings, you'll see, if you go back into our into our trading updates, that we added $15,000,000 of of of bookings in that in that first quarter of the year. So I think in our in our last trading update, we were at 45,000,000. We're now over over 60,000,000 and and beyond last year's revenue already. So we'll keep focusing on on building out those those future advertising bookings. We have plenty of inventory left to sell.

41:43 As we have done in in previous years, we've held back a significant amount of the inventory in our top 25 shows. Again, reminder that those are averaging $14,000 per per advertising unit in in those top shows. So we've really held back selling the second half of the year in those top 25 shows as as another way to drive demand and to to increase that pricing. So we're at 60,500,000 booked, lots of inventory still to sell, and we'll be pushing that that demand heavily as we go into the the second and third quarters of the year. The premium network, that key driver of revenue, you know, we continue to see very a strong amount of opportunity coming into into us from those key relationships that we have at the Hollywood talent agencies.

42:35 They are bringing more and more opportunities to us every single week. There is such a organic increase in in the the the growth of independent shows that they are now representing more and more creators, more and more podcasters. They bring us those opportunities to create those partnerships with the creator, and it is a really efficient way to to do our business development. So we'll keep building out that premium network. And then we have, you know, more key renewals coming up in 2022. So I talked about the ones that we've already renewed and made good progress with there. We have more renewals from some of our bigger shows coming up across across the rest of 2022. So we'll focus on on ensuring that we that we renew as as much of the that opportunity as we can.

43:25 Showcase continues to to develop. We are kind of focused on adding demand to that to that marketplace, so bringing in more connections to programmatic platforms and ad networks to to lift the the sales side of of of Showcase. And then we roll adrip out our inventory creation tool to more and more and more of our partners. So we we think across this year, and this is kind of an upgrade on our previous estimate of of 3,000,000,000. We upgrade that that estimate to to to to see 4,000,000,000 plus impressions in that marketplace during 2022. So so some huge scale going into that, and, obviously, the focus now is to make sure that the the demand is keeping up with the supply. So we're focused very much on on adding more buy side connections into into that marketplace.

44:18 We continue to invest into AUDIOBOOM Studios, particularly into the the new UK arm of of our of our production unit. More upcoming launches in in in 2022 in The UK, and we will, again, commit strong marketing budgets to those to those launches and and push our shows into the, you know, the the top levels of the of The UK podcast charts there as we grow out that that consumer focused brand. And then finally, we have a a focus to continue that international expansion, but in our in our very efficient way of doing so. So just as we've done in Australia, in in New Zealand, and and in Canada, we'll create sales partnerships, monetization partnerships across the the next group of territories. So use you know, we have partnerships now down to our sixth biggest territory.

45:06 The the next group, Ireland, Germany, Mainland, and the rest of Mainland Europe, will be focused on creating revenue driving partnerships in in those areas too. So all in all, 2022 is continuing to look very exciting for the business. We know what we have to do to to to keep driving this company forward. You know, key thing is that, once again, we're really focused on out outgrowing and outperforming that that wider industry growth of of of 30%. We're extremely confident that we'll be going well above above that number across the year, and we're in a just in a in a in a great place to to continue to to take market share and to grow this business. That's great, Stuart, Brad. Thank you very much indeed for your presentation this afternoon. Ladies and gentlemen, please do continue to submit your questions just using the q and a tab that's situated on the top right hand corner of your screen. Just while Stuart and Brad take a few moments to review those questions submitted today, I'd like to remind you that a recording of this presentation along with a copy of the slides and the published q and a can be accessed via your investor dashboard.

46:14 Brad, Stuart, as you can see, we've received a number of questions throughout today's presentation, and thank you to all investors for submitting their questions. If I could please just ask you to run through that q and a tab, and while it's appropriate to do so, read out the questions and give your response, and then I'll pick up from you at the end. Thank you. Thanks, Jake. So we'll do this one first. It's it's probably the number one question on there from Matt, Nigel, Steve. Lots of people asking. Questions along these lines really, which is, you know, there's we've we've seen speculation over the the last two months about companies like Spotify and and Amazon, just to name two of them, wanting to acquire AUDIOBOOM. Can you tell us more more about that interest? So, yeah, like, it's it's it's great to hear that it was interesting in what we've built. It's it's really not surprising. It's kind of validation for the work we've done, the model that we've created.

47:04 And, you know, as we've built out the brand and we've become more successful and and more visible to the wider industry, it's clear that we are, you know, a very attractive proposition. I've I've kind of talked about that more generally in the past as to as to why it would be attractive, but I think more specifically, when talking about companies like Spotify and and and and Amazon, why we're attractive there is is that those guys are kind of taking and making very high risk deals right now in podcasting. So they're laying down $60.80, $100,000,000 to work and to get access to individual shows, which is a very high risk maneuver there. AUDIOBOOM and what we are fantastic at, what we're really great at and and have been is is that kind of incubator for podcast talent.

47:58 So over and over again, we have recognized and create partnerships with with podcasters and creators, and we've helped them really, you know, become mega successful. We've made them very valuable. We've we've we've worked with them, coached them around content and and and and advertising and best practice. And we've, you know, we've played a big role in in in delivering that value, and and we will keep doing that. So inside a bigger company, what we are able to do what we would be able to do is is to kind of derisk that operation, play a key role there, and and kind of help them deliver that huge upside. So I think we are very valuable to, you know, a bigger organization in in in in podcasting.

48:44 We have the scale already, and then we continue to kind of perform that. So, you know, as you know, I think we are bound by the takeover code. So we are obliged to announce any firm interest. You know, of course, that doesn't mean that there might not be discussions, you know, happening that that haven't reached the company yet or exploration of what that opportunity looks like, you know, isn't isn't happening. But I think, you know, one of my jobs is is to ensure that shareholders see maximum value. And right now, we're on this fantastic growth trajectory, and I think what that's actually doing is kind of making us more and more valuable by by the day. So I'm not surprised by by the speculation. You know, if anything if if anything formal comes to AUDIOBOOM, you know, bound by that takeover code, you'll you'll know very quickly.

49:42 Next question I'll do here kind of come similar ones here from a couple of people, including RK. Why is the the guidance on on 2022 revenue not being upgraded even with these strong results. Yeah. So market expectation currently is for revenues of 83,000,000 from from AUDIOBOOM. And, you know, again, just to to to set that in context, that 83,000,000 in itself would be growth significantly above what the industry is doing this year. So once again, we will be 83,000,000, we would be be outperforming the wider industry. As you know, I I just spoke about, we have that $60,500,000 booked with lots more inventory to sell. So we are, you know, supremely confident right now of of hitting that market expectation of 83,000,000 and and and and getting there.

50:37 I think the key for for going beyond that 83,000,000 and then how far beyond that 83,000,000 we go is how we deliver the renewal of those major contracts across the summer. So, you know, on an individual basis, each one of those renewals will push that revenue number above the 83,000,000. And and and if we're very successful across the renewal of those key contracts, then we will go significantly past that 83,000,000. So, you know, I think right now, you know, we are in early negotiations on on two of those summertime renewals. They are looking very positive. Other negotiations there will will start a little later in the year. So really, as as of today, I think 83,000,000 is still a good number that's ambitious in in the context of the the wider industry, but it is one we expect to hit.

51:27 And by the end of the first half of this year, we'll have really great visibility on the remainder of the year and and just how far beyond that 83,000,000 will be going. Next one here that I'll do is the question is, will podcasting and audio boom be negatively impacted by world events such as the war in in in Ukraine? Just a good question. So I think right now, I would suggest we are probably impacted to the tune of what maybe 1% of our revenue potential because of of world events. I think at a maximum, we could be impacted two to to 3%. You know, there there are still COVID related issues in the advertising market, particularly with brands who who continue to have supply chain issues, and therefore, they limit their that's limiting their spending in the space. So I think there's still some kind of COVID related issues there.

52:26 We have seen, I think, over the past four to five weeks, a little nervousness from brands due to the war in in in Ukraine. There's been a a kind of a low level, I think, of of cancellations of their advertising bookings, but nothing that that that's too concerning. You know, I think our top shows, I spoke to earlier, our top shows that drive such a significant part of our revenue are the highest performers for brands. They they deliver great OR ROI, and and they are unlikely to be impacted by any nervousness in in the ad market. So so there is, like I said, a small amount of nervousness, but set that against the the continued expansion of of of the market. And I I think the bigger picture really is is, you know, overwhelming positivity, you know, about the growth of both the market and, you know, more acutely audio boom.

53:21 The next question I have here is management have sold shares earlier this year. What should investors read into that? Like, I'd say I'd say don't read too much into that in terms of, you know, you know, the the future success of the business. I think we're very, very much continuing to bet on ourselves to to build this business further and continue to to strengthen shareholder value. I mean, firstly, some of the options that were sold were part of management compensation from several years ago. So really, it's it's kind of crystallization of some of that compensation linked to work done in in, you know, in 2014 and and and 2015.

54:07 It was also a very, very kind of small percentage of of management options that that were sold. So, you know, we still have, I think, significant skin in the game. And like I said, continue to kind of bet bet on ourselves there personally. As I think you'll know, I I'm based in The US. Taxation on stock options works differently here. I also don't qualify for things like EMI tax relief. So I have a, you know, a taxation need to to exercise and and hold hold those shares so they qualify for lower for lower capital gains tax. So there's a major upfront cost to that, the cost of exercising those plus the the the tax on on the spread there. So in order to do some of that, I've need to needed to to to sell some of those options as well.

54:56 But, you know, overall, I think, you know, we've increased our individual holdings over the past year. I think we'll continue to do that also. And and like I said, we, you know, very much still heavily betting on ourselves to to to build the business further. Next question here. On Twitter, you talked about AUDIOBOOM's advertising model being unique. Can you explain why it's unique, and is it the reason you're growing faster than the industry? So, yeah, this is something from I think from last week, I referenced a thought piece from an advertising executive who highlighted why they would pay up to a 100% more for our advertising model versus various models used by our our competitors, which, as I said at the time, was was kind of great validation for the work we're doing, the model we have. It's just kind of it's very nuanced.

55:50 But to break it down a little bit, I think, you know, fundamentally, brands will traditionally pay to buy audience or to buy content. And what I mean by that is if you're if you wanna buy audience, you're saying, I wanna reach 2,000,000 people in Texas and California with my message. If you buy content, you're saying, I want to align my brand with with sports shows. Both of those are very effective, but what we're doing really is we're enabling brands to buy influence. So to utilize the influence, the personality, and the engagement of the podcast host, and that is what makes our advertising model so impactful in driving sales and and ROI. And therefore, we we we can charge a premium to it. But what we then do is is we supercharge that by ensuring that the ads are delivered in single ad breaks, that brands have competitive separation within episodes so their competitors competitive brands can't be on that same episode, that the ad is delivered native to the content for better audience engagement. We use attribution technology to to to to measure the effectiveness of those ads and and the reach of those ads. So that supercharges that that work we do, allow us to charge you even more for those ads by by connecting with with the influence of the hosts.

57:09 And at the same time, you know, many of our competitors are now watering down the model. Right? Because they are particularly those ones that are now part of a bigger organization, they are having a a different advertising model imposed on them that may not be best for podcasting. It's not making the most of of the podcast host and the influence of that podcast host. What it does because they're part of a a bigger organization is it makes things efficient, but they're having to sell advertising in the same way that they might sell streaming or digital advertising because that's the that fits well with the the overall model that the that the organization has. But that does water things down, makes our advertising model more effective. So, yeah, I believe, you know, it's we have the the most effective advertising model in the business. It is why we are growing so quickly. It's why we're able to deliver so much value to our to our creators. Why people want to come and and work with with with AUDIOBOOM.

58:07 And it's why brands also, you know, trust us to to deliver for for them. I realize I just have a a couple of minutes left, so we'll have a a look here through some more. This one's a question about ADREP. Is ADREP destined to remain exclusively for AUDIOBOOM use? Do competitors have their own version of this tech? Could it be licensable? I think right now, it's it's such an effective tool that it's not something we would look to license out because it gives us an incredible competitive advantage to be able to remonetize content over and over again and create this vast back catalog of advertising inventory. Not something I think we'll we'll license out. Today, I don't believe there is anyone else in the industry or in the market that has that has that piece of technology. So that will remain exclusively for AUDIOBOOM use, and it is is very, very effective for us.

59:06 I'll try and fit a couple more in, guys. Spotify has introduced call to action cards for podcast advertising. Is this something AUDIOBOOM are utilizing? If so, what's the impact on conversion? Yeah. It's it got a little press a few months ago. It's basically a kind of a click through visual card when you're using Spotify that allows you to go straight to a website's page and and buy product there and then measure the the the conversion. It's not something we get access to. It's for podcasts that are exclusive to Spotify. We are working though with a number of attribution services that allow us to to measure the impact on on conversion of our own ads.

59:55 As I said before, they do deliver great ROI. So we we work with attribution services to to do that, which gives us a great look at that. So if there's anything else quick I could could do here. Have a question from Chris about sonic influencer marketing and and how that works with AUDIOBOOM. So, yeah, you know, AUDIOBOOM and sonic work just as AUDIOBOOM would work with another advertising agency or or platform? So Sonic can can access advertising inventory on AUDIOBOOM in in that same manner. No change there, really, and and it does deliver a higher overall gross margin to the the the the full business because it's the sonic gross margin plus the AUDIOBOOM gross margin there. It's just recognized on the the sonic side separately.

1:00:51 I think we'll probably leave it there. We've gone past the top of the hour. So thank you for those questions. Hopefully, we got through a few more than we were usually able to. Thank you everyone for joining us today and and and for your support. Stuart, that's great. Brad as well, thank you for addressing all of those questions that you can from investors this afternoon. And, of course, ladies and gentlemen, the company will have the opportunity to review all of the questions submitted today, and we'll publish those responses where it's appropriate to do so on the investment company platform. Stuart, perhaps we're redirecting investors to provide you with their feedback, which I know is particularly important to yourself and the company. If I could please ask you just for a few closing comments, that'd be great. Thank you. Yeah. As you know, well, you know, Brad and I are always here for for feedback, so you can can can always reach out to us or or ask for any kind of clarification, any points from today.

1:01:41 Yeah. Just wanted to really say say thank you for joining us. Thank you for the support or for your interest in the business. You know, we're in a great place. We're we're really excited about the year ahead of us. We're doing things that our competitors are are not able to do. We play such a a a key role in in podcasting without AUDIOBOOM. Podcasting does not have anywhere near the value it otherwise does. The whole industry is moving quickly, but we are moving much faster. We do things smartly. We do things in a very lean and efficient way. The platform is super scalable. We have the best sales model in in the business, and there's just more and more opportunity coming into AUDIOBOOM to scale our of our our our content business. So lots of exciting things happening.

1:02:26 New shows from AUDIOBOOM Studios, new shows joining our creator network every single day. We're just in a in a great place to continue growing and and making sure that that 2022 is another successful year. That's great. Stuart, Brad, thank you very much indeed for taking the time to update investors this afternoon. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order that the management team can better understand your views and expectations? This will only take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team of AUDIOBOOM GROUP PLC, we'd like to thank you for attending today's presentation. That now concludes today's session. So good afternoon to you all.