Audioboom Group (LSE:BOOM) — Q3 2022 Trading Update

0:02 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 can be submitted at any time via the q and a tab that's just situated on the right hand corner of your screen. Please just simply type in your questions 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 that are submitted today and publish responses where it's appropriate to do so. Before we begin, I would like to submit

0:32 the following poll. And if you could 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. Good afternoon, sir. Thanks, Jake. Hi, everyone. It's, good to be back with you. Lots of, familiar names on the list today and some, some new names as well. So, thank you for for for your support. And for those of you that are new to the business, it's great to have you here. Hopefully, we can tell you a little bit more about AUDIOBOOM today and update you on on everything we've been working hard on over the last quarter and and also the last few years. We'll start things off as as we usually do just by looking at the company, the business model. We'll look at the various revenue lines in the business, how we operate, the part the part that we we play in the in the in the podcast space.

1:18 Then we'll drill down a little onto the the the results and the financial results that we we released this morning, go a little deeper on on the operations of of the business, a little deeper from Brad on on the finances, and then we'll take a a quick look forward,

1:34 before we get to answer some of your questions at the end. So as Jake said, get those questions, in now, and we'll pick those pick some of those as we go across the hour that we're with you. But with with let's get into it quickly. And the first thing for anyone that is is new to the business, we will introduce ourselves to you. My name is Stuart Lars. I'm the CEO of AUDIOBOOM. I've been the CEO now for the past two and a half years based here in New York City, which is where we drive 90% of of of the business out of the The US, and I have been working in and around podcasting now for the past probably twelve or thirteen years at the BBC in London before I moved to called VoxNest in The US.

2:24 And I've been with AUDIOBOOM in various capacities for for the last eighteen years, as I said before stepping up to be CEO two and a half years ago. Thanks, Joe. Hi, everyone. I'm Brad. Brad Clark, CFO here at AUDIOBOOM. Been here since March 2018, so be five years in in March next year. Chartered accountant, qualified with Grant Thornton, worked with various media companies over the last fifteen years or so. News UK for five years. Brave Bison, another AIMCOATED company for a couple of years before joining AUDIOBOOM. It's been a very, very rewarding role, joined the company in 2018. Obviously, in a different position then, loss making, losing cash. So to see it now, where it is now in terms of that growth, that profitability, being cash generative is is very pleasing to see. So we'll get into a bit more of that detail later on in the presentation. Back to you, Stuart.

3:19 Thanks, Brad. So as I said, for those of you that that are new to the company or those of you that that may not have had an update recently, we'll take a look now at the the business model and and the operations of the company. So AUDIOBOOM powers podcasting. We sit in the middle of audience creators and advertisers. We bring the three very, important parts of the industry together through our platform, and we create value for for all elements of of the industry. So, sitting at the heart, we work directly with creators, those content creators, those podcasters producing content. We distribute out to audience wherever that audience is, whether it's on Spotify or YouTube or Apple Podcasts or Pandora, and many, many other listening points. And then we connect the, the creators with advertisers, brands that want to advertise on podcasts, and connect with, and get that brand out out to audiences.

4:14 And AUDIOBOOM and the platform brings those, three key elements together. Without us in the middle, there's very little value in the podcasting space because, there is there is no way to connect those three elements together, efficiently or or any type of scale. So we really are the the kind of the the heartbeat of of the podcasting space. And when I talk to you about what the platform looks like on the next slide, you'll see that this is, like I said, very efficient, very scalable, and we're we're building it very successfully in the space. Now we we build this model on, I think, three core beliefs. First off, that that podcasting is a creator medium. So what I mean by that is that this is a medium that is very strong for independent creators, very authentic creators that have great engagement with their audiences.

5:05 And we're seeing that that first belief, really coming true now. Over the last few years, big brands have stepped into podcasting, but many of them are are now actually stepping away from podcasting because they don't have that authenticity. They don't connect with with the audiences in the same way that independent creators are doing. We've recently seen companies like Spotify and CNN, laying off their production staff because, they haven't got the traction that they wanted from, from their content creation arms. And therefore, AUDIOBOOM working directly with independent creators, we believe we're in in in the right place, and that's the future of podcasting. The second core belief that kind of pushes this model is that this is an advertising funded medium. And, again, we we believe that that's coming true now.

5:51 The take up of subscription modeling has been very, very low. And podcasting has never had, those same problems that something like cable TV in The US has had. It's always been free at the point of listening. The the content is very strong through an ad supported model. So there really is very little need for a a subscription model, and there's very been very much been a small take up of of subscription based podcasting, and we don't see that as being, something that will come through in the future. And then the third core belief is that this is a distributed media form. So we want our content and the content from our creators to be on every single listening app that's out there. So as I said before, whether it's Spotify, YouTube, Pandora, Apple Podcasts, Google Podcasts, iHeartMedia, there are many, many other listening destinations.

6:41 We make sure that that content is everywhere a potential audience is. And again, this third of our core beliefs is is also being proven out right now. We've seen recent studies, that when podcasts have gone exclusive to one platform, they've lost anywhere up to 75% of their audience. So, again, we believe getting that content out to the widest possible audience is in everyone's favor. And it's those three core beliefs that that that drive this model. We power podcasting for creators, advertisers, and audience.

7:15 The AUDIOBOOM platform that sits at the heart of that model is is very scalable, and it's been built over the the past seven or eight years. And it really manages every part of the production and distribution distribution process. So at the the very heart of that platform, we have a content management system. This is where the podcasters will upload their audio. They will manage the publishing process when that that content is launched and how it distributes out to each of those listening destinations with simply one click. Then we are able to gather analytics from each of those those listening destinations and consolidate consolidate those into a analytics dashboard for our podcasters so that they can understand their audience.

8:01 They can see all of their listening data, and then our sales team can use that listening data to monetize that content very strongly. On top of that content management system, we've built out an advertising technology stack. So that's, an ad server that fires in the advertising. It's a yield up system that ensures that we get the very best pricing for each piece of that ad ad inventory in in real time. We have something called AdRip, which creates additional inventory within back catalogs of content. And then just last year, we will we launched Showcase, which is our advertising marketplace, and that advertising marketplace enables all of the inventory to be sucked into it and then for that to be monetized, by, through many different sources globally. So that's an advertising marketplace that that sits with that advertising technology stack on top of our CMS.

8:56 And then finally, we have a Salesforce based system called Lyrical. This is an inventory management system. It allows our team to execute the advertising. It automates the billing. It's business and sales and intelligence, and, again, adds to the level of automation that we have in the business. It keeps our headcount very low, enables the the the entire, distribution and monetization part of of the platform to to work very smoothly. And we're really seeing some, some some true scale, coming through this platform now. So we have more than 8,000 podcast channels, using the platform for for publishing and distribution and monetization. We're seeing more than a 130,000,000 monthly downloads across the the platform, and the content is listened to by more than 34,000,000, unique listeners every month. So that platform, as I said, very efficient. It doesn't take a a lot of investment for the number of channels and downloads and unique listeners to grow over time.

10:01 This slide really looking at our content and revenue model. So to break this down a little bit, you know, the the graph graph in the in the in the top half of of this slide is really showing you how podcasting works. There's a a few large podcasts at the very top end, which have a very large number of downloads, and then there's a very, very long tail of shows that have a much smaller number of of downloads. And AUDIOBOOM and the platform of AUDIOBOOM is able to work with all of those podcasts. So, at the very top end of the industry, we, we call it our premium network. That's the work we do with our biggest 200 shows, and they are driving a significant amount of the downloads that come through the platform.

10:50 We then have AUDIOBOOM Studios, which is our in house production. It's a smaller number of shows, around 30 podcasts, but very much in the premium end of of of the podcast space. And then we have our Creator Network. That's our long tail. That's 8,000 podcasts, much smaller shows, but delivering some some good volume across the the entire entirety of of that long tail. The way we then monetize is through through three ad models. Our premium sales model, this is our in house sales from our, in house teams in New York and and London. They are selling directly to agencies and and brands. They sell at a very high price point, and they're really selling those ads just on those top 200 podcasts in our premium network and then the AUDIOBOOM Studios shows as well. So, these are bespoke, podcast sales, where the host delivers the ad, in in natively to the podcast. It's a heavy lift to sell and execute those ads, but they are a very premium price point upwards of $25 per 1,000 downloads.

11:55 So, that's the the premium sales model that we have within the business. The secondary ad model that we have in the business is called Showcase that I mentioned on the previous slide, and that's an automated ad marketplace that's all delivered through, advertising technology. And Showcase can monetize shows of any size. So it can monetize a show that has a million downloads per episode. It can equally monetize a show that has just a 100 downloads, per episode. We feed all of that that content into Showcase, and then we open that up to, to advertisers to, to target advertising against demographics and and locations and and and keywords within that that content.

12:40 And Showcase, as you'll see later on in this presentation, is a is a fast growing part of the business and a very successful, part of the business too. And then thirdly, we have, Sonic. That's our team down in Austin, Texas. Sonic, are also able to to monetize across the the entire span of our podcast. Sonic works a little differently. It's a platform that, that is working directly for the brands and for the advertisers. So it enables those brands and advertisers to access podcast inventory not just on AUDIOBOOM, but outside of the exclusive AUDIOBOOM network as well. Within AUDIOBOOM, it's it's monetizing those top 200 podcasts, AUDIOBOOM studios, podcasts, and also the long tail creator network.

13:27 This slide breaks down our various revenue lines within the business. At the top, you'll see how each of those revenue lines contributes to our group revenue. And then at the bottom, you'll see the gross margin on each one of those revenue lines. So if we take those in in turn, AUDIOBOOM Studios, that's the the shows that we produce ourselves through our production teams or the shows that that that we coproduce within AUDIOBOOM, and they have a a strong gross margin at 30%, but it's a small part of our our revenue. It's a growing part of our business. Just launched just over a year ago. As I said, we have around 30 shows that we are producing or coproducing out of AUDIOBOOM Studios. Our premium network, that's those top 200 shows, big audiences, big revenue driver at 65% of our of our group revenue, but comes with a a slimmer gross margin at at 19%.

14:26 And that's that that gross margin has kind of hovered in and around the the 20% mark now for the past few years. That's really impacted, and and there's pressure on that gross margin from, from the the competitive nature of the space where, you know, us and our competitors are all trying to sign the biggest shows in podcasting, and we have to offer them favorable revenue share terms to attract them to our network. And that put pressure that puts pressure on that gross margin, but it's holding in and around that that 20% mark on in any particular period. Then Showcase, our newly launched ad marketplace, this is has moved very quickly for us, and we're we're really happy with the progress that we're seeing within Showcase. So very quickly, Showcase has become 14% of our of our group revenue, from its kind of starting point last year and has the highest gross margin now within the the business, as as well. So it's very efficient, and, it is growing revenue very quickly. And we're super pleased with the the progress that we're seeing, at Showcase.

15:33 Sonic also has been a fast growing new addition to AUDIOBOOM. It's been with AUDIOBOOM, now for the past, three and a and a bit years. Has that slimmer gross margin because it's operating directly with the brand, and has to, has to utilize that traditional ad agency, gross margin or commission structure with the brand, but it's growing very quickly to be 18% of, of AUDIOBOOM's revenue this year so far. So I hope that gives you a good overview of of the model, how we sit within the space, and how we how we power podcasting, what the platform does, how we think about content, and how we monetize that content, and also the various revenue lines and how they they they come together to to form AUDIOBOOM.

16:23 We'll now take a look at performance, and we'll start off with the most recent set of results that we released this morning to the stock market. So I'll walk you through those. Year to date revenue of $57,100,000, that's 44% annual growth over the same period last year. And I think one of the key points here is that we are moving, once again significantly faster than the wider industry. The podcast space in The US is projected to grow around 15%, this year. And so we are year to date significantly ahead of the wider industry growth. Our EBITDA profit for the the first nine months of the year is 2,700,000, up a 125% on the same period last year, which was 1,200,000.

17:11 So we're now at 2,700,000 for this first nine months of of the year. Q three revenue, down slightly on last year, so $16,200,000. And in a moment, we will obviously talk through market conditions and how they've impacted the the business through q three. It's been a challenging quarter, but we'll go into detail a little more on those market conditions in in a couple of slides' time. We continue to be profitable. $600,000 of EBITDA profit for for the quarter, again, down on the same period, q three of last year due to those market conditions that we're working in, but again, to to be a profitable podcast company. And there are very few of of those out there right now.

17:59 I wanna kind of draw some attention here to that cash position that we have, $8,000,000 of of cash

18:05 in the bank with a further £1,500,000 or $1,700,000 of of untouched overdraft facility available to us. That $8,000,000 of of cash is the highest cash position we've we've ever reported as a company. We've been cash generative over the the the past quarter, adding $2,200,000 to that cash balance since since the end of the end of June. Continue to be fully funded for the the current growth plans. And I think as we are working and operating in in somewhat uncertain economic times, just having that big cash balance, the biggest cash balance that we've ever had in in the business is is gonna be a very important point and something that should give us confidence as we move forward.

18:55 So let's talk, I think, about the way the market has changed since we since we last got together. I think three months ago, we kind of gave you, you know, a bit of a heads up that we were starting to see some, some change in the ad market due to, global economic conditions, and that has, as we expected, come together in in in q three. So, we saw a very kind of, quick downturn in the ad market in July, and July is the low point in terms of advertiser demand and and and revenue from advertising. We saw small recoveries in August and September that were both stronger months in terms of revenue than than July.

19:40 We're continuing to see that that recovery into q four. Again, October is another small improvement and obviously with the higher demand months around the holidays of November December, we expect to see that recovery continue in q four. Now this has mainly impacted the The US market, and I think when you look at it, it's it's because of the inflation impact happening here first, and and happening a little earlier than it that it did in The UK. So The UK operation is not really impacted, at this point, although we perhaps expect to see some UK impact in in in q one or q two of next year, particularly when energy pricing has has impacted consumers.

20:32 Our premium ad model is the one that is most impacted. And this is really because, those brands that we work directly within that premium ad model, they are direct to consumer brands. So, they are the first to be hit, by higher inflation and a change in consumer confidence and consumer spending. And they're also performance driven brands. So they are willing to spend money in podcasting when they can measure the performance of those ads and, and grow their businesses because those ads perform so well, as consumer spending, changes, spending habits change and confidence goes down. Those, direct to consumer and performance driven brands, have have been pulling back their spending and that has impacted that premium, ad model that we have.

21:22 Showcase, remains largely unaffected though. Now showcase is working with larger blue chip brands and they are not as directly impacted or have not to this point been as directly impacted as those smaller performance driven brands. So Showcase has continued to to grow. We have not seen too much of an impact there. Now one thing that you'll see here is that the weaker ad market has led to a small number of missed creator minimum guarantees. So to step that back a little bit, when we sign the larger shows within our network, we guarantee them minimum levels of revenue for their content. And as we have, have seen lower revenue levels due to this weaker ad market, it has meant that we have missed a small number of of those minimum guarantees. We obviously have to pay those minimum guarantees out in full, and that results in a kind of a direct, hit to the gross margin and and and EBITDA. So you're seeing that slight reduction in in gross margin, and and lower EBITDA due to some of those, a small number of those, creator minimum guarantees being missed during this tough market.

22:38 PLC are projecting now that the industry grows around 15%, this this year. And I think just that key point here again that I've I've mentioned before and and we'll probably mention again before this presentation is over, we continue to to go significantly ahead of this industry growth. So while it's tough times out there and and tough times in the in the advertising market, AUDIOBOOM is is is resilient versus our competitors, and we are continuing to grow much far we're continuing to grow, and we are continuing to grow much faster than than our competitors in the podcast space.

23:21 So I do wanna talk I mean, I I you know, it's a tough market that I've I've just talked through. It has been challenging operating over the first the last three months, but I do wanna talk about some of the the the key points here. And I think, you know, one one thing is how much we've really learned from COVID. Now COVID was, you know, just two years ago, so this is the the second time in three years that the business has been impacted by larger uncontrollable forces, I I think. So we learned a lot from from from COVID, it's been great to kind of see that that play out and make us more resilient during this economic downturn. I think the first point here is is around Showcase. Showcase was really developed during and after after COVID to diversify the the revenue streams a little bit. So during COVID, we were very much focused on our premium ad model, which was impacted that time, and and Showcase was a way to to diversify that revenue to start working with those bigger blue chip brands who are perhaps less impacted by some of these economic conditions.

24:32 And so Showcase, we've seen great revenue growth there, 75% revenue growth in q three versus q three of twenty twenty one, and a 115% year to date growth on Showcase versus the the same period last year. So I'm really pleased to see, to see Showcase, having such a a big impact on on the business born, as I said, out of out of COVID. And it now contributes more than 14% to group revenue versus 9% this time last year. So, it's growing fast and and making a real impact on the on the business. Likewise, with the the opportunity to sign big shows to to the network, again, something we kind of understood during COVID was that there was an opportunity

25:18 while other competitors of ours are impacted harder by the by market conditions, there was an there was an opportunity for us to to go out and target big shows that we wanted to work with and sign those shows exclusively into the AUDIOBOOM network, that's what very much what we're focused on here. New shows just signed in in the last three months into that the top end of that creator network, Loves and Friends, Mia Cobb, Straight Up with Sassy, Undisclosed. These are all large podcasts here in The US mainly that have strong built in audiences that can be monetized off the bat, and they are now part of the AUDIOBOOM network. And we will instantly and and and and continue to see revenue coming from from those shows as we go across the the the last part of this year and into 2023.

26:09 One point that I I do wanna talk about is is morbid, a large show that was part of the AUDIOBOOM network until May. And we have we had known for several months before May that Morbid would be leaving the network. We have very kind of, you know, strict financial strict financial goals around making offers to to to the bigger shows to renew the the contracts there. If we'd have chased that morbid contract and had kept them with an audio boom, that would have left us losing tens of millions of of of dollars a year. So we we had to let you know, be very strict on on what our top maximum offer was.

26:56 And and as I said, morbid, left the network, and we'd had notice of that for for for several months. But morbid leaving, while it impacted downloads across the network, it hasn't stopped growth within AUDIOBOOM. So we've seen over this this last period network downloads across AUDIOBOOM up 33% from last year when you exclude Morbid from from last year's numbers. So growth is continuing in terms of consumption and inventory without Morbid even though that that losing Morbid has obviously impacted the the top number, but but growth there is continuing strongly, and we'll see that on the chart on

27:36 a later slide. And then finally, you know, in q three, we've had some success here with AUDIOBOOM Studios, particularly in the in The UK. But q three launches, including Killers, Colts, and Queens, Glittering a Turd, Superpower, State of Mind, these have all made an impact on The UK podcast charts, and we're starting to see the the commercial benefits of of those shows as well as they add more more episodes and and add more inventory across the year.

28:07 I talked a little already about AUDIOBOOM's performance versus the industry, but both of these charts really are highlighting that, once again, AUDIOBOOM for the fifth year in a row is growing faster than the wider industry, faster than than our our competitors. So our year to date growth of 44%, significantly stronger than the projected industry growth of of 15% this year. So, as I said, we are, resilient, and we are, we are performing well in in this current market. Over that past five years of outperforming industry, we've taken our market share from less than 2% to greater than 6% in that five years. So growing market share all the time, and our medium term goal here is to get to that 10% market share point, and I don't think that's that's, you know, too many years away from getting to that 10% market share point. So, you know, key thing here is, despite impact from the the market, we are growing faster than than our competitors.

29:08 And the chart on the right is is is so pleasing to see. This is a a ranker of the the biggest podcast publishers, in in The US, and this is looking at the time period from July 2021 through to June 2022. And AUDIOBOOM is the fourth largest podcast publisher in The US, which is the the world's biggest podcast market. And when you look at the the company we're we're kind of keeping there, it's just a fantastic achievement. So the the only publishers above us are Spotify, SiriusXM, and iHeartMedia, three of the biggest broadcast companies in the world. And then we have NPR, which is the BBC of The US, and The New York Times immediately below us. So we're we're kind of I I said this many times before, we continue to punch above our weight. We continue to be very, very smart about the way we do things, and and to be the fourth biggest publisher in in The US is is just an incredible achievement. So, you know, versus our competitors, we are doing an incredible job here and performing very highly.

30:16 Alongside of our financial results every quarter, we put out an update on our KPIs, and we have three corporate KPIs. The first one of those is global downloads. That's the amount of consumption that we're seeing across the platform on a on a on a on a quarterly basis. And we're seeing year on year growth here, 9% year on year growth versus q three of of twenty twenty one. But what you are seeing there on that green line is is the drop off through losing Morbid in in q two. So that 124,000,000 dropping down to to a 108,000,000. That's the drop off for for Morbid. But when you remove Morbid, as I said before, take Morbid out of those those stats from last year, that's the pink line, You are seeing the network as a whole continuing to grow, very quickly across the the the past year. So we know we have growth ahead of us on that KPI.

31:10 We're already seeing in October, around 5% growth over q three, so we do expect that that that that KPI to continue heading in the right direction. Brand count is the number of brands that we work directly with in our premium ad model. This one, you'll see here that the dip being linked almost entirely to those market conditions. So q three seeing a a big drop off there. As I talked about earlier, brands being more nervous about spending money in in in the space. Again, just highlighting what I said earlier, seeing that recovery and higher demand in in q four is, is showing us already, in October that that brand count will tick up, as we go into q four. So confident about, you know, a slow and steady return on that brand count KPI.

32:00 And then ECPM is really our optimization metric. That's how many how much money we are able to extract from a thousand downloads across the network. We are $50 per 1,000 downloads across the network. We've been above that $50 number now for the past eighteen to twenty four months. And while this is a, you know, a little dip caused by those lower revenue numbers in q three, again, we're seeing that going higher in q four. So expect that, e c p ECPM number to be up, again as we go in into q four. So, you know, I think really the the the story here from the KPIs is you're seeing market conditions impact them in q three, but the signs are good for recovery as we go into q four and 2023.

32:53 And with that, I'll throw it to Brad who can who can go a little deeper on some other parts. Great. Thank you very much, Stuart. Hi, everyone, again. So yeah. So the AUDIOBOOM growth story we've seen over the last few years continues this year. Today, I'll give you further insight into our revenue performance, EBITDA, operational costs, working capital cycle, just building on those themes and messages that we've that I presented over over the last few investor meeting sessions.

33:23 This one, first up, we can see our financial performance over the last five years as we've positioned ourselves among the the leading companies in the in the podcast industry, recognizing revenue growth, is above the wider podcast industry, taking market share, transitioning the company from a loss making position to profitability, and all with access to resources, which are a fraction of what our competitors can can call upon. As a company, as and as investors as well, when you're looking at the company, when you're looking at the podcast space, the company is competing in it. There are a couple of couple of public companies which can get a decent amount of company specific information and industry information, but the majority of companies will either be private or be part of larger organizations. So you're not really gonna get a full picture of of how they're performing. But AUDIOBOOM is public, so we're upfront and honest in terms of where where where we are. And to be able to say that we're perform you know, we're growing faster than the wider podcast market, say that we're profitable when many of our competitors are loss making, to say that we're cash generative, especially in this economic climate.

34:27 Those are, in my opinion, three very good strong messages to be able to to communicate to to investors. So we know that 2022 will be another record breaking year for the full year on both revenue and and and EBITDA. As of the end of q three, we had recorded booked 95% of our 2021 revenue total. And today, we've confirmed that we've got $73,000,000 of of advertising revenue booked for 2022. So we're already over 20% up on on last year, which is above that 15% growth figure that we've that we've quoted, and Stuart's mentioned already, that PLC report from from June of this year. Onto that. Onto the next slide. We can see here a bit more detail in terms of the the revenue and costs of the business.

35:17 We've we've gone through some of the challenges that we faced in the in in the third quarter, and it's encouraging that we we've we've seen that recovery from July through through August and September and and and into October as well. In terms of that growth across the revenue mix for the first three quarters of this year, we've recorded impressive growth statistics across our revenue mix. So the premium network grown by 38%, 115% growth on on marketplace, and 40% growth in in Sonic. And Sonic has just booked its its record revenue quarter in in the third quarter of this year. So lots of lots of positives. We said revenue has grown by 44%. We know that. But OpEx increased at a slower rate of 21% for the first nine months of the year.

36:03 The third quarter of this year was flat and level with the third quarter of last year at at 2,600,000. And q three OpEx was actually 16% lower than q one and q two. Now what we're I'm aiming to illustrate here is that there's there's continued cost control within the business, and there's actually a cost base that flexes with the revenue record revenue recognized within the business business and the performance of the business as well. So our two there's two major costs that really vary with the performance of the business. So with revenue recognition, we incentivize our sales staff with with sales commissions. Obviously, there's no revenue recognition, so that cost decreases. And download costs as well, you know, we've we've seen that in the third quarter there has been lower lower downloads.

36:50 So therefore, there's a lower cost incurred there as well. So, you know, this is not a business that's, you know, for example, lumbered with with stock. It doesn't have a high headcount. So when those macroeconomic challenges do occur, we're well placed to weather those because that cost base does, to an extent, flex as well. In terms of the the mix of of OpEx within the business, similar, you know, same breakdown as as before in terms of the major cost being salaries and sales staff commissions. That accounts for 65% of our our OpEx base. There's an 18% year on year increase on that line for the first nine months of this year from 4,800,000 last year up to 5,700,000 this year, and that's mainly due to a higher headcount within the business.

37:37 We we ended September on on 45 heads, slightly down on June where there was 47 heads within the business, but up year on year from the 38 that we we had at the end of September last year. I say this, you know, every quarter, we continue to be very, very lean, very efficient when compared to our competitors. There's no current plans to to increase headcount significantly above where we are today. So that's the major cost category within the business. Second major cost category is the cost category is those technology costs and hosting and downloads. That content is is within that. First nine months of the year, there's a a 40% increase on on technology costs from 1,300,000 to 1,800,000 for the first nine months of this year. Obviously, downloads cumulative downloads have have increased year on year, so therefore, we've incurred that that that higher cost as well. But overall, that that point I'm making there is that that cost base does flex dependent on on on performance.

38:37 In terms of a bit more detail on on working capital and and the cash within the business, I had a couple of questions, pre submitted questions section as well. As at the end of June, we're very pleased to be able to report, as we did in June, the highest cash balance that the company's ever reported at $8,000,000. It's a testament to the internal processes that we've that we've built within the business to be able to continue to generate that cash. So cash increased by 2,200,000 in the third quarter of this year, increased by $5,000,000 since the end of December. Collections totaled almost 59,000,000 for the first nine months of the year, an average rate of 6,500,000 a month. And for the second successive quarter, cash collected actually outstripped revenue books and payments made.

39:24 Just a a note on the payments made, there was one question pre submitted on on that one. So the payments made column, that does include OpEx within the business, which if when you look at OpEx within the business, rough run rate of OpEx is around $1,000,000 a month, just under $9,000,000 OpEx for the first nine months of this year. The other payments made relate to revenue share payments that we make to our partners. So those costs, if you look at our interim statement in within cost of sales, those are the revenue share payments that we make to our to our podcast partners. So the payments made, the gray column here, is OpEx plus those those cost of sales. That was a question that we received before, just a bit of explanation around that. Another pre submitted question as well is around the the cash that the the company holds and the currency that the the company holds.

40:11 So to answer this one, majority of cash held is in US dollars. So the company recognizes around 95% of its revenue in The US. So we're invoicing in in US dollars and receiving that cash in US dollars. So that's the majority of the cash held within the business. At the end of September, the company held around £900,000 in sterling, around $7,000,000 in 7,000,000 in in US dollars. So that gets us to our 8,000,000 held at the end of the quarter. There's a certain amount of natural hedging that occurs because we are invoicing and receiving in the in the relevant currency. There's very limited transfer between between dollars and and and sterling. We do have to do that but very, very occasionally.

40:56 So there is a certain amount of natural hedging there. So hopefully that answers that question. In terms of the weakening of the pound against the dollar, that's another question that we've received. The impact that we've seen on the p and l, I actually went through that in the interim statement because of the structure of the company, where the main trade of the business is recognized within AUDIOBOOM LIMITT, our UK sterling based entity, which then consolidated up into AUDIOBOOM PLC, which reports in dollars. We are seeing because we are translating debtors into sterling on on the balance sheet, there is a to the end of September, there is over a million dollars in in FX gain within the company. But that's below EBITDA around three years ago. We moved that FX below EBITDA because, obviously, we can't control that, obviously.

41:46 So we derisk that from, you know, from what we report to the to the market. So that's below EBITDA. You'll see that on our last couple of of annual reports as well. The reason why we recognize trade in our UK entity, well, we've got over $30,000,000 of brought forward tax losses, which we can utilize to offset future profits. Once those brought forward losses are utilized in the future, we'll then recognize the revenue in the appropriate territory. So hopefully that gives an overview of the cash position, which is strong within the company. In terms of debtors, a good statistic here. So strong collections have continued through the third quarter. So the debt to day figure at the end of Q3 was 52, which is 16 lower than the 68 reported in June, and 42 lower versus the 94 we reported at the end of December.

42:39 How do we keep doing this? Well, high quality, reliable invoice information distributed, structured data collection processes, good customer relationships will enable this figure to decrease. And that's despite the continuing increased revenue and, again, to reinforce that efficiency point in AUDIOBOOM. That's run by one person, Sean. We've got two people, Jamie and and James, within within Sonic. So that really does that's reflective across the business in terms of that in terms of that efficient team that we've got here at AUDIOBOOM. Last time I updated you on our new accounting system, NetSuite. So that went live on the July 1. Now we've successfully closed. Three month ends with it. It's working well. Pleased to pleased to report our data chasing was automated. Our payment runs are much quicker partly due to the fact that there's a healthy cash balance there.

43:28 And now that's implemented implemented, we're now using you know, moving on to using that to give us greater financial intelligence for finance and and the wider business as well. So welcome to the team for getting that in so smoothly. That's another key system of the business now that along with along with Salesforce allows us to really help the business to to to scale without adversely impacting it. So to conclude on these financial slides, the working capital cycle continues to to function well within the business. The company has more cash reserves than any other point in its history with a £1,500,000,000 overdraft, which is undrawn. We we have not touched that. So the company has, as at the end of September, around $10,000,000 of available capital to call upon. We're fully funded for that current growth trajectory.

44:14 We've got a cost base that flexes in part to the to revenue recognized in downloads, which are recognized. We're profitable today in 2022, cash generative, and we're well positioned to be, you know, in as good a position as we can be to meet those macroeconomic challenges that we've that we've seen in that third quarter. If got any other questions on the financials, please just email me directly or shoot over a question today in this presentation. But back to you, Stuart. Thanks, Brad. Just one more slide from me coming up, so probably now is the the last chance to get any questions in. I think we'll have around ten minutes at the end to do some of those questions. Last slide for me just as a as a little bit of a of a look ahead, really. So I think the first point here is very important. We currently, as of today, have more than $73,000,000 of advertising bookings, in place for 2022.

45:12 That is 21% higher than the entirety of last year's revenue. So if we stopped everything today, you know, we would still be growing well above, you know, market industry rates. We have another kind of ten, twelve weeks ahead of us in our very high demand season to take that $73,000,000 number upwards, but that's the the bookings figure as of today. As I said before, q four is is seeing a strengthening in in advertising demand, and we're seeing that kind of on a on a on a monthly basis. But, you know, those challenges remain, particularly in the in the the premium part of our business, the direct to consumer sector of what we do. So, we do think that, you know, that there are continued challenges, ahead, albeit seeing some, some strengthening, of demand in in the next, in the next quarter.

46:09 Said it a few times here, but we are set to continue to outperform the industry for the fifth year in a row, growing much faster than that 15% industry growth. And right now, we're really just focused on upfront season. So upfront is is when we book ahead for the entirety of of the next year. That begins in mid October, and it's really gonna be our first look at pricing levels and and the kind of the confidence that advertisers have, the demand that advertisers have for for 2023. Usually, we are booking somewhere around 30% of our full year revenue during that period from from now until December the thirty thirty first. So we are very much focused on on the upfronts, season as we as as we go ahead. So I think in conclusion, challenging times, but, Audioboom is resilient and, and continues to, to continues to grow across those KPIs into q four. We're seeing the market improving slightly in in into q four, but we know there are some challenges ahead still.

47:18 Stuart, Brad, if I may just jump back in there, and thank you very much indeed for your presentation this afternoon. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab that's situated on the right hand corner of your screen. But just while the team take a few moments to review those questions that were submitted already, I would like to remind you that recording of this presentation along with a copy of the slides and the published q and a can be accessed via your investor dashboard. Stuart, Brad, we did receive a number of presubmitted questions ahead of today's event as well as as you can see in the q and a tab, a number of questions that have been submitted throughout the presentation itself. So firstly, thank you to all of those on the call for taking the time to submit their questions. And, Brad, sure, if I could just hand back to you to run through the q and a tab just to respond to those questions where it's appropriate to do so, and then I'll pick up from you at the end. Thank you.

48:05 Okay. Thanks, Jake. I think so I think this first one is probably something kind of in line with the most popular question today, so we'll tackle that one that one first. The question is, the share price of AUDIOBOOM reached very high levels due to market rumor and speculation. Could you please once and for all address the rumors that surround the company this last year? Were there rejected bids of $12.18, £28 from the likes of Spotify, Vivendi, and Amazon? If these bids were rejected, why were not why were shareholders not advised? Okay. So I think I I addressed much of this during the the last investor meets company called back. Actually, the one before that back in April when these rumors were were were were pretty strong, and I talked about it then.

48:51 As I kind of said at the time, the the board had had no direct contact with any of those companies that that were just named or were named in in in the press. No offers were received. And, And of course, shareholders would be advised if a serious bid came in in for the company. The only bid we we've ever received at AUDIOBOOM was by AAA back in the summer of twenty twenty one. That was an offer of of £12.50, which the board did advise shareholders on and and rejected due to to to many factors. So, yeah, nothing no real kind of change the information that I gave you back then. There was no board contact with with any of those named parties that were were named in the press, and, of course, we will, you know, bring and update you on any serious bid for the company.

49:48 Next question we'll do is this one. ACAST seem to have more celebrity podcasters than AUDIOBOOM. Why does it seem that these firms have more recognizable faces under their banner? Do they offer better terms for creators than AUDIOBOOM? So, yeah, for background, Acast is one of our UK competitors, another publicly traded podcast company, actually. Another company that is around, you know, 70% down from their all time high share price, actually. They are bigger than us in The UK, and maybe that's why you are seeing more recognizable faces there. But I think what I'll ask you to do is to not look at this from a UK perspective. The UK podcast market is actually not that big.

50:36 Audio boom just in the first first nine months of this year, is bigger than the entire UK podcast market. So it's it's not a a big market, although we do operate strongly in The UK market. We are obviously, AUDIOBOOM is a major player in The US. That's the world's biggest podcast market. As I showed you earlier, we're the fourth biggest publisher in in that market. And we have very recognizable names, in in in The US, and those names do an incredible job of of of delivering revenue, and and we do a great job of of creating value for those those major names. We've we've made creators more than a $150,000,000 over the past few years. So, yeah, I think you you kinda need to view this from a global perspective.

51:22 UK media names that ACARS may have are actually not that big globally. They don't cross over into that lucrative US market, and that's the market that we are doing our work in. We have a great footprint in The US market. Question three that I have here. It seems that everyone is joining the podcast party with people across the world starting new podcasts. Is there a risk that all these millions of podcasts could actually be dilutive to your listener base and more important, dilutive to your earnings? I think I kind of showed it on a on a chart earlier that podcasting is is very top heavy. So the top 1% of podcasts currently drive more than 90% of of revenue.

52:13 And the AUDIOBOOM model really focused on that top 1% for for for some time, that was our premium ad model. We were very focused just on those those biggest creators. But there is a lot of opportunity actually in monetizing the long tail of creators, and that is why we developed Showcase. That's our automate automated ad marketplace. Showcase enables us to deliver advertising against shows of any size anywhere in the world. So we can bundle up shows, create bundles out of those shows, a high volume out of those shows so that advertisers can target specific audiences, demographics, locations. The whole I think the whole industry struggled to monetize that that ninety nine nine percent of of smaller shows until recently. And it's products like Showcase that are designed to to drive value from from that volume. So while there are more and more creators coming into podcasting, I think almost every day, we are developing products and developing tools that enable us to continue to to extract value from from podcasts of of any size. And so I don't see it as a as something that will dilute dilute our revenue. I'll actually see it as an opportunity, I think one that we are already ahead of many of our competitors with because of our work to develop Showcase and those ad tech tools.

53:46 What forward bookings are there for 2023, and what are the indications for advertising spend looking ahead to next year? So there are I I think I mentioned a few parts of this just in the in the presentation there, but there are two trusted projections for the podcast industry in in 2023. One that I've already mentioned from PWC, and that measures The US industry. And the other one is from the World Advertising Research Center or WARC for short, and that looks at the the global podcast industry. PLC is projecting US growth around 12% next year. And World Advertising Research Center, they are projecting global podcast growth around 8%.

54:32 So AUDIOBOOM's revenue is is heavily weighted towards The US part, but it it also you know, we do also have global revenue streams as well. So, you know, the the projection is, you know, from those two companies is is somewhere between 812% growth. You know, once again, as a reminder, we significantly outperformed the wider market by more than double actually. On on on average, we're usually, a 100% or more ahead of of the wider market for each of the the past five years. And I I think that will be the the focus again in in 2023 to to outperform those, projected industry growth numbers significantly. As for bookings, I mentioned earlier that we had, that we were just getting into the upfront process for for next year. It really starts in in in mid October.

55:25 During that that process, we're we're we're really just offering, preferred pricing to brands and advertisers who are able to book high volumes of ad inventory across the whole of next year. So that that's this upfront process that that we're in currently. We as I said before, we we usually book around 30% of the following year's revenue during our upfront season. So we're we're just getting started in that. We're just understanding the the pricing and the demand in that. And by the time I I kind of talk to you in in in January and we do this again, I think we'll have a, you know, a really strong view on what 2023 is is going to look like. And, Jake, I think with that, we've only got a couple of minutes left here, so I'll I'll throw it back to you to wrap things up. Stuart, Brad, that's great. And thank you very much indeed for for addressing all those questions that you can from investors this afternoon. And, of course, we will give you back all of the questions that were submitted today to review and then add any additional responses where it's appropriate to do so. Stuart, perhaps before redirect ing those on the call to provide you with their feedback, which I know is particularly important to yourself and the company, if I could please just ask you for a few closing comments to wrap up with, that'd be great.

56:38 Sure. I think, you know, firstly, thank you for for your continued support. AUDIOBOOM is a strong company. And while the the market conditions are are changing and it's been a a challenging time, the fundamentals of the business have not changed. The business model is is still strong. We continue to to be profitable. We continue to grow much faster than than any of our competitors. So, you know, as as you know, to to be exposed to a fast growing medium like podcasting, AUDIOBOOM is a is a is a great company to be connected to. We're expecting the market to improve across q four and and next year. And we've learned a lot, as I said before, from from COVID and how to make this business resilient and how to make this business really well placed to, to to to really come back strongly once the the market lets us.

57:32 Stuart, that's great. And Brad as well, thank you once again for taking the time to update investors today. Could I please ask investors not to close this session? 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, but I'm sure it'll be greatly valued by the company. On behalf of the management team of AUDIOBOOM GROUP PLC, we would like to thank you for attending today's presentation. That now concludes today's session. So good afternoon to you all.