Q4: Positive adjusted EBITDA for the first time

Year-end report 2023

Fourth quarter 2023

• Net sales in the quarter amounted to SEK 494.2 M (454.3), which corresponds to net sales growth of 9% (35%). Organic net sales growth amounted to 7% (24%).
• Gross margin for the quarter was 24% (35%). As a consequence of Apple’s update to iOS17, the number of counted listens are lowered near term across the industry. As a result we have made a, for the quarter, non-cash flow-affecting revaluation of podcast contracts of SEK -76 million. Excluding this revaluation the gross margin was 39%.
• EBITDA for the quarter amounted to SEK -59.2 M (-42.4) and the EBITDA margin was -12% (-9%), this includes the revaluation of podcast contracts.
• Adjusted EBITDA amounted to SEK 16.3 million (-31.1) and the adjusted EBITDA margin to 3% (-7%), this excludes the revaluation of podcast contracts.
• Operating loss amounted to SEK -77.6 M (-58.6).
• The result for the period amounted to SEK -117.5 million (-74.0) and was negatively impacted by exchange rate losses of SEK -39.8 million (-16.6).
• Cash flow from operating activities amounted to SEK 50.3 M (-12.3).
• Earnings per share for the period before and after dilution amounted to SEK -0.65 (-0.41).
• The number of listens amounted to 1,162 million (1,327), a decrease of 12% compared to the same period last year. The decline is due to Apple’s update to iOS17 which has had a negative impact on the number of listens. At the same time, the Average Revenue Per Listen (ARPL) increased by 24% to SEK 0.43 (0.34).

Full year 2023

• Net sales amounted to SEK 1,636.4 M (1,390.4), which corresponds to net sales growth of 18% (36%). Organic net sales growth amounted to 13% (26%).
• The gross margin for the full year was 32% (34%). As a consequence of Apple’s update to iOS17, the number of counted listens are lowered near term across the industry. As a result we have made a, for the quarter, non-cash flow-affecting revaluation of podcast contracts of SEK -76 million. Excluding this revaluation the gross margin was 36%.
• EBITDA amounted to SEK -187.3 M (-294.9) and the EBITDA margin was -11% (-21%), this includes the revaluation of podcast contracts.
• Adjusted EBITDA amounted to SEK -111.7 million (-272.3) and the adjusted EBITDA margin to -7% (-20%), this excludes the revaluation of podcast contracts.
• Operating loss amounted to SEK -258.6 M (-352.6).
• The period’s result amounted to SEK -179.7 million (-286.4) and was negatively impacted by exchange rate losses of SEK -5.5 million (71.6).
• Cash flow from operating activities amounted to SEK -28.1 M (-294.3).
• Earnings per share for the period before and after dilution amounted to SEK -0.99 (-1.59).
• The number of listens amounted to 5,019 million (5,139), a decrease of 2% compared to the same period last year. At the same time, the Average Revenue Per Listen (ARPL) increased by 21% to SEK 0.33 (0.27).

Significant events in the fourth quarter of 2023

• Acast reached a positive adjusted EBITDA for the first time, a milestone in the company’s development.
• Acast/Podchaser launched Performance+, the industry’s first recommendation engine for more effective direct response podcast advertising campaigns. Through AI-powered data the podcasts most likely to achieve the best results for advertisers’ individual performance marketing goals are identified and recommended.
• Acast launched a feature to enable real-time planning within podcast advertising campaigns. This includes the ability for advertisers to have an up-to-date overview of available advertising space and prices.

Significant events during the full year 2023

• Through its subsidiary Podchaser, Acast owns the pocast industry’s most extensive and detailed data. During the year, new capabilities were launched that combine Podchaser’s data with Acast’s product expertise. These include Collections+ - an AI-driven data function that increases advertisers’ reach and accuracy in podcasts.
• Acast signed new agreements strengthening and broadening the range of podcasts on its platform. Examples include Barack and Michelle Obama’s media company Higher Ground, the Bill & Melinda Gates Foundation, Warner Bros Discovery and the Luminary podcast network. The agreements mean that Acast is responsible for these networks’content distribution and advertising sales.
• During the year, Acast worked intensively on launching new capabilities that enable automated sales flows and increased scalability. Acast’s selfserve plattform, which launched at the end of 2022, was further strengthened with the inclusion of host-read sponsorships as well as new tools which enable automated campaign planning and real-time ad production.

Comments from the CEO: Positive adjusted EBITDA for the first time
I am proud to state that our consistent work during the year has borne fruit and that we end the year with a positive adjusted EBITDA in the fourth quarter - for the first time in Acast’s history. During the year we have strengthened our competitiveness through various product initiatives driving increased scalability. Furthermore, we succeed in maintaining strict cost control. As a consequence of Apple’s update to iOS17, the number of counted listens are lowered near term across the industry. As a result we have made a, for the quarter, non-cash flow-affecting revaluation of podcast contracts of SEK -76 million.

North America continues growth trajectory
Turnover in the fourth quarter increased by 9 percent to SEK 494.2 million (454.3). Organic growth was 7 percent.

Development in North America continued to drive our overall growth in the last quarter of the year. Turnover increased by 19 percent to SEK 137.7 million (115.8) compared to the previous year.

Acast has stable development in Europe, despite the fact that several countries have been in recession with a negative impact on advertising markets. Net sales in Europe amounted to SEK 311.7 million (296.8), an increase of 5 percent. Other Markets increased net sales by 8 percent to SEK 44.9 million (41.6).

Cost control delivers profit improvement
As a consequence of Apple’s update to iOS17, the number of counted listens are lowered near term across the industry. As a result, we have made a, for the quarter, non-cash flow-affecting revaluation of podcast contracts of SEK -76 million. Excluding this revaluation, the gross margin in the fourth quarter amounted to 39 percent. A significant improvement compared to a year ago and proof that our underlying business is developing positively. Including the revaluation, the gross margin amounted to 24 percent (35). We see a continued good development of all our products as well as an increasing share of SaaS revenues, which affected the gross margin in the right direction.

The fourth quarter was a milestone in Acast’s history when, for the first time, we reached a positive adjusted EBITDA of SEK 16.3 million (-31.1), corresponding to an adjusted EBITDA margin of 3 percent (-7). I am very pleased to state that we managed to reduce our operating costs by 9 percent in the quarter while growing, a prerequisite for reaching the goal of a positive EBITDA in 2024.

Another milestone during the quarter was reaching a positive operating cash flow of 50.3 MSEK (-12.3), a result of a positive earnings trend and effective work to reduce the time it takes to get paid by our advertisers.

Product development and initiatives for increased scalability
Strengthening Acast’s ability to generate revenue through automated sales flows is an important strategic focus area. During the quarter, we further improved our self-service ad platform by introducing a tool for planning campaigns in real time. Through the new capability, advertisers get access to a real-time view of available advertising space for host-read sponsorships and their price level. The result is a more efficient process that significantly reduces the time for advertisers who want to book campaigns through Acast.

Also improving the process of podcast advertising is Performance+, which was launched in the fourth quarter. The feature is the latest development to our AI-powered productCollections+ and allows advertisers to make even more data-driven decisions in planning campaigns. It is another example of how the synergies between Podchaser and Acast drive innovation and improve our competitiveness.

Acast stands strong as a leading player in podcasting
Acast finishes the year strong and we enter 2024 with early signs of improved momentum in the market. A strong underlying development during the last quarter of the year creates a path towards a positive EBITDA in 2024. The work to balance tight cost control with the development of new services and tools that help advertisers and podcast creators reach a wide audience will have continued high priority for us in the coming year.

We enter 2024 with a robust balance sheet that increase our competitiveness even more. The world’s advertising markets are still affected by the weakened economy, but Acast’s position as the leading player in podcasting is stronger today than it was a year ago.

Ross Adams
Chief Executive Officer

Report presentation
CEO Ross Adams and CFO Emily Villatte will present the report in a webcast today 12 February at 10:00 CET. The presentation will be held in English and there will be the opportunity to ask questions during the presentation.

Link to the presentation: https://ir.financialhearings.com/acast-q4-report-2023

Link to report
The Interim Report is attached to this press release and available on https://investors.acast.com/