Q2 2023

• Net sales in the quarter amounted to SEK 386.3 M (315.8), which corresponds to net sales growth of 22% (39%)
• Organic net sales growth amounted to 15% (28%)
• Gross margin for the quarter was 36% (30%), the second quarter 2022 was negatively affected by one-off costs linked to certain podcast agreements
• EBITDA for the quarter amounted to SEK -41.7 M (-98.6) and the EBITDA margin was -11% (-31%). The improvement in the EBITDA result means that Acast is following the plan to reach a positive EBITDA in 2024
• Operating loss amounted to SEK -59.3 M (-112.0)
• The period’s result was positively affected by currency translation effects and amounted to SEK -14.2 M (-70.6)
• Cash flow from operating activities amounted to SEK -57.5 M (-97.6)
• Earnings per share for the period before and after dilution amounted to SEK -0.08 (-0.40)
• The number of listens amounted to 1,294 million (1,238), an increase of 4% compared to the same period last year, and Average Revenue Per Listen (ARPL) amounted to SEK 0.30 (0.26)

Significant events in the second quarter of 2023

• Acast signed an agreement with President Barack and Mrs Michelle Obama’s media company Higher Ground. The agreement means that Acast will handle ad sales and content distribution for podcasts such as Michelle Obama: The Light Podcast, Renegades: Born in the USA (with Barack Obama and Bruce Springsteen) and The Michelle Obama Podcast; Tell Them, I Am
• During the quarter, Acast+ Access was introduced, a technology that allows companies with existing paid subscriptions to include podcasts as a benefit in those subscriptions. Through Acast+ Access, businesses with existing membership benefits, such as news publishers, media organizations and streaming services, can now integrate podcasts into the paywall they already use for their subscribers and increase value for customers
• Acast launched host-read sponsorships on its self-serve ad platform. This means that advertisers of all sizes can themselves book campaigns to be delivered as host-read sponsorships by podcast hosts in their own voices, opening more podcasts to monetization. Previously only pre-recorded podcast ads were available on a self-serve basis
• Acast launched Collections+, AI-powered data capabilities that increase the reach in our podcasts. Collections+ combines our subsidiary Podchaser’s podcast data and proprietary algorithms with Acast’s marketplace, scaling ad sales and increasing monetization in small and medium-sized podcasts. By utilizing Acast and Podchaser data, dependence on third-party data providers is reduced, resulting in increased cost efficiency

Comments from the CEO: Margin improvement and strengthened results
The second quarter of the year has been marked by a continued improvement of our margins and our results, driven by prudent cost control and positive revenue development especially in North America. Our work to build the world’s most valuable podcasting marketplace - connecting podcast creators, advertisers and listeners continues evidenced by a number of product improvements and launches in the quarter, that strengthen both us and our stakeholders in the long term.

Profit improvement for the second quarter in a row
Our net sales during the second quarter amounted to SEK 386.3 million (315.8), corresponding to a growth of 22 percent. The organic growth amounted to 15 percent, an improvement compared to the first quarter of the year and a positive indication in an advertising market that continues to be difficult to assess.

Net sales in Europe amounted to SEK 235.1 million (201.3), an increase of 17 percent. During the quarter, our total growth was driven primarily by a positive development in North America, where we grew by 31 percent to SEK 110.7 million (84.5). We also see a good development in Other Markets with a growth of 35 percent. During the quarter, we noted some early indications of a certain improvement in the American advertising resultsmarket, including through the US Ad Market Tracker index, which is now increasing for the first time in a year. In the current macroeconomic climate, however, uncertainty remains regarding a possible market recovery.

The gross margin amounted to 36 percent (30), a significant improvement compared to the previous year when the gross margin was negatively affected by one-off costs linked to certain podcast agreements. In addition, stable development of all our products and an increasing share of SaaS revenues from Podchaser contribute to an improved gross margin compared to a year ago. Non-ad revenues now make up just over 10% of net sales.

The EBITDA result improved to SEK -41.7 million (-98.6), which means an improvement in the EBITDA margin by 20 percentage points to -11 percent. The improvement in earnings is a result of good cost control and ongoing work to adjust and streamline our organization to meet the current market in the best possible way. Furthermore, our gross margin as well as EBITDA was influenced in the same quarter previous year from one-off costs related to certain podcast agreements. We continue on our path towards a positive EBITDA in 2024, which is confirmed by the trend in the second quarter.

Focus on automation creates value
Our work to further develop our self-serve ad platform is an example of how we constantly strive for an increased proportion of automation in our flow. During the quarter we added host-read sponsorships to the platform, creating opportunities for advertisers to independently find and purchase relevant advertising space as host-read sponsorships from across the entire Acast marketplace are improved.

Acast’s self-serve ad platform has had a promising start since launching late last year. By now adding host-read sponsorships to the platform, we further leverage our large and growing base of audio influencers. The launch positions Acast as the largest podcast network to enable self-serve ad buying for sponsored reads.

The work to automate our services and reduce manual sales work continues with several important initiatives during the second quarter. By automating the ad buying process, we create higher cost efficiency. At the same time, more opportunities are created for advertisers to reach an engaged and valuable podcast audience. Programmatic ad buying, which allows podcast ad buyers to book ad campaigns efficiently and in real time through the Acast marketplace, continues to be one of our fastest-growing sales channels with positive development in the second quarter as well.

AI-driven podcast advertising gives increased reach
After acquiring Podchaser a year ago, we have been working hard to build even better solutions that create value for advertisers, listeners and podcast creators. A good example is Collections+, which was launched in the second quarter.

Collections+ is an AI-powered data capability which increases advertiser reach in podcasts. Data about podcasts and their listeners is pulled from a very broad range of sources, including Podchaser’s own data. The data is processed using AI models that then sort podcasts into richer, more relevant sales verticals based on all available data points. It gives advertisers the opportunity to reach more relevant listeners through a wider variety of podcasts.

For Acast, Collections+ creates a unique opportunity to combine Podchaser’s highly detailed and industry-leading podcast data with Acast’s proprietary marketplace. It helps us scale up ad sales and monetize more podcasts, especially the mid-sized ones with a lot of untapped potential. During the first seven-week test period, we saw that the marketplace generated revenue for more podcasts than before. By combining Acast’s and Podchaser’s data, we will also reduce our reliance on third-party data providers, giving us increased cost efficiency.

A growing advertising product
The timing of a broad recovery in the world’s advertising markets is still difficult to assess, but certain positive signals now appearing on the horizon give hope for the future. In the meantime, Acast is well-equipped to meet advertisers’ growing needs to reach relevant audiences through our marketplace. As a global market leader in podcasting, our position will be further strengthened as we continue to develop our offerings for both podcast creators and advertisers.

Ross Adams
Chief Executive Officer

Report presentation
CEO Ross Adams and CFO Emily Villatte will present the report in a webcast today 3 August at 13:00 CEST. 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-q2-2023

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