Third quarter 2023

• Net sales in the quarter amounted to SEK 424.5 M (322.0), which corresponds to net sales growth of 32% (21%). The growth was mainly attributable to North America where net sales increased by 55%, Europe’s net sales increased by 25% and Other Markets’ net sales increased by 24%.
• Organic net sales growth amounted to 26% (7%).
• Gross margin for the quarter was 35% (35%).
• EBITDA for the quarter amounted to SEK -25.7 M (-86.1) and the EBITDA margin was -6% (-27%). The improvement in the EBITDA result means that Acast is on course to reach a positive EBITDA in 2024.
• Operating loss amounted to SEK -43.6 M (-102.0).
• The result for the period amounted to SEK 24.1 million (-68.6) and was positively impacted by SEK 73.6 million by the release of the contingent consideration that arose in connection with the acquisition of Podchaser a year ago. This was offset by negative exchange rate losses of SEK 10.2 million.
• Cash flow from operating activities amounted to SEK -19.3 M (-96.7).
• Earnings per share for the period before and after dilution amounted to SEK 0.13 (-0.38).
• The number of listens amounted to 1,280 million (1,318), a decrease of 3% compared to the same period last year. At the same time, the Average Revenue Per Listen (ARPL) increased by 36% to SEK 0.33 (0.24).

Significant events in the third quarter of 2023

• Acast has entered into a strategic partnership with Luminary, the premium podcast network, to increase the reach of selected Luminary original podcasts which are now being made available to listeners on all platforms via Acast. Acast will serve as Luminary’s exclusive monetization partner for these podcasts and additionally, Luminary will leverage Acast+ Access, which allows subscribers to access exclusive, gated content on the listening app of their choice.
• Acast has launched Predictive Demographics, an AI-powered feature that optimizes advertisers’ ability to target the most relevant audience, based on a data-driven analysis of the dialouge in the episodes. This creates opportunities for advertisers to further fine-tune the accuracy of their podcast advertising, and for more podcasts to be opened up to monetization.
• Acast has entered into a new partnership with Warner Bros. Discovery to become the exclusive distribution and monetization partner of its podcasts. The deal will make podcasts from Food Network, TLC, HGTV, Animal Planet, Discovery Channel and Travel Channel, including Curiosity Daily, Food Network Obsessed, A Ghost Ruined My Life with Eli Roth and many more available to advertisers through Acast’s marketplace.
• Acast launched the new tool AdCollab to reduce the time and resource needed to activate host-read advertising campaigns, and increase efficiency and scalability. AdCollab allows podcast creators and advertisers to collaborate in real time within Acast’s product to produce the host-reads, greatly simplifying the ad purchasing process.

Comments from the CEO: On track towards profitability
During the third quarter, we have succeeded in balancing growth with prudent cost control, positioning us on our established path to profitability with a significant improvement in EBITDA results. We are delivering positive net sales growth, with North America leading the way. Our efforts to develop podcasts into an increasingly efficient advertising channel continues, and during the quarter, we introduced several initiatives that enhance our ability to further scale up revenues.

Balancing growth and cost control leads to profit improvement
Net sales of the third quarter amounted to SEK 424.5 million (322.0), corresponding to a growth of 32 percent. The increase was largely attributable to North America. The organic growth amounted to 26 percent, a continued recovery compared to the beginning of the year and a clear improvement compared to a year ago.

The gross margin amounted to 35 percent (35). We see continued good development of all our products as well as an increasing share of SaaS revenues from Podchaser, impacting the gross margin positively. We also saw some negative impact on the gross margin, as certain larger podcast contracts are affected by Apple’s ongoing roll out of iOS17. This update implies a change to how podcast episodes are downloaded on mobile devices, which in turn affects the measurement of listens. In the long term, the change will mean a more accurate picture of the listening frequency for each podcast, which is a positive development for our industry. In the short term, we expect a decrease in the number of overall listens and an increase in the average revenue per listen (ARPL). During the third quarter, ARPL increased by 36 percent, whilst the number of listens decreased by 3 percent.

The EBITDA result improved to -25.7 MSEK (-86.1), a continued improvement in the EBITDA margin, which now amounts to -6 percent in the quarter. The actions taken throughout the year to reduce operational costs have had the expected effect. Good cost control is a critical parameter to reach the goal of a positive EBITDA in 2024. The work to continuously adjust and streamline our organization to meet the current market in the best possible way continues.

North America remains an important growth driver
Our growth is primarily driven by a positive development in North America, where net sales increased by 55 percent to SEK 122.5 million (79.2). Net sales in Europe amounted to SEK 263.7 million (211.7), an increase of 25 percent, and in Other Markets net sales increased by 24 percent to SEK 38.4 million (31.1).

We succeed in driving growth despite the continued uncertainty in the advertising markets.

Podcast advertising - an increasingly effective advertising channel
Through Podchaser, Acast has the most extensive and detailed database of podcasts in the industry, and we are constantly working to create solutions that strengthen and develop podcasting as a media channel. Earlier this year we launched Collections+: AI-powered data capabilities that increase advertisers’ reach in podcasts. In the third quarter, this feature was further developed through Predictive Demographics, an offering that optimizes advertisers’ ability to target the most relevant audience, based on a data-driven analysis of the dialouge in the episodes. In other words, an advertiser can increase the reach and accuracy of their advertising by targeting completely new podcasts and audiences relevant to their goals. By doing so, we can increase our advertising sales in smaller and medium-sized podcasts and thus scale up our advertising sales further.

Efficiency through development of scalable sales channels
Streamlining our processes and increasing the scalability of ad sales is key to building the future of Acast. With automated sales flows, the foundations for building long-term growth are strengthened. The development of Acast’s self-serve advertising platform is a good example of how we are increasing scalability and I am delighted by the very positive reception, which has led us to already reach our full-year revenue target for this new sales channel in the third quarter.

During the quarter, we launched AdCollab: a tool that enables advertisers and podcast creators to collaborate in real time to create host-read sponsorship campaigns. Through AdCollab, the podcasters and advertisers can create host reads within the Acast product, reducing the time and resources needed from Acast sales teams. Early test results show a 85 percent time improvement in the process of booking and producing this type of ad.

New partnerships with leading podcast publishers
We also entered into new agreements with Warner Bros. Discovery and Luminary, two leading podcast publishers, which each bring a slate of premium, popular and high-profile shows to our marketplace. By adding even more household name brands to our already extensive marketplace, we increase our attractiveness to both advertisers and podcast creators.

I am proud of the way that we are able to deliver both growth and profit improvement. It is still too early to point with certainty to a moment of broad recovery and upswing in the world’s advertising markets, but despite this, we continue to strengthen our position as the global independent market leader in podcasting.

Ross Adams
Chief Executive Officer

Report presentation
CEO Ross Adams and CFO Emily Villatte will present the report in a webcast today 7 November at 10:00 am 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-q3-report-2023

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