Q4 2022

• Net sales in the quarter amounted to SEK 454.3 M (336.5), corresponding to net sales growth of 35% (40%)
• Organic net sales growth amounted to 24% (35%). Despite continued uncertainty regarding the macro-economic development, the quarter has been characterized by increased advertising purchases and good growth in non-advertising-related revenues
• The gross margin for the quarter was 35% (36%)
• EBITDA for the quarter amounted to SEK -42.4 M (-28.1) and the EBITDA margin was -9% (-8%)
• The adjusted EBITDA result amounted to SEK -31.1 M (-28.2) and the adjusted EBITDA margin was -7% (-8%), corresponding to more than halving the adjusted EBITDA loss compared to the third quarter this year. This is fully inline with the financial goal of reaching profitability in 2024
• Operating loss amounted to SEK -58.6 M (-39.5), including SEK 10,7 M in restructuring costs related to redundancies and SEK 1 M in costs related to the acquisition of Podchaser
• Loss for the period was negatively affected by currency translation effects and amounted to SEK -74.0 M (-25.3)
• Cash flow from operating activities amounted to SEK -12.3 M (12.4)
• Earnings per share for the period before and after dilution amounted to SEK -0.41 (-0.14)
• The number of listens amounted to 1,327 million (1,091) an increase of 22% compared to the same period last year and Average Revenue Per Listen (ARPL) amounted to SEK 0.34 (0.31)

Full year 2022

• Net sales for the full year 2022 amounted to SEK 1,390.4 M (1,025.7), corresponding to net sales growth of 36% (73%)
• Organic net sales growth amounted to 26% (74%). The year has been characterized by increased uncertainty regarding the macroeconomic development, which has affected organic growth
• The gross margin was 34% (36%)
• EBITDA for the full year 2022 amounted to SEK -294.9 M (-181.6) and the EBITDA margin was -21% (-18%)
• The adjusted EBITDA result amounted to SEK -272.3 M (-150.4) and the adjusted EBITDA margin to -20% (-15%)
• Operating loss amounted to SEK -352.6 M (-221.6), including SEK 18,4 M in restructuring costs related to redundancies and SEK 4 M in costs related to the acquisition of Podchaser
• The year’s result was positively affected by currency translation effects and amounted to SEK -286.4 M (-300.4)
• Cash flow from operating activities amounted to SEK -294.3 M (-121.8)
• Earnings per share for the period before and after dilution amounted to SEK -1.59 (-1.91)
• The number of listens amounted to 5,139 million (3,735), an increase of 38% compared to the same period last year, and the average revenue per listen (ARPL) amounted to SEK 0.27 (0.27)

Significant events in the fourth quarter of 2022

• Amazon Music and Acast entered into an agreement to deliver ad-free podcasts for Prime members and Amazon Music Unlimited subscribers. The agreement means that Amazon Music has bought all advertising space in thousands of Acast’s podcasts
• During the quarter a new self-serve advertising platform was launched, enabling businesses and brands of all sizes and budgets to reach highly engaged audiences through podcasts available through the Acast Marketplace
• The Keyword Targeting add-on was launched to the platform, Acast Marketplace, which opens up contextual advertising. The proprietary feature allows advertisers to target specific words and phrases in individual podcast episodes
• Acast continued its’ expansion in Europe by launching in the Netherlands by signing an agreement with podcast studio Meer Van Dit. Acast will host the podcast studio’s programming, which generates approximately 27.5 million listens annually, thereby handling distribution and revenues
• In Podtrac’s new ranking of ad sales networks for podcasts in the US market - Podcast Sales Network Ranking - Acast is ranked number two
• Acast launched a solution for first-party data, i.e. data that the advertiser has collected directly from its own audience, in order to reach a specific audience on the Acast Marketplace. For the first time ever, advertisers can thus harness the power of their own data to create even more effective podcast campaigns

Significant events during the full year 2022

• Acast acquired Podchaser, the world’s most comprehensive podcast database. Together, the two companies create the industry’s best metadata and monetization opportunities for podcast creators and advertisers
• During the year, Acast reached an inflection point for the EBITDA margin, which means a gradual improvement of the margin to a positive EBITDA
• Acast published updated financial targets that bring the timing of positive EBITDA forward to 2024
• In September Acast communicated that it would review the organization with the intention of reducing the cost base and thereby creating profitable growth. The workforce reductions have affected approximately 15 percent of Acast’s workforce and were completed in 2022. On an annual basis cost savings of c. SEK 77 M will be delivered
• Acast’s scalable business model has enabled continued global expansion in 2022 by introducing Acast in Italy, the Netherlands, Spain and Singapore via new partnerships with, for example, the American podcast network Wondery
• During the year, Acast has created new opportunities for podcast creators to expand and interact with their listener base via collaborations such as Meta, Facebook’s owner company, and the social music platform Resso. These collaborations expose podcast creators to millions of new listeners and create opportunities to reach new advertisers
• Acast has developed several new tools and functions that create opportunities for increased revenue for Acast as well as podcast creators and advertisers. The launch of Acast+ provides the opportunity to offer listeners premium subscriptions with extra benefits. New Conversational Targeting features enable advertisers to target individual conversations in podcast episodes

Comments from the CEO: Positive end to the year but continued ad-market uncertainty
2022 will go down in history as a year when the focus in many industries shifted from hyper-growth to profitability and internal efficiency. We have seen a gradual change in the advertising market, where podcasts continue to stand out as one of the fastest growing media channels with promising future prospects. At Acast, we have adjusted the operations to suit the new market conditions, which means that we can end the year with a stable development and good organic growth. The adjusted EBITDA of -31.1 MSEK is a strong improvement compared to the third quarter and thus a step on the way towards the goal of reaching positive EBITDA in 2024. The gradually increased uncertainty in the outside world during the year has affected the advertising market also towards the end of the year, however with some improvements in both Europe and North America. During the quarter, we launched several new features that in different ways help advertisers and podcast creators to transact on our platform, an important part in our quest to develop the world’s most valuable marketplace for podcasts.

Improved organic growth an on the right path towards profitability
During the last quarter of 2022, Acast grew by 35 percent compared to the same quarter the previous year. Our position as one of the market leaders in ad sales and monetization for podcasts continues to strengthen. We are seeing many advertisers move from successfully testing a medium, that is new to them, to now capitalizing on this established, incredibly interesting channel by investing larger and larger advertising budgets into our podcasts. This is an important trend for the long-term positive development of podcasts as an advertising medium. At the same time, a weaker economy means that more advertisers are more cautious than before, which has a countervailing effect in the short term.

Net sales in Europe amounted to 297 MSEK (215), an increase of 38 percent. The negative macroeconomic climate has affected the advertising market throughout 2022, but at Acast we continued to expand into several new European markets. Growth in North America amounted to 28 percent and in the rest of the world, 34 percent. The growth rate in both Europe and North America improved compared to the third quarter of 2022. The average revenue per listen (ARPL) was 0.34 SEK (0.31), an increase of 11 percent compared to the same quarter last year. The gross margin amounted to 35 percent (36). Adjusted EBITDA for the quarter was -31.1 MSEK (-28.2), in line with the previous year and losses more than halved compared to the third quarter of the year. The adjusted EBITDA margin improved slightly to -7 percent (-8). We are now working further to create the conditions to reach the goal of a positive EBITDA result in 2024, and the development during the second half of 2022 shows that we are on the right track.

Acast’s route to profitability is through dedicated work on our internal efficiencies and cost control, combined with healthy growth generated by proactive product-led innovations that give rise to an increase in automated sales, and a continual evolution of our advertising offering. The cost reductions announced at the end of the summer are now complete and we enter 2023 with a solid foundation to continue developing Acast as a global independent market leader in revenue creation for podcasts.

Diversifying monetization routes
During the last quarter of the year, we announced a first-of-its-kind agreement with Amazon Music, which means that Acast is now delivering podcasts ad-free for Prime members and Amazon Music Unlimited subscribers. This is an innovative deal, and a good example of how we have expanded monetization within podcasts enormously in recent years. The agreement with Amazon Music opens up another channel to increase revenue to both Acast and our podcasters. With Amazon having effectively purchased all the ad slots in the podcasts on the Amazon Music app, this improves our sell-through rate for the large base of advertising space available on the Acast Marketplace, without requiring further manual resources.

More efficient targeting and ROI for advertisers
Overall, the media landscape has changed compared to a year ago. In times of economic uncertainty advertisers are increasingly looking for ROI through channels that help them optimize their ad investments. Campaigns that show good, measurable conversion become more important than more holistic brand-building efforts. This development benefits us as a marketing channel in the long term, as performance marketing returns from podcasting tend to surpass traditional media such as TV and radio. During the year, the average advertising spend per advertiser on Acast Marketplace increased by 46 percent compared to a year ago.

With every marketer’s ad dollars counting even more, we have developed even more granular targeting capabilities to ensure podcast advertising campaigns are as effective and efficient as possible. In the last quarter of the year, we launched Keyword Targeting to further expand our contextual advertising offering for advertisers. This capability allows advertisers to target specific words and phrases in individual podcast episodes, aligning their message with the most contextually relevant content spoken being about within an episode.

Making it easy to buy podcasting ads
At the end of the fourth quarter, the number of podcasts on Acast’s platform totaled 92,000 and the number of listens in the quarter was 1,327 million, an increase of 22 percent. Now, with more than 90,000 podcasts in our extensive network, we have the stable foundation that enables us to reallocate our resources somewhat from acquiring new shows in bulk, and towards expanding ad sales in each of these existing Acast shows, thereby increasing our revenue at a lower cost.

A key strategic move for Acast is developing scalable tools that help even more advertisers - regardless of size or budget - to reach relevant podcast listeners. During the quarter, we launched a new self-serve platform for advertisers, which means that advertisers of any size and budget can reach a highly engaged audience. Through the new platform, advertisers can build and activate their ad strategy in podcasting themselves, without the need for Acast sales team time, thus increasing more passive revenue opportunities for both Acast and the podcasters on our platform.

During the fourth quarter, we also saw a continued positive development in programmatic ad sales, an automated way of buying and selling media through the use of technology, real-time data and algorithms. At the end of the year, programmatic sales accounted for 13 percent of our total revenue, compared to 10 percent a year ago. The automated processes of programmatic benefit both advertisers and Acast - offering the advertiser a seamless, effective buying route, and Acast increased sell-through rates without requiring the same increase in human-led sales efforts: key to creating operational leverage.

A year to be proud of
I look back on the year just passed with immense pride. At Acast, we believe in storytelling as a unifying force, a chance to make a more connected world. Our role is to create space for anyone, anywhere to connect and harness the inherent power of podcasting - be that an advertiser, podcaster or listener. Even in a year characterized by uncertainty due to the outbreak of war in Europe, a gradually changing geopolitical situation and a weak macroeconomic outlook, Acast has advanced its position and taken several important steps towards becoming the number one marketplace in the world for podcasts, providing a world-class advertising experience for creators, advertisers and listeners alike. A huge thank you to all our dedicated Acasters who contribute with so much passion and commitment every day to make this possible.

Ross Adams
Chief Executive Officer

Report presentation
CEO Ross Adams and CFO Emily Villatte will present the report in a webcast today 15 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-2022

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