Acast AB (publ)

Good morning and welcome to ACoS earnings call for the year-end report 2024. As usual we have our CEO Ross Adams and CFO Emilie Villat who will present ACoS results for the year and important events over the past quarter. You're welcome to submit questions throughout the presentation using the form below the stream and we will then make sure to raise the questions during the Q&A held after the presentation. Let's kick off by handing over to our CEO Ross Adams. Please Ross, the floor is yours.

Thank you. Hi all. And thank you for listening in. Hello to those on our stream on YouTube. I'm Ross Adams, CEO of ACAST, normally operating from New York, where I've been living for the past three years. But today I'm in sunny Stockholm for the presentation with our CFO, Emily Villat. I'll take you through our Q4 developments and recent business highlights. Then Emily is going to take you through the financial performance in more detail. If we have new investors listening in, ACAST is in essence the market leading independent global infrastructure platform for podcasts. We're uniquely positioned at the center of the podcasting value chain. matchmaking advertisers with podcast creators who want to monetize their content and their highly engaged audiences. Essentially, we are in an interconnected ecosystem bringing together creators who produce compelling content to attract listeners using their creativity to build a high loyal audience base. This high quality content attracts audiences who are eager to consume it. Sizable and engaged audiences are highly attractive, of course, to advertisers seeking and paying for efficient reach and engagement at scale. We underpin this with the widest data set in podcasting through our data company, Podchaser. Podchaser has data on 5.6 million shows, which allows us to drive discovery for podcasts, matchmaking between advertisers and audiences, and revenues for both creators and, of course, for Acast. Our competitive edge is based on the facts that we true podcasting pioneers, being the inventors of the technology behind global podcast advertising as we know it today. We have unmatched scale and exclusivity. Our portfolio consists of more than 140,000 podcasts that generate more than 1 billion listens per quarter. And we connect these to more than 3,300 advertisers per year, a number that's grown by 24% in 2024. And these advertisers consist of the likes of global brands as well as smaller companies. And we are innovation leaders, consistently first to market with technologies like AI-driven targeting, contextual targeting, and first-party data onboarding. And we offer reliable measurement, providing trusted industry leading measurement solutions that are required to track performance across the entire marketing funnel. We also go beyond the podcast. We are podcast first, but not podcast only. We have the capabilities needed to deliver broad omnichannel campaigns that span across social media, video, live events and more. And we see a growing demand for these omnichannel campaigns from both advertisers, and creators. And I'll come back to give examples of these later in the presentation. So to summarize, Acast empowers podcast creators and advertisers with global reach, strong monetization, and cutting-edge technology, all at a scale unmatched in the industry. We foster and grow relationships with podcasters of all audience sizes and types around the world. And our portfolio of podcast creators ranges from some of the biggest personalities, including the likes of Peter Crouch, Marc Maron, Giggly Squad, and Peg and Penny, to established news publishers, such as The Economist and The Telegraph, amongst many, many others. and we have a heightened focus on increasing monetizable listens. In the quarter, we were pleased to welcome iconic content from TED Audio Collective, currently bringing 26 hit podcasts to our network, garnering 176 million listens annually and also Casefile which is one of the world's largest true crime podcasts with around 80 million listens annually too. In the quarter we also signed the prominent French YouTube creator Squeezie. Acast will serve these with ad sales, hosting and distribution and we also have the rights to monetize video versions of their podcasts too. Of course, we also support niche shows of all types who bring with them dedicated communities. Over the last year, we've added about 5,000 shows per quarter. And this diverse range of content allows us to connect advertisers with the creators and audiences that perfectly match their needs. And the common thread among these creators is that they all choose Acast to help them find and grow their audience and earn revenue from advertisers of all sizes. Okay, looking at our development in the fourth quarter of 2024, we delivered 17% net sales growth, of which 15% was organic growth. The growth was again primarily driven by North America, where revenues grew by 33%. The gross margin remained high at 40%. And the EBITDA profit amounted to 34 million sec, corresponding to a 6% margin. When summarising the full year, we delivered 19% net sales growth, of which 18% was organic. The full year gross margin amounted to 39%, where the improvements to 2023 are explained by a favourable product mix, efficient yield management and positive effects from Podchaser. We have maintained good cost discipline and a measured investment approach which ultimately has allowed us to deliver additional large profitable improvements and our full year EBITDA amounted to 24 million sec reflecting that we successfully have delivered on our profitability target of positive EBITDA in 2024. An increasingly important focus for us throughout the year has been to meet the growing demand for broad omnichannel campaigns, and the fourth quarter has not been any different. Significant event in the quarter was our announcement of the acquisition of Wonder Media Network, which will expand our audio capabilities and ability to deliver large omnichannel campaigns. Wonder Media Network is a female-founded creative audio studio based in New York, highly experienced in innovative campaign delivery and podcast production, producing highly awarded branded and original content. This historically worked with a number of large established brands such as Pfizer, Nike or Nike and Microsoft to name a few to assist them with their audio strategies. And Wonder Media brings a team of 25 employees that will join ACAST's existing creative team to form ACAST Creative Studios. And together, we will offer advertisers integrated campaigns and branded content solutions from ideation through to production and campaign delivery, allowing these advertisers to reach engaged audiences across audio, video, social, live events, and more. And the acquisition is expected to open up new revenue streams for Acast and our creators, whilst also fostering deeper relationships with advertisers to bring bigger and bolder ideas to life. In the fourth quarter, we executed one of our largest omnichannel campaigns to date in partnership with Google, featuring several of the largest podcasts and personalities in the UK, including Katherine Ryan, Help! I Sexed Up My Boss, Private Parts, Rhea Ferdinand, and Giovanna Fletcher. all making use of Gemini Live on Pixel 9, captured in branded segments across both audio and video. With currently over 22 million plays across social, this integrated campaign demonstrates our capability to deliver high impact, wide reaching initiatives and highlights the increasing demand for omnichannel campaigns. We believe that these campaigns will play a significant role in the evolving media landscape and that ACAST is well positioned to capitalize on this opportunity. During the quarter, we officially opened our new London hub, ACAST Studios London. An entire floor of the new office is dedicated to supporting our creators through investment in state-of-the-art facilities. And this includes four studios equipped for both audio and video production, which will be available to our extensive network of established UK creators. One of our other studios was launched in partnership with Amazon Music, dedicated to providing new creators with the professional resources and equipment needed to start and grow their podcasts. And the investment demonstrates our strong commitment to supporting our creators across both audio and video and taking on a key role in fostering a vibrant podcasting community. Before handing over to Emily, I am very pleased to look back at our long-term financial development We've continued to grow despite varying market conditions and saw higher growth rate compared to the previous year. Over the past six years, we have grown our revenue base more than tenfold to reach revenues just short of 2 billion SEC in 2024. And I'm especially pleased in reaching the milestone of positive EBITDA, thereby delivering on our profitability target, which has been a steadfast focus over the last two years, especially cementing our transition into a profitable growth company. With that, Emily, perhaps maybe you could take us through some of the developments in more detail.

Happy to, Ross. For those of you who have followed us for some time, you will recognise our revenue build-up, which you see here on the slide, and this explains how our advertising revenues are being generated. The foundation of our ad-based revenues is our inventory, which is the product of the number of listens and the number of ad breaks available in each show. Our success in selling our inventories reflected in the sell-through rate, and the product of the sell-through rate and the inventory provides the number of delivered impressions, i.e. the number of delivered ads. Ads, of course, are priced in cost per mil, CPM, which is the price for 1,000 impressions often expressed in US dollars. So together, this shows the dynamic behind our ad sales buildup. And let's look at our 2024 progress. Our listens declined by 13% in 2024, primarily due to the iOS 17 effect. And we estimate impact from iOS 17 for the full year to have been 17%. So underlying growth is therefore around 4% positive underlying growth, excluding the iOS 17 effects. The number of ad slots has increased to 6.8 from 6.2 in 2023, resulting in an inventory just short of last year's level. We've also delivered a significant improvement in the sell-through rates. And pricing has been fairly stable throughout the year, and our CPM in 2024 average was 13 US dollars. And here I want to highlight that we've had a slight shift in product mix in favor of more ads, which generally are priced at a lower CPM compared to sponsorships. And this buildup reflects that there are different levers to drive or add sales revenues despite the decline in lessons. Having said that, we're committed to growing our base of monetizable lessons moving forward, whilst also seeing room for further sell-through rate expansion. So in short, there's ample room for future growth. Looking at the financial development in the quarter, starting with listens and ARPL, our listens declined by 8% in the quarter, primarily due to the BBC leaving ACoS and to a smaller extent by effects from iOS 17. And I want to stress that this drop in listens has not had any impact on our revenues as we have been successful in allocating demand towards other suitable shows. In addition, we onboarded new shows like TED and Casefile, and these have already replaced the commercial value of the BBC. So we look forward to leaving the iOS effects behind us as we progress through the first half of 2025 and remain increasingly focused on growing our inventory of monetizable listens. In fact, we have also increased our unique reach year on year, which I want to point out, and we currently reach over 100 million uniques on a monthly basis. ARPON, or average revenue per license, continued to grow also in Q4 to reach a record high of 0.54 SEKs in the quarter, reflecting 28% year-on-year growth. Our net sales grew by 17% in the quarter to reach 578 million SEKs and the organic growth amounted to 15%. And Q4 was the strongest sales quarter consistent with historical trends and seasonality. Our gross margin remained high in the quarter at 40% and our gross profits grew by 18% year over year when excluding the impact we had from podcast contract revaluations in Q4 of 2023. As in previous quarters this year, this growth primarily reflects a favorable product mix with a higher proportion of ad saves compared to sponsorships alongside yield management efforts and contributions from BondChaser. And our gross margin has remained stable at a healthy level throughout 2024, as shown on the right. Our other operating expenses amounted to 215 million SEKs in the fourth quarter, slightly increased by FX, as well as including expenses related to the acquisition of Wonder Media Network. And the total number of staff at the end of the year was 395 persons, slightly higher than last year, but notably it's the exact same level as we ended 2022, reflecting our ability to scale. Now let's turn to our performance by segments. Europe delivered 12% year-on-year growth in the fourth quarter. And similar to previous quarters, we've seen strong development in continental Europe, whereas performance in the UK, which is our largest market, has been moderate due to a challenging ad market. The segment's contribution profit has continued to improve and the contribution margin has increased to 23%. North America has remained a key driver of revenue growth at 33% in the quarter, reflecting maintained and consistent momentum. This has also been followed by a large improvement in the contribution margin, amounting to 12% in the quarter. Other markets were largely flat in the fourth quarter, but still managed to achieve minor uplift in the contribution margin. So overall, we are very pleased to present another quarter with profitability improvements across all our segments. In this year-end report, we also disclose our annual revenue and contribution profit for our top three markets. And as you can see, the UK has had a softer year, 2024, affected by a more challenging ad market, leading up to a year-on-year growth of 2%. Despite the more challenging ad market, UK has still seen a significant contribution profit improvement, with a margin of 24% in the full year of 2024. Consistent strong performance in the US market resulted in 37% growth in 2024, confirming that our strategy is working. And the strong revenue growth has also been followed by profitability improvements in the US, with the contribution margin now amounting to 11% in 2024. And this ultimately reflects that the US has also started to have a meaningful impact on the group's profitability. Sweden's performance rebounded strongly in 2024 after a more challenging 2023, with a 28% sales increase for the full year. Sweden has also seen a substantial profitability improvement, operating at a contribution margin exceeding 30% in 2024. So this highlights the varying growth rates among our top markets and our ability to still achieve substantial profitability gains compared to the prior year. And this has, of course, been crucial in achieving our EBITDA profitability target for the full year. In Q4, our EBITDA profit mounted to 34 million SEKs, reflecting a 6% margin. We've also had COPs related to the Wander Media Network transaction in Q4, and adjusted for these, the EBITDA was 36 million SEKs. The EBITDA margin improved by 3 percentage points versus Q4 of the prior year, thanks to us scaling against a higher level of sales and a gross margin improvement. On the right hand side, you will see that we've continued to achieve consistent profitability improvements on a last 12 month basis over the past two years. And positive cash flows have followed. The operating cash flow was positive 55 million SEKs in the fourth quarter and the free cash flow was also positive at plus 28 million SEKs. And on a last 12-month basis, the operating cash flow was 34 million SEKs. Yes, we closed the year with a robust balance sheet. And I would now like to hand back to Ross for final remarks and then some Q&A.