7digital announces interim results for H1 2017
Today (26th Sep 2017), we announced 7digital's interim results for the half year ended 30th June 2017.
For the full announcement, visit our Investors page and click 'Latest RNS'.
- Strong sales momentum into the second half of the year
- Total revenues up 17% on a pre currency movement basis and 9% on adjusted basis to £5.9m (H1 2016: £5.4m)
- Licensing revenues up 33% to £4.0m (H1 2016: £3.0m)
- MRR up 38% to £3.2m (H1 2016: £2.3m)
- LBITDA reduced by 36% to £1.7m (H1 2016: £2.6m)
- Benefits from the acquisition of 24-7 Entertainment ("24-7"), effective from 1 June 2017, starting to come through with additional revenue of £530k in June as a result of the acquisition
- MediaMarktSaturn ("MMS"), Europe's biggest electronics and entertainment retailer, becomes the Company's largest shareholder following the acquisition of 24-7 Entertainment
- Contracts signed with MMS as part of the transaction with a value of £18.0m over three years
- Total combined value of other one/two year contracts signed in the period of £4.0m. These included contracts with all three major record labels, the re-launch of TriPlay's eMusic service in the US and a renewed contract with musical.ly across additional territories, with revenue to be recognised over the next year
- More than 65% of H2 licensing revenues (£7.5m out of £11.3m) already contracted or committed
- £2.9m raised through a placing and open offer in March 2017 which allowed the Company to broaden its shareholder base
- 7digital's strategic decision to move into higher quality streaming or "Hi-Res" gains significant momentum:
- Hi-Res files outsold traditional MP3 files in the Company's download stores in every month of this period
- The MQA format and technology, adopted 18 months ago by 7digital, gains significant traction and is endorsed by major and independent labels
- Creative revenues grew 17% on the same period in 2016 to £1.0m (H1 2016: £0.8m) with the division bringing an increasing number of synergistic benefits to our licensing and B2B operations
- Statutory loss for the period was £3.0m (H1 2016: statutory loss of £3.2m)
- Cash at period end of £0.9m ahead of pre-payments from MediaMarktSaturn in August and October
- The Board remains confident in its 2017 expectations and that 2018 will be a year of profitability and positive operating cash flow as the full benefits of 24-7 Entertainment are realised
Post Period End Highlights
- Several key contracts signed in Q3. Today, 7digital announces that it has signed a deal with Fender®, one of the world's leading musical instrument companies, to provide technology and access to its music and metadata platform
Simon Cole, Chief Executive of 7digital, said:
"These results show clearly, after just one month, how transformational the acquisition of 24-7 and, with it, the relationship with MediaMarktSaturn will be for the Group. Our work to create a suite of new digital services for Europe's biggest entertainment and electronics retailer has begun and will gain momentum in the second half and into 2018.
Our licensing revenues continue to see the results of the global growth in music streaming and, more particularly, the development of services in new markets and with new business models. In-flight entertainment, with our first client Global Eagle and today's news of our new contract with Fender are just two examples.
We have always believed that the mature music streaming market will be about much more than "all you can eat" services for a fixed subscription. 7digital's business is in providing the tools and the platform on which our customers build the myriad of ways in which people will consume digital music in the future.
Our healthy first half performance has continued into the second half of the year, our pipeline is strong and the Board is confident in meeting full year expectations for 2017 and seeing the full benefits of consolidation realised in 2018 and beyond."
The company was founded by Ben Drury and James Kane, offering digital music delivery B2B services. In the year following, 7digital was powering 180 stores for record labels and brands. Our fastest release ever was 46 mins from on-stage performance to sale in Dec 2005 as part of the Live 8 Guinness World Record.
7digital was powering 1,000 stores and made history by enabling Koopa to become the first unsigned act to make it into the top 40 charts on downloads alone. 7digital-powered service Now Play It won “Best Digital Service” award at the BT Digital Music Awards. 7digital signed a partnership with Last.fm and celebrated their first 1 million users on the platform. In 2008 7digital launched the global API and became the first European download store to offer Warner Music catalogue DRM-free.
7digital launched HMV music and video download stores in the UK and Canada, as well as an e-book store for Waterstones. Lost Tunes, powered by 7digital, won the ”Digital Achievement of the Year“ award at the Music Week Awards. We partnered with Songbird to provide an integrated MP3 store and built a mobile app on BlackBerry, which won the EMEA ”Innovation Award“. 7digital integrated MP3 downloads into AOL’s Winamp media player, HMV Group acquired 50% stake in 7digital for £7.7 million, we took part in the first ever Music Hack Day in London and celebrated 7 million tracks our catalogue.
7digital partnered with Shazam, we launched our own Android and iOS apps and developed a unique digital music experience for Samsung devices. Network operator O2 chose 7digital as their digital music partner in the UK and 7digital’s API powered services for 120 clients with 500 million API requests served.
In the following years 7digital expanded North American operations with key hires and launched Samsung Music Hub 3.0 in numerous territories. 7digital was selected as the music partner for Toshiba connected TV and we released the first digital music store on Windows 8.
7digital merged with award-winning radio company, UBC Media and went public on the LSE. We launched hi-res download stores for Panasonic and Onkyo, a Latin music radio service for SBS (Spanish Broadcasting System) and we confirmed a partnership with will.i.am.
7digital powered the launch of The Overflow, a genre-based streaming app, and we expanded territories for Radioplayer Worldwide. We announced that we are powering services for OpenLIVE, Tonlist, Electric Jukebox, Team Rock, CrowdTunes, Rithm, and Astro. We expanded licenses to Africa making our reach a total of 82 territories. Finally, we launched an integration with Google Cast to playback hi-res audio.
7digital started the year by premiering MQA content on onkyomusic at CES. We announced a new contract to power the relaunch of eMusic and won the tender to produce Jazz programmes for BBC Radio 3. We acquired French B2B streaming service Snowite (now 7digital France) and have brought on a number of new key hires. We launched 7digital Creative to look after curation, radio production, editorial and playlisting services for our partners.