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."