Paul and I are going to try having two separate articles, on days when we are both writing.

Here is the link to Part 1, where Paul covers BOO, VCP, LVD, PUB



Audioboom (LON:BOOM)

Share price: 2p (-6%)
No. shares: 638m
Market cap: £12.7m

Trading Update

Key points from this podcasting platform's Q4 update:

  • Unique file requests (i.e. how many times people listened to something on the platform) are up by 42% to 145 million, compared to Q3.
  • Number of unique users has doubled compared to a year ago, now at 58.6 million

On the financial side:

Overall 2016 revenues are expected to exceed £1.3 million, an increase of more than six fold compared to last year, and ahead of market expectations. The rate of growth in 2016 has continued to accelerate from H1 to H2, with Q4 revenues of more than £630,000. This rate of revenue growth has continued post year end, with over £1.1 million already booked for advertising campaigns in 2017.

When something is starting from a very low base like this, the fact that the growth rates are explosive is not too important me - there is no alternative, or the company won't go anywhere!

However, I must admit that the operational metrics sound quite good. The others, less so:

Due to acceleration in audience acquisition costs and higher recruitment fees to acquire USA commercial head count, the Company expects its EBITDA loss for the full year to be greater than market expectations. The Company has taken steps to reduce costs through new ad-serving and bandwidth partnerships which it expects could achieve cost savings of approximately 40% for 2017 over 2016 in this area. Additionally, UK annual headcount has been reduced by £465,000 to allow the Company to focus on its growth opportunities in the USA.

The year-end cash balance was c. £710,000.

Clearly, then, this is not an instance of self-funding growth, since growing the audience base is increasing the rate of losses.

Slashing UK headcount sounds worrying - is the company caught between two stools, the US and the UK? It's never very encouraging to see a company spreading to a new jurisdiction, without having first achieved success at home.

Also, the funding discussions with the Chinese fund (for an injection of up to $8 million) have ceased. Audioboom's cash balance is now £710k.

My…

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