Release Date: July 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Storytel AB (LTS:0GBU, Financial) achieved the best quarterly financial performance in its history, marking the end of a successful two-year transformation process.
- The company crossed the 2.3 million paid subscriber milestone, with significant growth in both the Nordics and non-Nordics core segments.
- Gross profit margin improved by 5 percentage points year-over-year to 44.2%, driven by increased popularity of in-house content and cost management.
- Adjusted EBITDA reached SEK128 million, a 2.8x increase from Q2 2023, with an EBITDA margin of almost 14%.
- Storytel AB (LTS:0GBU) introduced innovative subscription plans like the Flex Plan and Student Forever, which have been well-received and are expected to drive subscriber acquisition and retention.
Negative Points
- ARPU experienced a minor decrease of 2% year-over-year, indicating potential pricing pressure.
- Revenue from the Rest of the World region decreased slightly by 2%, with a subscriber decrease of 3%.
- The company faces a competitive market, particularly in Poland, where it is not the market leader.
- Operational cash flow, while improved, was still negative at SEK32 million for the period, including a SEK50 million repayment of a term loan.
- The introduction of 6,000 podcasts in Sweden is a strategic experiment, and its impact on the core audiobook business remains uncertain.
Q & A Highlights
Q: Can you provide insights into the subscriber growth in the Nordic streaming business, particularly which markets or packages are driving this growth?
A: Johannes Larcher, CEO, explained that the Nordic Streaming segment saw over 80,000 net paid subscriber additions year-over-year. This growth is attributed to innovative packages, pricing, and promotions, such as the Premium for Life promotion in Finland. The introduction of original and exclusive content, like "My Brother in 75 Parts" in Denmark, also contributed significantly. Additionally, improved marketing efficiency has played a role in subscriber growth.
Q: How has the business performed in the Nordics during the summer months, given their importance for annual intake?
A: Peter Messner, CFO, stated that while they can't disclose specific details, they are encouraged by the momentum going into the summer, which has continued into July. They plan to report more comprehensively at the end of October.
Q: Could you comment on the performance of the non-Nordics core streaming business area?
A: Johannes Larcher highlighted significant growth in non-Nordics core markets, with 154,000 additional subscribers year-over-year. Audiobooks.com, part of this segment, reached an all-time subscriber high and remains profitable. The entry of Spotify into the audiobook market in the U.S. has not negatively impacted them and may have expanded the category's appeal.
Q: What factors contributed to the strong performance in the Publishing segment this quarter?
A: Johannes Larcher attributed the strong performance to a combination of successful new titles, such as those from Denise Rudberg, and the new agreement with Nextory, which boosted digital revenue. The digital side of the business is performing well, and they are slightly outperforming the overall industry in physical book sales.
Q: Can you provide more details on the introduction of 6,000 podcasts in Sweden?
A: Johannes Larcher clarified that these are freely available podcasts, representing 90% of Sweden's most popular content. The aim is to keep existing customers engaged on Storytel and attract new listeners who may eventually become audiobook subscribers. This move is strategic and not a shift towards becoming a podcasting company.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
